Timing key in consulting deal between FirstEnergy, regulator
COLUMBUS, Ohio (AP) — Shortly before a utility lawyer and lobbyist was appointed Ohio’s top regulator of electric and power generating companies, he received $4.3 million from top executives at one of the companies whose fortunes would soon be in his hands.
In the months that followed, that company — Akron-based FirstEnergy Corp. — won a string of legislative and regulatory victories worth well over $1 billion over time to the company and its subsidiaries, including a nuclear plant bailout that’s at the center of a $60 million federal bribery probe. The bulk of that tab was to be paid by the state’s electricity customers.
What investigators at the state and federal levels now want to know is whether Sam Randazzo, the utility lawyer-turned-regulator who has since resigned, helped FirstEnergy in exchange for millions.
The payment to a future state official meeting Randazzo’s description received from then-executives of the utilities giant in January 2019 is the subject of an ongoing audit by the Public Utilities Commission of Ohio, which Randazzo chaired from April 2019 to last November, when he resigned under a cloud.
Corporate filings from November differed in the descriptions provided to the U.S. Securities and Exchange Commission of the payment made by fired top officials. FirstEnergy’s board of directors fired CEO Chuck Jones and two other executives weeks earlier for having “violated certain FirstEnergy policies and its code of conduct.”
FirstEnergy’s quarterly earnings report said the payment terminated a “purported consulting contract” dating back to 2013. Recent sleuthing by Energy and Policy Institute, a pro-renewable energy watchdog group, unearthed a disclosure in lending documents that suggested Randazzo was paid for future work, creating questions on what actions he might have taken as PUCO chair on behalf of FirstEnergy.
FirstEnergy spokeswoman Jennifer Young declined to address differences between the disclosures. Reached by The Associated Press, Randazzo declined comment.
CEO Chuck Keiper of NOPEC, Ohio’s largest nonprofit energy aggregator, called revelations in the filings “shocking.” He said in a statement that they raise questions of “whether there was something nefarious going on” at the PUCO.
NOPEC is fighting FirstEnergy and the PUCO in the Ohio Supreme Court over what they allege was an illegal decision made under Randazzo in early 2020.
Commissioners granted a new FirstEnergy subsidiary permission to sell electricity to customers without allowing competitors like NOPEC and the Ohio Consumers’ Counsel to intervene and oppose the move. They alleged the subsidiary shared senior managers with FirstEnergy in violation of Ohio law.
Randazzo was involved in other actions while chair that stood to benefit FirstEnergy companies. The most significant was House Bill 6, the $1 billion nuclear bailout bill.
Then-Ohio House Speaker Larry Householder, a Republican, and four associates, were arrested and indicted on federal racketeering charges in July, accused of orchestrating an elaborate scheme secretly funded by FirstEnergy to secure Householder’s power, elect his allies and pass the now-tainted bill. The legislation was promoted as a plan to secure the future of two aging nuclear plants then operated by a wholly owned FirstEnergy subsidiary.
Documents subpoenaed by the FBI showed Randazzo had a significant role in writing the bailout bill.
Calendars obtained by the AP through a public records request further show that Randazzo met with Householder and Republican Gov. Mike DeWine at the Governor’s Residence for an “energy discussion” in April 2019. That was less than two weeks after Randazzo had become PUCO chair and a day later the bailout bill was introduced. He also met in 2019 with both men’s policy advisers, as well as other administration officials.
DeWine’s office said in response to a separate records request that there was no further documentation of the meeting. The AP reported Dec. 10 that DeWine in early 2019 disregarded cries of alarm over Randazzo’s close ties to FirstEnergy before appointing him to the commission. DeWine has stood by the decision.
Besides the nuclear bailout, HB6 included a revenue guarantee tailored for FirstEnergy estimated to be worth hundreds of millions of dollars over time.
The Citizens’ Utility Board of Ohio, an advocacy group for residential and small business ratepayers, said Randazzo and the PUCO assured the guaranteed profits would continue into the future when they ruled in November 2019 that FirstEnergy’s Ohio utilities could forego a traditional rate-setting process that would have opened their books and erased it.
“Chairman Randazzo remained conspicuously silent about the profit guarantee’s flaws while it was pending in the Legislature, and then he presided over a PUCO ruling that allowed it to continue indefinitely,” said CUB Executive Director Tom Bullock.
With Randazzo no longer at the helm of the PUCO, the commission reversed that decision in late December, ordering FirstEnergy’s 2024 rate case to go forward.
FirstEnergy agreed two months later, in a settlement with Republican Attorney General Dave Yost, to forgo collection of the $100 million in guaranteed revenue slated to flow to its three electric utilities this year.
In December, a county judge in Columbus blocked collection and distribution of the fee HB6 established for the nuclear plants. Since then, Energy Harbor, the independent company that took ownership of the two nuclear plants and other FirstEnergy assets in February 2020, has indicated it may no longer want the money.
Ohio Legislative Inspector General Tony Bledsoe said Randazzo has never, since 2009, registered to lobby on behalf of either FirstEnergy or Energy Harbor.
Gillispie reported from Cleveland.