The evolving investigation into an alleged $61 million bribery scheme involving Ohio lawmakers and new revelations from utility FirstEnergy have led to the resignation of the state’s top utility regulator.
Sam Randazzo, chair of the Public Utilities Commission of Ohio (PUCO), announced his resignation Friday. The resignation comes days after the FBI searched Randazzo’s home as part of an investigation that’s led to the arrest of Ohio House Speaker Larry Householder and two plea agreements from his associates in relation to an alleged scheme to funnel funds to state lawmakers to ensure the passage of House Bill 6.
On Thursday, FirstEnergy disclosed a $4 million payment in 2019 to terminate a consulting agreement with “an entity associated with an individual who subsequently was appointed to a full-time role as an Ohio government official directly involved in regulating” FirstEnergy’s Ohio distribution utilities.
Randazzo, a longtime utility lawyer and consultant, previously worked for FirstEnergy Solutions, the former generation arm of FirstEnergy which filed for bankruptcy protection in 2018 and emerged as a standalone company under the name Energy Harbor earlier this year.
Federal prosecutors have made it clear that the utility and its affiliates are believed to be the source of $61 million funneled through a nonprofit group to maintain the alleged criminal conspiracy by Householder and four associates.
In his Friday resignation letter to Ohio Gov. Mike DeWine, the Republican who appointed Randazzo as PUCO chair in 2019, Randazzo wrote that these allegations and “the accompanying publicity will, right or wrong, fuel suspicions about and controversy over decisions I may render in my current capacity.”
FirstEnergy’s 10-Q filing with the U.S. Securities and Exchange Commission cited the $4 million payment as evidence that “certain former members of senior management violated certain FirstEnergy policies and its code of conduct.” FirstEnergy’s board of directors fired CEO Charles Jones and two other senior executives in late October on the same grounds of violating policies and codes of conduct.
Federal prosecutors have not implied wrongdoing on the part of Randazzo, FirstEnergy, Energy Harbor or Charles Jones. FirstEnergy’s disclosure of the $4 million payment believed to be directed to Randazzo has not been connected to the $61 million associated with the alleged bribery scheme.
Implications for Ohio energy regulation and nuclear energy subsidies
However, FirstEnergy’s disclosure and Randazzo’s resignation did draw fire from groups that have criticized the practice of appointing people who have worked for Ohio utilities to the state body tasked with regulating them.
“Utility consumers may think the regulatory system is rigged against them. That concern is understandable,” said Bruce Weston, director of state ratepayer advocate Ohio Consumers' Counsel, in a Friday statement. “Until today, a majority of commissioners, three of five, have worked for utilities that the PUCO regulates.”
“Things need to change and that change should begin with real reform of how PUCO commissioners are appointed and who gets appointed in this state,” said Weston. The counsel is advocating for reforms to shift the selection of PUCO commissioners to direct elections and to impose transparency rules to limit utility spending on those elections.
Randazzo is known for his opposition to renewable energy during his stints as a utility consultant and lobbyist. In testimony supporting House Bill 6, he supported its provisions reducing state funding for renewable energy and energy efficiency. He also sits at the head of the Ohio Power Siting Board, which earlier this year issued a permit for a proposed Lake Erie offshore wind project that included provisions that would restrict its ability to generate power for much of the year, essentially killing the project according to its developers.
House Bill 6 directs more than $1 billion in state utility ratepayer subsidies to the Davis-Besse and Perry nuclear power plants owned by Energy Harbor. Allegations that Householder and associates used $61 million in FirstEnergy money to secure its passage and defend it against a failed popular referendum last year have heightened calls from opponents to repeal it.
“The ignominious departure of Chairman Randazzo today will doubtless maintain pressure on Ohio lawmakers to bring forward some type of modification to HB 6,” Rob Rains, an analyst with Washington Analysis, said in a Friday interview.
It’s likely that the Republicans who are in control of both houses of Ohio’s legislature will seek to retain HB 6’s support of the two nuclear power plants important to the state’s economy, as well as its cuts to renewable energy and efficiency funding, which have been longtime Republican goals, Rains added.
But it’s also likely that lawmakers will seek to introduce measures now lacking in HB 6 to force Energy Harbor to disclose more financial details of its nuclear power plants, he said. That could include “some certification that either the need exists or that some other...set of criteria has been satisfied” to receive the clean air credits expected to channel between $150 million and $200 million per year in ratepayer funds to maintain their profitability and allow them to stay open.