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Public utilities

FirstEnergy CEO Change Sparks Concerns Over Private Equity Influence

Strategic Insights

— 1 min read

Public Citizen, a consumer advocacy group, is expressing alarm over the appointment of Brian Tierney, a Blackstone executive, as the new President and CEO of FirstEnergy Corp. The group had previously requested the Federal Energy Regulatory Commission to expedite action to deem Blackstone as an affiliate of FirstEnergy due to concerns that Blackstone's control of the utility's board would influence the selection of the CEO.

Key Takeaways:

  • Public Citizen had requested the Federal Energy Regulatory Commission to expedite action to deem Blackstone as an affiliate of FirstEnergy five months ago, citing concerns over potential undue influence on the selection of the CEO.
  • The group warned that Blackstone's control over FirstEnergy's board would lead to the installation of an executive of their choice as CEO, which has now come to pass with the appointment of Brian Tierney.
  • Public Citizen believes that deeming activist private equity funds as affiliates of utilities they control is essential to protect consumers and market integrity.
  • The Commission has been urged to issue an order finding Blackstone to be affiliated with FirstEnergy to prevent anti-competitive practices and ensure that investors with stakes in utilities do not engage in abusive financial transactions with the utility.
  • Public Citizen is concerned that funds like Blackstone, which own a massive fleet of power plants in addition to their stake in FirstEnergy, can engage in anti-competitive practices by selling services at inflated costs and recovering them from captive ratepayers.
  • Affiliation would require Blackstone to engage in financial transactions with FirstEnergy at arm's length, preventing them from selling services at inflated costs and recovering them from ratepayers.

Statistics:

  • Five months: the amount of time Public Citizen waited for the Federal Energy Regulatory Commission to act on their request to deem Blackstone as an affiliate of FirstEnergy.
  • 10%: the threshold investment stake used by activist investors and private equity firms to evade regulatory oversight.
  • Massive fleet: Blackstone owns hundreds of power plants in addition to their stake in FirstEnergy, making them a significant player in the energy market.

Sources:

  • "FirstEnergy Announces New CEO: A Critique" - Public Citizen press release (no date provided)
  • Tyson Slocum, director of Public Citizen's Energy Program, statement to the press on March 13, 2023 (Source: Public Citizen website)

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