The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
Things were already pretty industry-friendly at the Public Utilities Commission of Ohio when Sam Randazzo took the reins of the regulator in February 2019. For example, it had granted more than $1 billion in non-refundable electric rate increases that were later declared illegal by the Ohio Supreme Court.
But according to an indictment that was unsealed Monday, even FirstEnergy’s top executive knew that Randazzo’s coziness with the company was so blatant it was causing whispers in the halls of the PUCO.
Randazzo pleaded not guilty in a Cincinnati federal court to fraud and bribery charges related to his involvement in an epic conspiracy. In it, FirstEnergy paid more than $60 million to pass a $1.3 billion bailout that mostly benefited one of its subsidiaries.
Former Ohio House Speaker Larry Householder, R-Glenford, is already serving a 20-year prison sentence for his role and three others have been convicted. Now federal prosecutors have turned their attention to Randazzo — and they appear to be investigating at least two former FirstEnergy executives as well.
All three deny wrongdoing, but in a deferred-prosecution agreement, FirstEnergy said the two former executives — CEO Chuck Jones and Vice President Michael Dowling — paid Randazzo a $4.3 million bribe just before Gov. Mike DeWine nominated him to become PUCO chairman.
After the payment, FirstEnergy certainly fared well under Randazzo’s purported regulation.
He helped draft House Bill 6, the massive bailout the company was to receive.
Also helping FirstEnergy was a Nov. 21, 2019 order Randazzo pushed to stop a 2024 “rate case” in which regulators would comb the company’s books to see if its charges were reasonable. A day after Randazzo did that, Jones texted him an image of FirstEnergy’s stock price rising and thanking Randazzo for his intervention, according to documents cited in Randazzo’s indictment and filed last summer in an investor suit against FirstEnergy.
Despite those apparent favors, FirstEnergy’s leaders were demanding more.
Randazzo included in House Bill 6 a “decoupling” provision that paid the company tens of millions to “recession proof” the company, as executives described it. By early 2020, PUCO staff was trying to make changes to the provision, and at least some associated with FirstEnergy wanted Randazzo to stop them.
But FirstEnergy CEO Jones was cautious — apparently after being warned by Randazzo.
On March 4, 2020, Jones sent a text message to another executive that listed some of the things Randazzo had done for the company. Jones then explained that Randazzo had to be careful because people at the PUCO were getting suspicious, according to the communication, which was filed as part of Randazzo’s indictment.
“He will get it done for us but cannot just jettison all process,” Jones’s message said. “Says the combination of overruling staff and other commissioners on decoupling, getting rid of SEET and burning the DMR final report has a lot of talk going on in the halls of PUCO about does he work there or for us? He’ll move as fast as he can. Better come up with a short-term workaround?”
PUCO spokesman Matt Schilling on Tuesday said that “SEET” refers to periodic regulatory checks after utilities are allowed to increase rates — supposedly to make electricity service more secure. The checks are meant to ensure that utilities aren’t charging too much. So in other words, “getting rid” of them would eliminate a bit of financial oversight of a monopoly utility.
“DMR” refers to one of the upcharges the PUCO allowed FirstEnergy to impose on ratepayers before Randazzo became chairman. As a “distribution modernization rider,” the $456 million was supposed to be spent on grid improvements. But FirstEnergy and regulators couldn’t show that it was.
After the FBI searched Randazzo’s Columbus condo in November 2020, the PUCO reversed another of the official actions he allegedly undertook in exchange for bribes. Schilling said that the commission in December 2020 vacated its earlier order, and now a FirstEnergy rate case is set to take place by May.
But the March 4, 2020 message between Jones and the other executive raises another important question: If the whispers about Randazzo’s integrity were loud enough at the PUCO that even he could hear them, what did employees do about their suspicions? Did any go to the FBI? The governor’s office? The attorney general?
“I can’t speculate on the contents of the indictment,” Schilling said.
Meanwhile, a grand jury might not be finished charging people in the scandal.
Attorneys for former FirstEnergy executives Jones and Dowling have told the court in a related civil case that they believed their clients were under investigation. And Randazzo’s indictment refers to the two as “Executive 1” and “Executive 2” and it repeatedly calls them “co-conspirators” as it details Randazzo’s allegedly criminal conduct.
On Tuesday, Ohio Attorney General Dave Yost took the social media site X, formerly known as Twitter, and made what seemed to be a call for a grand jury to fix its focus on FirstEnergy players in the scandal.
“The private funders of public corruption must be held accountable,” Yost said. “There’s no fire without oxygen.”
