Utility regulator accused of taking a bribe helped write bill targeting watchdog

FBI agents remove boxes of materials from PUCO Chairman Sam Randazzo’s condo in Columbus Nov. 17, 2020. Photo courtesy of Daniel Konik/Statehouse News Bureau.

BY: JAKE ZUCKERMAN Ohio Capital Journal

Ohio’s former top utility regulator, who was accused of taking a $4.3 million bribe, quietly spent months helping write a sweeping energy bill that targeted a state watchdog agency that advocates for Ohio’s residential electric customers, records show.

Emails that the Public Utilities Commission of Ohio gave in response to two FBI subpoenas show its former chairman, Sam Randazzo, conferred with the bill sponsor and helped draft legislative language. The bill would have limited the reach of the Ohio Consumers’ Counsel and given often-hostile state legislators control of its board.

The OCC appears at PUCO cases and advocates for residential ratepayers’ interests, which often run counter to those of investor-owned utility companies and industrial-scale energy customers. The agency’s efforts have led to millions in refunds to consumers, including $306 million from FirstEnergy Corp. last year to settle a lawsuit against the company for charging an unlawful profit margin on its customers.

Akron-based FirstEnergy told prosecutors last summer that it paid a business owned by Randazzo $4.3 million before his 2019 appointment in exchange for “official actions.” The company also said it gave a nonprofit secretly controlled by then-GOP House Speaker Larry Householder $60 million to help pass House Bill 6 — energy legislation worth an estimated $1.3 billion to FirstEnergy. Householder has pleaded not guilty and awaits trial. Randazzo has not been charged with a crime.

Records released earlier this year showed some of Randazzo’s behind-the-scenes lobbying work on HB 6. The records released last week show his influence spanned further.

In May 2020, Rep. Nino Vitale, R-Urbana, introduced the text of House Bill 246. The bill would have narrowed the scope of cases the OCC can join and subject the agency to “any reasonable conditions that the commission deems necessary to avoid duplication, repetition or delay.” It also gives state lawmakers appointment power over six of nine seats on the OCC’s board.

The legislation contained a sweep of other changes as well, including creating new ways for utilities to set their prices, modifying setback rules for wind farms, and allowing the Ohio Power Siting Board to create new setback requirements for solar energy sites.

In the six months before Vitale unveiled the bill, Randazzo and PUCO staff met with Vitale, drafted elements of the legislation, and helped edit Vitale’s introductory testimony to lawmakers, the subpoenaed emails show. The emails don’t show Randazzo addressing the OCC provisions directly. But in a statement through his attorney, Randazzo equivocated when asked if he drafted or advised on the section.

“If so but having no recollection of either writing or advising any such language, it would only have been as the result of a request from the legislature,” he said. “It is likely that the utilities had input.”

The PUCO released the emails after the Ohio Capital Journal filed a public records request and an eventual lawsuit seeking them.

Around Thanksgiving of 2019, Randazzo asked to meet with Maura McClelland, a policy adviser and attorney at the PUCO, to meet and discuss the language of the bill’s “ratemaking piece.”

HB 246 created a new option for utilities to set prices called “alternative rate plans.” According to nonpartisan analysts with the state Legislative Service Commission, the plans can take into account aspects of fair energy pricing that the current model misses like efforts for energy efficiency or cash flow problems from the companies.

“In general, alternative rate plans could lead to higher prices paid by ratepayers,” the LSC analysts wrote. “But presumably, PUCO would only approve those higher costs after examining aggregate effects in accomplishing its policy objectives.”

HB 246 would also allow the PUCO to consolidate parties that it determines have “sufficiently common interests” to speed up cases.

In a memorandum opposing the bill, the Ohio Manufacturers’ Association said the legislation would block its members from meaningful participation at the PUCO. The manufacturers argued the bill in several areas consistently gives utilities the upper hand over their customers, especially via the ratemaking proposal.

“The bill is opaque and no clear reasoning exists for why its proposed changes are needed,” the memorandum states.

Roger Sugarman, an attorney representing Randazzo, said via email that neither Randazzo nor the PUCO were the driving force behind the bill. He said he couldn’t determine if the LSC’s analysis is correct without more details.

“Without knowing what type of alternative rate plan, or the object of your question and the statutory conditions required to secure PUCO approval, it is not possible to evaluate the LSC analysis,” he said. “In general, rate applications filed by utilities, whether alternative or traditional, lead to higher rates; the question is usually about how much higher.”

He said some pieces of the bill wouldn’t have affected much change versus current law. Plus, the bill all but died after its first hearing. Randazzo’s time “was occupied by more pressing and important things than HB 246.”

FBI agents arrested Householder and charged him with racketeering in June 2020. He awaits trial. Agents raided Randazzo’s condo months later. In July 2021, FirstEnergy signed a deferred prosecution agreement with the U.S. Department of Justice. It agreed to pay a $230 million penalty and cooperate with the ongoing investigation into HB 6 to possibly avert a charge of wire fraud.

In a statement of facts paired with the agreement, FirstEnergy said it paid companies controlled by Randazzo $4.3 million in exchange for official action. The company said it hired Randazzo as a consultant and paid him a total of about $22 million since 2010.

Before starting in state government, Randazzo represented industrial scale energy users before the PUCO. He spent years fighting against Ohio energy policies that forced utilities to include more renewable energy in their mixes or make their customers’ homes more energy efficient. He also represented subsidiaries of both CenterPoint Energy and Dominion Energy as a lobbyist, as well as a group of citizens opposing a wind farm in Huron County.

Vitale drew significant media attention via outrageous claims including that Bill Gates invented the novel coronavirus or that Gov. Mike DeWine was bringing “FEMA Concentration Camps” to Ohio in relation to the pandemic. (Randazzo said his position on COVID “pulled in a very direction” than Vitale’s.)

Vitale also, perhaps more subtly, helped guide HB 6 from legislation to law. He co-sponsored the bill and chaired the House Energy and Natural Resources committee that reviewed it. He first won office with $7,700 in financial backing from Householder’s campaign committee. He voted for HB 6 in 2019 and against repealing it after Householder’s arrest. He was one of 21 lawmakers who voted against expelling Householder from office.

Vitale didn’t respond to a phone call or emails to his personal and official accounts.

“As you all know, anyone can be indicted for anything. Anything,” he said in a floor speech last year defending Householder.

“However, that person deserves to go in front of a jury of their peers and prove their case. They might be guilty, they might not … That’s what makes us different from a communist country.”

Federal prosecutors alleged that Householder secretly controlled a nonprofit organization that received $60 million from FirstEnergy. He used the money to elect a slate of candidates who would vote him into the House Speaker’s office and in turn support HB 6. He’s also accused of spending the money for personal use. Two alleged conspirators, including Householder’s former political adviser, have pleaded guilty.

When the anti-OCC bill dropped, few knew or suspected of either Randazzo’s financial ties with FirstEnergy or his lobbying work on the bill. However, after Householder’s arrest and the raid on Randazzo’s home, some raised interest in ensuring the bill’s quick death.

“This bill is a danger to anyone in Ohio who pays a utility bill and it remains on the Ohio House docket as a direct attack on the OCC and all Ohio residential utility customers,” wrote former Democratic State Senator Leigh Herington in a November 2020 op-ed in the Columbus Dispatch.

He suggested the legislation was simple retaliation for the OCC’s opposition to House Bill 6 and another bill that allows FirstEnergy a more favorable accounting formula to determine if its collections from customers are “significantly excessive.” (The OCJ previously reported Randazzo lobbied on that legislation as well.)

Utility companies spend big and wield considerable sway in Ohio politics. As Herington noted, the OCC has seen its size dwindle over the years. Its budget dropped from $9.3 million in 2011 to $5.5 million in 2020.

The OCC also suggested the bill was retaliatory in nature due to its opposition to HB 6. Vitale’s bill, the agency said in a resolution, would “weaken the independence” of the board as well as its “utility watchdog role.”

A PUCO spokesman said the emails only show the PUCO working on language related to the agency and the state Power Siting Board. He said he didn’t know why Randazzo and Vitale communicated through personal email accounts.

“The PUCO does not take a position on proposed legislation,” he said. “We will always be responsive to inquiries from members of the General Assembly as they go through the legislative process.”