TAKEAWAYS: Ex-utility regulator had outsized role in scheme
CLEVELAND (AP) — A statement of facts included with FirstEnergy’s deferred prosecution agreement announced Thursday by the U.S. Attorney’s Office in Cincinnati sheds new light on the role a former utility regulator played in a $60 million corruption scheme involving the Akron-based company.
The statement provides new details on a $4.3 million payment made to Sam Randazzo to end a purported consulting contract shortly before Gov. Mike DeWine nominated him as the next chair of the powerful Public Utilities Commission of Ohio in early 2019. It also details what Randazzo did on FirstEnergy’s behalf after he became chair that April.
Takeaways from Thursday’s announcement and court filing:
WHO IS SAM RANDAZZO?
Randazzo was a respected and knowledgeable energy utility and lobbyist long before FirstEnergy pushed for him to become the powerful chair of the state utilities commission in 2019.
He resigned from the position in November after FBI agents searched his Columbus townhome and after FirstEnergy Corp. disclosed it had paid him $4.3 million.
HOW DID WE GET HERE?
FirstEnergy is accused of secretly funding a $60 million bribery scheme to get supporters of former Rep. Larry Householder elected, get Householder appointed House speaker, win legislative approval of a $1 billion subsidy for two nuclear power plants operated at the time by a wholly owned company subsidiary and to conduct a dirty-tricks campaign to stop a repeal referendum from reaching the ballot.
All of those moves, and more, were successful. But it all blew up in July 2020 when then-U.S. Attorney David DeVillers announced the arrest of Householder and four of his associates, who were subsequently indicted on racketeering charges. Householder has pleaded not guilty and awaits trial.
WHAT DOES RANDAZZO HAVE TO SAY ABOUT THE ACCUSATIONS?
Randazzo issued a statement on Thursday that said he followed the law during his tenure at the utilities commission. He said he was never asked, nor did he ever exercise his authority on FirstEnergy’s behalf.
“I executed my duties as PUCO chair conscientiously, lawfully and mindful of striking the right balance between competing interests,” Randazzo said.
He also said payments from FirstEnergy were in accordance with his contract and were approved by company executives.
Randazzo has not been charged criminally.
HOW DID HE GET APPOINTED TO THE UTILITIES COMMISSION?
FirstEnergy initially disclosed that officials had paid approximately $4 million to end a purported consulting contract with someone who was appointed as a state utility regulator.
The company also said that the payment was for future help that Randazzo could provide as the utilities commission chair.
FirstEnergy’s statement of facts said Randazzo, referred to as “Public Official B,” met with “Executive 1” and “Executive 2” in on Dec. 18, 2018, to discuss the payment and efforts to get Randazzo appointed as utilities commission chair.
Descriptions in the document strongly suggest that “Executive 1” was former FirstEnergy CEO Chuck Jones, who was fired in October for violating company policies and its code of conduct.
Later that day, Executive 1 texted Randazzo and Executive 2, saying, “We’re gonna get this handled this year, paid in full, no discount.” FirstEnergy officials then “pushed” to have Randazzo appointed, the statement said.
Randazzo was paid the $4.3 million in January 2019. Republican Gov. Mike DeWine nominated Randazzo the following month.
Executive 1 the day after the appointment texted “Congratulations!” to Randazzo, who responded, “Thanks goes to some great friends.”
WHAT DID RANDAZZO DO FOR FIRSTENERGY?
According to the statement of facts, plenty.
FirstEnergy and the U.S. Attorney’s Office said in the statement that company officials and Randazzo, perhaps the top utility law expert in Ohio, helped write the bailout legislation providing a $1 billion subsidy for the two troubled plants.
The bill was approved in July 2019 and became law that October.
Meanwhile, FirstEnergy was looking to avoid having to submit to the utilities commission a rate case in 2024, which rating agencies had said would hurt the company’s bottom line.
Submitting a rate case on behalf of FirstEnergy’s three Ohio electric companies would possibly mean the companies would no longer be able to collect on dozens of add-on charges the commission had allowed since FirstEnergy’s last rate case in 2009.
In November 2019, Executive 1 — presumably Jones — texted another company executive saying, “the FE rescue project is not over.”
Later that month, the utilities commission bailed FirstEnergy out. In its ruling, the Randazzo-led commission concluded that “we find that is no longer necessary or appropriate” for the companies to file a rate case in 2024.
Afterward, Executive 1 thanked Randazzo in a text that included an image showing a rise in FirstEnergy’s stock price. Randazzo responded, “Ha — as you know what goes up may come down” and said had received help from others.
Executive 1 replied, “Every little bit helps. Those guys are good but it wouldn’t happen without you.”
In January, with Randazzo no longer at the commission, FirstEnergy was ordered to file a rate case in 2024.