Despite scandal, DeWine says he takes corruption seriously

Despite a massive bribery scandal related to a lobbying effort involving his appointees and members of his administration, Ohio Gov. Mike DeWine says his administration takes corruption seriously.

“We always take things seriously,” he said.

DeWine made those comments last Tuesday, less than three weeks after his appointee to chair the Public Utilities Commission of Ohio resigned. The commissioner, Sam Randazzo, left the post after the FBI raided his house and the utility at the center of the scandal, FirstEnergy, disclosed that it gave $4 million to a regulatory official shortly before he assumed his post in early 2019.

“We certainly did not know the huge payment that was made to him,” DeWine said. “We certainly did not know that when he was picked.”

FirstEnergy has been implicated in what federal prosecutors last summer called the biggest bribery scandal in Ohio history. They say the Akron-based utility and affiliated groups poured $61 million through dark-money groups and into an effort to make Larry Householder speaker of the Ohio House and ram through House Bill 6, a $1 billion ratepayer bailout of two failing nuclear power plants.

Householder, who remains in the legislature, and four associates were charged with racketeering. Two of the associates pleaded guilty in October.

It’s unclear what involvement, if any, Randazzo had in the effort to pass HB 6. 

But the governor’s appointment to the committee that nominated Randazzo was a FirstEnergy lobbyist who had registered to lobby on the bill at the same time he voted to nominate Randazzo. That official, Michael Koren, earlier this month denied that he had actually worked on the tainted legislation.

Randazzo, a longtime energy lobbyist, did consulting work for FirstEnergy, which fired its CEO, Chuck Jones, in part over the company’s apparent $4 million payment to Randazzo. While DeWine didn’t know about the payment in early 2019 just as he was preparing to make Randazzo the top utility regulator in Ohio, he said Randazzo’s work for FirstEnergy was common knowledge.

“When Sam Randazzo was selected, anyone who was paying attention knew that he had worked for FirstEnergy…,” DeWine said. “But it was also well known that he had done work for businesses who had adverse interests to FirstEnergy and other utilities. The other thing that was known about him is that he was very knowledgeable in the whole field of energy. That’s why he was picked: because of his knowledge in the area.”

Two days after DeWine made that statement, the Associated Press unearthed documents in which Republican insiders tried to warn DeWine that Randazzo had “opaque, undisclosed financial ties that should be fully examined and made public.”

Asked about the report, DeWine Press Secretary Dan Tierney on Friday said, “The Governor was aware that Randazzo worked with First Energy prior to the events referenced in the article.”

Randazzo and Koren aren’t the only people with official ties to DeWine who also had ties to FirstEnergy. 

DeWine’s legislative affairs director, Dan McCarthy, was a FirstEnergy lobbyist in 2018 during the nasty fight to pass HB 6. 

An FBI affidavit supporting Householder’s indictment said that in 2017, McCarthy founded Partners for Progress, a 501(c) “dark money” group. In 2018, while  McCarthy was still the group’s president, it wired $1.2 million into Generation Now, Householder’s dark-money group that also has been indicted as part of the HB 6 scandal.

Last summer, DeWine said he’d seen no evidence that McCarthy had done anything wrong and that it was important “not to leap to any conclusions or guilt by association.” 

Now McCarthy is lobbying the legislature on DeWine’s behalf to repeal HB 6 and replace it with yet another bailout of the two Northern Ohio nuclear reactors owned by FirstEnergy successor Energy Harbor.

“Dan McCarthy works for me,” DeWine said last Tuesday. “Dan McCarthy does what I tell him to do. I set the policy in  the administration. I get advice from a lot of different people. Again, the buck stops with me.”

DeWine said he has good reasons for wanting to bail out the nuclear plants.

“One is at least 85% of our non-carbon production in the state of Ohio is nuclear,” he said. “If you get rid of that, you’ve totally changed your percentage that is non-carbon. You’re virtually down to nothing. So that doesn’t seem like a great idea. 

“Second, there’s a large number of jobs at stake in those communities and that has a huge impact on those communities as those legislators have very properly pointed out.”

Claims that HB 6 was about protecting clean energy have been questioned. It gutted energy efficiency and renewable energy standards and it subsidizes two 1950s-era coal plants — including one in Indiana. And Randazzo, DeWine’s pick to lead the utility commission, is a longtime critic of clean energy.

Despite months of promises, it’s looking less and less likely that HB 6 will be repealed yet this year. On Jan. 1, ratepayers will start forking over for the decade-long, $1 billion bailout of the failing nuclear plants.

If it’s repealed sometime after the beginning of the year, there’s no mechanism to force the utility to refund any money that’s collected to ratepayers. 

That’s on top of $1.2 billion collected by Ohio utilities since 2009 from rate increases that were later declared unlawful. Those monies can’t be refunded because the PUCO didn’t build in a refund mechanism when it allowed the unlawful rate hikes.

That might fit under a broad definition of corruption: using the law or the PUCO to allow monopoly utilities to increase rates and then allowing the utilities to keep the money when those increases are either struck down on the courts or reversed by the legislature.

Asked about creating mechanisms for refunds, DeWine said “That’s an issue we have not looked at. It’s certainly an issue that we will look at. It’s certainly a legitimate question.”