Utility’s corporate secretary among finalists for PUCO regulator spot

By: - January 31, 2020 1:00 am

The leading candidates for an influential public utilities commissioner spot appear to be an incumbent who once worked for a utility company and a challenger who does right now. 

Two others under consideration include a renewable energy project consultant who believes he is a “token Democrat” finalist, and a government finance manager whose application concedes he has no direct experience for the job. 

These are the four possible selections for Gov. Mike DeWine in picking a new commissioner for the Public Utilities Commission of Ohio (PUCO). He was given those four by PUCO’s Nominating Council and has the next few weeks to decide. His pick must then be confirmed by the Ohio Senate. 

The four finalists are:

  • Lawrence Friedeman, a Democrat. He has served as commissioner since being tapped by Gov. John Kasich in 2017 to complete an unexpired term. He formerly served as vice president of regulatory affairs and compliance for IGS Energy, a Dublin-based company. 
  • Stephen Serraino, an independent who identifies as conservative-leaning. He serves as general counsel, corporate secretary and chief compliance/ethics officer for the Upper Peninsula Power Company. UPPCO has been involved in a protracted legal battle related to it having imposed “unlawful surcharges” on its Michigan customers. 
  • Ronald Russo, a Democrat. For the past 14 years, he’s worked as a consultant developing wind and solar projects. He specializes in real estate and land use.
  • Gerardo Torres, a Republican. He is the finance manager for the city of Cincinnati’s IT department. 

The Capital Journal recently spoke with Serraino and Russo about their backgrounds and the reasons for seeking a commissioner spot. Friedeman could not be reached and Torres declined to comment.

Serraino: A utility’s interests are the public’s interests 

PUCO commissioners serve five-year terms. State law prohibits someone from consideration if they work for a public utility regulated by PUCO, but Serraino works for a utility based in Michigan that is outside of PUCO’s purview. 

In an interview, Serraino said it has long been his goal to serve the public as a commissioner. He was previously on the PUCO “short list” under Kasich’s administration. His skills working in the energy field up in Michigan would be helpful and easily transferable to Ohio, Serraino said. 

Serraino made a case for why representing a utility company’s interests is not incongruous to him representing the public’s interest if chosen as commissioner. 

While UPPCO’s executives do have their own financial needs, he said, the company still takes into account the public need when deciding upon things like utility rates. 

“We factor in customer concerns as part of our corporate planning and policy,” Serraino said. 

He also pointed to UPPCO regularly providing assistance to residents so they can afford heating during the winter, along with a long-term effort to devote more resources to renewable energy in Michigan. 

“What’s best for UPPCO is largely what’s best for the customers,” he maintained. “I don’t think any legitimate business would not care about the customers.”

A lengthy dispute involving UPPCO perhaps demonstrates otherwise.

The Mining Journal, a news outlet based in Marquette, Michigan, detailed last month the ongoing battle in which UPPCO is trying to keep from refunding residential customers who were imposed “unlawful surcharges.”

UPPCO, an electric utility, imposed between 2010 and 2015 a type of rate increase that was found to only be legally permitted for natural gas utilities. 

A commercial customer of UPPCO disputed the charge and sought a refund, according to reporting from The Mining Journal. Around 2017, with Serraino as general counsel, UPPCO and the commercial customer reportedly agreed to a settlement. 

Citizens Against Rate Excess (CARE), a Michigan advocacy group, has for years urged UPPCO to refund residential customers as well. CARE wanted a copy of the settlement agreement. UPPCO fought to keep the settlement private but was unsuccessful, The Mining Journal reported. 

“CARE applauds the commission’s denial of UPPCO’s appeal,” the group’s attorney said. “If (the company) got a refund, so should residential ratepayers.”

UPPCO’s handling of the rate surcharge matter is of particular interest in Ohio, where our state’s utilities commission has also dealt with a high-profile case involving an improper charge of customers. 

In 2017, FirstEnergy began imposing a charge on customers that was later found by the Ohio Supreme Court to be improper. PUCO had initially approved the charge, but the commission reversed itself in an August 2019 decision that followed the Supreme Court ruling.

Still, Ohioans were not given a refund for much of the time period in which they were wrongfully charged. 

As reported by Cleveland.com, ratepayers do not receive refunds for charges the Ohio Supreme Court determines are wrong. This is because of a legal precedent dating back to the 1950s. 

The ‘underdog’ 

Ronald Russo has a simple explanation for why he’s trying again to become a commissioner, after failing several times before — he believes PUCO’s interests are “purely corporate.”

“I’m a populist type of guy, helping citizens more than corporate,” he said. “I’m not sure if the governor’s going to like that.”

Russo thinks he is an “underdog” to be selected, but wanted to try again anyways.

“I’m kind of tired of what’s going on and what I’m seeing,” he said.

In his view, utility companies always get their way in asking for “bailouts, riders, anything extra.” Russo pointed to House Bill 6, signed by DeWine in 2019, which subsidizes a pair of FirstEnergy nuclear power plants in Ohio. He also noted the aforementioned example of FirstEnergy’s improper surcharge money not being refunded to Ohioans. 

“HB 6 proves it’s all on the side of energy,” he said. 

Russo has spent 24 years working in the utility infrastructure field, primarily as a lawyer consulting on acquiring land rights for wind and solar projects. These projects range across the United States, with some being in Ohio. 

He described himself as being an expert in the electrical grid who has long followed PUCO and reads “everything they put out.”

Changing the system?

Among the 12 members of the PUCO Nominating Council, which sent the four finalists to DeWine for consideration, is a representative of the Ohio Consumers’ Counsel governing board. 

OCC has been vocal about its distaste for the way commissioners are selected and has called for there to be public elections instead. After the four finalists were publicized, OCC released a statement urging DeWine to not select Friedeman or Serraino because of their histories representing public utilities. 

Russo agrees with that sentiment.

“This should be elected,” he said.

But it isn’t, and DeWine will have his pick between two Democrats, a Republican and an independent; between two who have represented utilities’ interests and two who have not.

“Resumes aside,” Columbus Dispatch columnist Thomas Suddes recently opined, “the next PUCO appointee will be someone who suits Mike DeWine. And given the governor’s whiplash-fast signing of HB 6, his PUCO pick won’t be someone who rocks the boat.”

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Tyler Buchanan
Tyler Buchanan

Tyler Buchanan is an award-winning journalist who has covered Ohio politics and government for the past decade. A Bellevue native and graduate of Bowling Green State University, he most recently spent 6 1/2 years as a reporter and editor of The Athens Messenger and Vinton-Jackson Courier newspapers. He is a member of the BG News Alumni Society Board and was a 2019 fellow in the Kiplinger Program in Public Affairs Journalism.