COLUMBUS, Ohio -- New documents show Sam Randazzo, a former longtime utilities lawyer who years later became Ohio’s top utilities regulator, in 2015 received a huge personal windfall from FirstEnergy Corp. in exchange for what the company has said was his agreement to change sides on a key state regulatory move sought by the company.
At the time, Randazzo was in private practice, representing a trade group of large industrial electricity customers, but also had a 2012 consulting agreement with FirstEnergy. In 2015, FirstEnergy more than quadrupled Randazzo’s contract, going from owing him $2.5 million to owing him $11.2 million, according to the documents, obtained Monday through a public records request.
In exchange, FirstEnergy has said, Randazzo agreed to stop opposing the company’s bid for state approval for a controversial “power purchasing agreement” that effectively would have bailed out some of its aging power plants, including the Davis-Besse nuclear plant near Toledo and the W.H. Sammis coal plant near Steubenville. The move, which was eventually blocked by federal regulators, was an early iteration of what became House Bill 6, the nuclear bailout law that now is the center of an ongoing federal corruption probe.
Randazzo had opposed a similar request from American Electric Power the previous year, arguing it would cause customers’ electricity bills to go up, according to a 2014 report from Energy News Network. In an interview with the outlet, he initially signaled he might oppose FirstEnergy’s request, too.
“If it turns out that the proposal FirstEnergy is presenting is not superior to the market and would cost money instead of save money, then not only will it be opposed on factual grounds, but it will be challenged legally,” Randazzo said in 2014.
But Randazzo ended up supporting the measure, reads a court filing FirstEnergy made last month as part of a deal with federal prosecutors, with the 2015 changes coinciding with and “in exchange for” Randazzo’s group withdrawing its opposition.
Rob Kelter, an attorney with the Environmental Law and Policy Center, said FirstEnergy’s “power purchasing agreement” before the Public Utilities Commission of Ohio was hugely contentious at the time, and fiercely opposed by all environmental and consumer groups except for the one that Randazzo led. Randazzo’s eventual support was a pivotal factor in the PUCO’s decision to approve it, Kelter said.
“Parties before the commission assume that everybody is on the up and up, and parties are taking positions based on principled reasons, not based on inside deals with utilities,” Kelter said. “And the respect that regulators had for Sam was based on the assumption that his positions were based on his free market principles. Not on his agreement with FirstEnergy.”
In addition to showing how much Randazzo benefited personally from what the company said was his support on a key policy issue, the new documents shed additional light on the contract that FirstEnergy admitted last month became a vehicle for the $4.3 million bribe it paid to Randazzo weeks before Gov. Mike DeWine hired him to run the PUCO in February 2019. The admission about the bribe, and the details about Randazzo dropping his opposition to FirstEnergy’s sought regulatory change, came in writing through the deferred prosecution agreement, a deal through which FirstEnergy will avoid being convicted of a corruption-related crime.
Randazzo has not been charged, and has denied any wrongdoing. But FirstEnergy has admitted to bribing him. Randazzo resigned from his position in November 2020, shortly after FirstEnergy first disclosed the $4.3 million payment to its shareholders in a federal regulatory filing, and days after the FBI searched Randazzo’s house in Columbus. The discovery of the payment to Randazzo, FirstEnergy said, led it to fire several top executives, including then-CEO Chuck Jones.
Cleveland.com and The Plain Dealer obtained Randazzo’s written contracts with FirstEnergy through a public records request sent last week to the Ohio Consumers’ Counsel, a state agency set up as a watchdog for consumers. The OCC received it from FirstEnergy through discovery in an ongoing PUCO case through which the state is investigating whether FirstEnergy billed customers for the money it spent pushing for House Bill 6. FirstEnergy could have tried to block the disclosure of the document, under the terms of a legal agreement between it and the OCC, but decided not to.
An attorney for Randazzo declined to comment for this story. But Randazzo previously has said the agreement was reviewed and approved “by senior executives at FirstEnergy.” Jennifer Young, a company spokesperson, declined to offer additional details on the contract with Randazzo.
“While we’re unable to comment on the contract in light of pending proceedings, we are carefully reviewing and revising our political activity and lobbying/consulting practices, including requiring robust disclosures about lobbying activities,” she said.
The 2015 contract amendment documenting Randazzo’s significantly increased retainer, a written copy of which FirstEnergy gave to the OCC, was unsigned. Prosecutors and FirstEnergy said last month that the changes weren’t legally binding, since it was never formally executed, and that invoices to Randazzo’s company were set up to bypass FirstEnergy’s normal process of approving payments.
Randazzo’s initial contract, signed in 2013, was to pay him $2.5 million over five years. The 2015 changes extended it to 12 years, front-loaded with increased payments so Randazzo was to receive $8.5 million from 2016 to 2019, and then another $2.7 million from 2020 through 2024.
The updated contract also required Randazzo to sit in on a meeting with FirstEnergy officials and state legislative leaders to discuss Senate Bill 310, a 2014 law signed by then-Gov. John Kasich that effectively froze Ohio’s renewable energy and energy efficiency mandates for two years. The mandates later were eliminated as part of House Bill 6.
FirstEnergy’s 2015 changes to its consulting deal with Randazzo lays out terms that are generous to Randazzo, requiring the company to pay the contract amount in full to the Sustainability Funding Alliance of Ohio, a company Randazzo owned, even if FirstEnergy decided to terminate the deal at any time.
And that’s what FirstEnergy and Randazzo did in December 2018, hashing out the particulars during a meeting at Randazzo’s Columbus condo with two top FirstEnergy executives, according to the deferred prosecution agreement FirstEnergy reached with federal prosecutors.
During the meeting, Randazzo, Jones and Michael Dowling, another FirstEnergy executive “discussed the remaining payments under the consulting agreement” as well as Randazzo’s “candidacy for the open PUCO chair position.” On Dec. 19, Randazzo texted with Jones and Dowling about the payment, according to court records.
“We’re gonna get this handled this year, paid in full, no discount. Don’t forget about us,” Jones texted in the conversation with Randazzo.
Randazzo responded, “you guys are welcome anytime and any whereI [sic] can open the door. Let me know how you want me to structure the invoices. Thanks,” before adding. “I think I said this last night but just in case – if asked by the administration to go for the Chair spot, I would say yes.”
Randazzo has said he applied for the PUCO job after he was recruited and lured out of retirement by members of the DeWine administration. In February 2019 DeWine hired him in one of the first major moves of his term as governor. DeWine has said he knew about Randazzo’s past ties with FirstEnergy when he hired him, but didn’t know about the $4.3 million payment at the time.
After Randazzo became PUCO chairman in April, he helped the company push for state law changes worth hundreds of millions of dollars, FirstEnergy officials said in their deferred prosecution agreement. That included helping develop and lobby for the House Bill 6 nuclear bailout bill, which also included a “decoupling” provision that guaranteed FirstEnergy’s revenues at record 2018 levels, and helping the company avoid a 2024 PUCO electricity rate review -- which executives referred to as “the Ohio hole” -- that the company feared would hurt its bottom line.
As part of its deferred prosecution agreement, FirstEnergy also has admitted it paid $61 million in bribes, in the form of political donations, to former House Speaker Larry Householder. In exchange, Householder helped push House Bill 6 into law, and helped defend it against a repeal campaign effort. Householder, who was removed from his leadership position shortly after his July 2020 arrest, and kicked out of the legislature in June, has pleaded not guilty and denied wrongdoing.
House Bill 6 largely has been repealed, including the nuclear subsides and the decoupling provision.
Here is Randazzo’s contract with FirstEnergy, and the 2015 amendment: