Former DeWine aide warned governor about utility regulator before the FBI raided his home

Gas lobbyist turned regulator had “opaque and undisclosed” FirstEnergy ties, the former aide said

By: - April 4, 2022 4:00 am

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

More than two years before FirstEnergy Corp. admitted to paying Ohio’s top utility regulator a $4.3 million bribe, Mike DeWine’s former campaign treasurer warned senior aides to the new governor about the eventual nominee’s “opaque and undisclosed” financial ties to the company.

The warning came in a 198-page dossier alleging Sam Randazzo — a lawyer and lobbyist who represented gas companies and industrial scale electricity buyers — uses businesses registered in his name to “funnel” money from FirstEnergy to buy real estate.

Indeed, between January 2013 and May 2015, Randazzo and his companies purchased eight properties worth nearly $4.1 million, according to the dossier and an independent review of property records. They include six units in Columbus, one in Cuyahoga Falls, and two in Naples, Florida.

DeWine’s chief of staff, Laurel Dawson, received the packet Jan. 28, 2019. The nominating council of the Public Utilities Commission of Ohio, chaired by a former FirstEnergy lobbyist, had included Randazzo among four nominees given to the governor. DeWine got the final choice.

J.B. Hadden — a Columbus lawyer who has represented American Electric Power; a board member of two nonprofits that control millions of AEP’s political spending; and DeWine’s campaign treasurer from 2009 to 2015 — delivered the dossier, according to a DeWine spokesman. Hadden said in a text message he thought it was important to let DeWine know what people were saying about Randazzo.

“As a longtime supporter of Gov. DeWine, I’ve always been honest with him when I think he needs to know something to aid in a decision,” Hadden said.

At the time, Randazzo was winding down a storied career as a legal and political bulwark against renewable energy in Ohio. As a lobbyist and public official, he waged a years-long quest to kill two state programs: one requiring electric companies to sell at least 12.5% of their mix from renewable sources by 2025, and another requiring them to reduce their customers’ energy use by 22% by that same year.

As both a lawyer and a lobbyist, Randazzo represented huge energy consumers like TimkenSteel and Marathon Petroleum to secure better electricity deals from Ohio utilities. He also lobbied at the statehouse for the Ohio Gas Company, a utility serving 50,000 in Northwest Ohio, and Vectren Energy, which sells and delivers gas to 4 million homes in six states.

“When I spoke with him years ago, he was extremely anti-renewables and extremely anti-efficiency, to the point of being irrational,” said Leah Stokes, a political science professor at UC Santa Barbara, who wrote a book spotlighting the successful, fossil-fuel backed, 12-year campaign to roll back clean energy in Ohio.

“With hindsight, it seems there were rational, monetary reasons for him to take those positions.”

On Feb. 4, 2019, DeWine named Randazzo as the PUCO’s chairman.

Less than two years into Randazzo’s five-year term, FBI agents raided his German Village condo and seized boxes of material. He resigned days later, stating that the events could “right or wrong, fuel suspicions about and controversy over decisions I may render in my current capacity.”

The next summer, FirstEnergy entered into an agreement with the U.S. Department of Justice, admitting it paid Randazzo $22 million between 2010 and 2019 for favorable PUCO rulings and other favors. That includes $4.3 million, paid just before DeWine appointed him.

Randazzo issued a statement after FirstEnergy’s admission denying wrongdoing, though acknowledging the existence of a consulting agreement with the company. He has not been charged with a crime and has refrained from public comment.

He and two lawyers representing him in related civil cases did not respond to repeated interview requests or questions.

In its deferred prosecution agreement, FirstEnergy described multiple favors from Randazzo as PUCO chairman to the company. They include helping lawmakers write House Bill 6, which included a bailout for two nuclear plants and another provision its CEO said would “somewhat recession-proof” the company. Federal prosecutors estimated the bill was worth about $1.3 billion to FirstEnergy.

FirstEnergy, in its agreement, also credited Randazzo with waiving a PUCO requirement that would have forced the company to open its books to the commissioners — a point of major financial concern from CEO Chuck Jones.

This account of Randazzo’s ascent is gleaned from 20 interviews with people familiar with Randazzo’s work, PUCO filings, regulatory audits, media reports, and criminal and civil court records related to the scandal.

Randazzo’s final appointment wound through DeWine, whose 2018 campaign received $1 million from FirstEnergy via its PACs, executives, and lobbyists, according to the Dayton Daily News. After receiving both the dossier and another letter from environmentalists warning of Randazzo’s “extreme bias” against renewable energy, DeWine appointed him regardless.

Fighting windmills

Then-PUCO Chair Sam Randazzo testifies as an interested party regarding House Bill 6 on May 7, 2019. Source: Ohio Channel.

In July of 2008, Ohio Gov. Ted Strickland signed into law Senate Bill 221, which required Ohio’s electric utilities to generate at least 25% of their energy from “alternative energy resources” by 2025. Half was to come from renewables, and half from new technology that can increase output without burping more carbon into the air. The bill also created an energy efficiency standard, requiring utilities to reduce their customers’ electricity demand by 22% by 2025.

Randazzo would spend the next 11 years as a lobbyist and public official seeking to freeze or roll back the programs, which finally died via HB 6. Ohio is now one of just 17 states without an energy efficiency program, according to the National Conference of State Legislatures.

Alongside the other efforts, in 2014, Randazzo lobbied on the state budget, which contained language that tripled the required distance between a windmill and a property line, effectively choking off the wind energy industry in Ohio.

At the time, Randazzo worked as general counsel to the Industrial Energy Users of Ohio (IEU). Its membership has included big energy buyers like universities, TimkenSteel, Marathon Petroleum, Energizer Manufacturing, and others. Randazzo’s job was essentially to use the aggregated buying power of IEU’s members to secure them cheaper electricity costs via cases before the PUCO.

According to FirstEnergy’s admission to federal prosecutors, Randazzo entered a “consulting agreement” with the company in 2013. While lobbyists and lawyers who appear in court for clients must disclose who they’re representing, consultants are spared such scrutiny. By 2015, FirstEnergy said it beefed up its consulting contract with Randazzo “in exchange” for IEU withdrawing its opposition to a PUCO case that allowed FirstEnergy to pass on hundreds of millions in charges to its customers.

On May 28 of that year, Randazzo wrote a letter withdrawing IEU’s opposition to a new electricity sales plan from FirstEnergy under the PUCO’s review. He said IEU wouldn’t call any witnesses and withdrew prior testimony from its members against the proposal.

Similarly, in 2008, Duke Energy customers sued the utility for allegedly providing for such side deals. A deposition from a Duke official, referenced in the dossier, notes a $100,000 payment to IEU amid the arrangement. In 2018, a similar settlement brokered with American Electric Power granted IEU a similar $8 million settlement, according to Columbus Business First.

It’s unclear to what extent IEU or its members were aware that Randazzo, IEU’s general counsel, was also receiving money from FirstEnergy, a sometimes-adversarial party. Matthew Pritchard, IEU’s current general counsel, declined to comment.

Electric costs are a zero-sum game in this context, according to Neil Waggoner, an environmental activist with the Sierra Club’s Beyond Coal campaign. Better deals for big customers mean bigger costs for residential ones.

“[Randazzo] had all this influence because he knew the stuff — he was active, and around this for a long time,” Waggoner said. “It was always known that he was hostile to clean energy.”

On some occasions, Randazzo literally shared the stage with the industry. He appeared on a panel: “Powering the Future of Ohio’s Economy,” in 2018, alongside executives from Dynegy Inc., FirstEnergy, AEP, Duke Energy, and AES Ohio.

After Randazzo ascended to the PUCO chairmanship, he helped write HB 6 — legislation FirstEnergy admitted paying $60 million into as a bribe to a nonprofit controlled by House Speaker Larry Householder. Householder has pleaded not guilty to a charge of racketeering and awaits trial next year.

Despite its name (the “Ohio Clean Air Program”), the bill also expands and extends preexisting subsidies to two coal-fired power plants owned by utility companies including American Electric Power, Duke Energy, and AES Ohio. Ohioans have paid $211 million to the plant’s owners so far. The total tab is projected to run at least $700 million by 2030.

An obvious hire

On Dec. 18, 2018, Jones, FirstEnergy’s CEO, and fellow executive Mike Dowling met Randazzo at his condo in Columbus. According to FirstEnergy’s agreement with the DOJ, the three discussed remaining payments under Randazzo’s consulting contract and the newly opened seat at the PUCO.

That evening, Jones and Dowling dined with DeWine and Lt. Gov. Jon Husted, as was first reported by the Dayton Daily News. On. Jan. 2, 2019, a FirstEnergy subsidiary wired $4.3 million into a bank account controlled by Randazzo, according to the company.

PUCO’s nominating council, a 12-member panel, reviewed resumés and interviewed candidates for the seat. Several council members said in interviews Randazzo wasn’t a surprising name to make the short list. He had a reputation as a brilliant lawyer and one of the savvier minds in energy policy after decades of practice.

Stuart Young sat on the council representing the Ohio Consumers’ Counsel, which represents ratepayers in PUCO cases. He said it was obvious after the council vote that Randazzo would be selected.

“There was really no doubt as to what was going to happen,” he said.

However, allegations of impropriety fester around the council. The council chairman, Michael Koren, previously worked as a lobbyist for FirstEnergy. Co-councilors included Virginia “Gini” Ragan, one of the biggest donors in Ohio Republican politics, and Mark Totman, an official with the International Union of Operating Engineers. The IUOE’s political arm donated $495,000 to a nonprofit organization that pleaded guilty to a racketeering charge in connection with the scandal.

Totman, who registered to lobby on HB 6, did not respond to multiple inquiries. He has since resigned from the PUCO nominating council.

Hadden delivered the dossier on Randazzo to DeWine’s staff Jan. 28, 2019.

The Associated Press first reported on the dossier without identifying the author. A DeWine spokesman confirmed Hadden delivered it to the governor’s chief of staff and other administration staff. The governor was not present. AEP spokesman Scott Blake said the dossier wasn’t created at the behest of the company.

Among other records, the dossier contained documents from FirstEnergy’s bankruptcy filings that listed companies owned by Randazzo listed as creditors. The same day it was delivered, the Energy and Policy Institute’s Dave Anderson, a watchdog researcher who documents political influence of the fossil fuel and utility industries, published the link between Randazzo’s companies and FirstEnergy.

The PUCO sent DeWine its short list of candidates Jan. 31 of that year with Randazzo included.

“That bullet grazed the temple,” Dowling texted Jones, according to FirstEnergy’s filing.

“Forced [State Official 1]/[State Official 2] to perform battlefield triage. It’s a rough game,” Jones responded.

It’s unclear what ‘bullet’ Dowling was referring to. The two state officials’ identities have not been publicly revealed. Both DeWine and Husted, responding to reporters’ questions, said they don’t believe they’re the people referenced in the filing.

One member of the nominating council, who requested anonymity, said no one from the DeWine administration called to ask for their vote. However, the member alleged that Koren, who lobbied on HB 6 for FirstEnergy, “let it be known” that Randazzo was the administration’s preference.

“It was known, but Koren made a point that [Randazzo] was the one the administration wanted,” the member said.

Koren did not respond to multiple phone calls. He resigned from the nominating council earlier this year.

Five environmental advocacy organizations, in a letter to DeWine sent Feb. 1, told him about Randazzo’s history working “earnestly” to dismantle Ohio’s energy efficiency and renewable portfolio standards and his lobbying against windmills that enacted a “de facto moratorium” on construction.

“[Randazzo] in particular stands out because he carries with him extreme bias demonstrated through a storied history of anti-clean energy efforts on multiple fronts and over many years,” the letter states.

DeWine appointed Randazzo as PUCO chairman on Feb. 4, 2019.  Texts cited in FirstEnergy’s deferred prosecution agreement show celebration within the inner circle.

“Congratulations!” Jones texted Randazzo.

“Thanks, [Jones] — the last four days have been tuff … Thanks goes to some great good friends,” Randazzo responded.

The DeWine administration has deep ties to FirstEnergy. DeWine’s former legislative director, Dan McCarthy, was formerly a lobbyist for FirstEnergy and established a dark money group that would be used as a pass-through for $15 million from the company to pass HB 6. Dawson’s husband lobbied for FirstEnergy in 2013 and reportedly consulted for the company. DeWine’s 2018 campaign manager, Josh Rubin, lobbied for FirstEnergy, though not on HB 6, per state records.

Dan Tierney, a DeWine spokesman, said the information within the dossier was largely known to the governor and within Columbus political circles. He said it was widely known at the time that Randazzo had extensive ties with the utility industry and FirstEnergy. The governor, Tierney said, wanted someone with knowledge of the industry. He said the DeWine administration was “generally aware” of a contract termination payment being made before Randazzo started. More details came to light, he said, toward the fall of 2020.

He said no one in the DeWine-Husted administration has been subpoenaed or interviewed by law enforcement, and that attempts to tie Randazzo to the governor are just political swipes.

“If you look at the people involved in the investigation, there’s no there there,” he said. “…The idea that this dossier is the first time anybody had ever made such an association is completely off base and quite frankly, bunk. No truth to that whatsoever.”

Randazzo’s commission

Wind turbines rise up above farmland. (Photo by Scott Olson/Getty Images)

From within the PUCO, Randazzo and his commissioners made several decisions worth millions to FirstEnergy and often over the objections of legal groups representing residential ratepayers.

For instance, the Ohio Supreme Court halted a prior PUCO ruling that predated Randazzo, allowing FirstEnergy to collect $460 million from customers as a “rider.” The court lacked, however, the ability to demand refunds. When the PUCO initially allowed the charge, it required FirstEnergy agree to audits of the fund and a rate review in 2024 — its first since 2007. Given the Supreme Court blocked FirstEnergy from continuing to collect on the rider, Randazzo eliminated the rate review. Rate reviews require utilities to undergo thorough regulatory scrutiny of their earnings.

Jones, according to FirstEnergy, texted Randazzo to thank him for the ruling, including a picture showing an uptick in FirstEnergy’s stock price.

Also according to FirstEnergy, Randazzo helped write HB 6. Dowling told Jones that Randazzo reviewed “decoupling” language, which would essentially guarantee the company’s revenues at 2018 levels — an unusually profitable year.

Texts previously obtained by this outlet show Dowling texting Jones that Randazzo helped secure language in the state budget that more generously calculates how large a profit margin FirstEnergy’s three Ohio utilities can lawfully charge.

House Bill 6 was signed into law July 23, 2019. Jones, FirstEnergy’s CEO, sent Randazzo a digitally altered image that shows Randazzo, Dowling, FirstEnergy’s Director of State Affairs Ty Pine, and “Company C executive” all imposed over Mount Rushmore.

‘HB 6 F–K ANYBODY WHO AINT US,” the photo caption reads, as described in FirstEnergy’s filing.

In May 2020, about two months before the first arrests in the HB 6 case, Randazzo ruled that a landmark, offshore wind project on Lake Erie that would generate power for about 7,000 homes could only move forward if its blades were turned off every night for eight months per year.

Supporters of the project likened the ruling to a poison pill. Randazzo said he did so to protect birds and bats that could get caught in the blades.

Fire sale

Householder and four political allies were arrested July 21, 2020. The PUCO, which wields powerful investigative tools like subpoenas and audit demands, didn’t open an investigation into the matter until mid-September.

As lawmakers considered a repeal of HB 6, they brought in Randazzo to testify as the PUCO chairman. House Democrats, however, seized the opportunity to question Randazzo about any FirstEnergy ties. Rep. Casey Weinstein, D-Hudson, asked whether Randazzo or his companies had ever “had contracts or done business” with FirstEnergy. Randazzo declined to disclose any previous clients.

“I will tell you, however, that I have never represented as a lawyer or as a lobbyist any electric utility regulated by the PUCO or [federal energy regulators],” he said. “The same is true for any affiliate.”

Rep. Dave Leland, D-Columbus, needled Randazzo about what the PUCO would do if its investigation determined FirstEnergy did what it was accused of. Randazzo didn’t directly answer the question.

“Discussions like this can have implications for publicly traded companies,” he said.

In October of that year, Randazzo purchased a home for $600,000 — in addition to his $4 million in real estate purchases between 2013 and 2015. On Nov. 17, 2020, the FBI raided Randazzo’s condo, the same day the company first disclosed to shareholders its $4.3 million payment to Randazzo.

After the raid, Randazzo began selling off $4.8 million in property in Ohio and Florida, not to mention a transfer of one Columbus home to his son for $0 as well.

Attorney General Dave Yost filed a lawsuit that blocked Energy Harbor, a spinoff from FirstEnergy that assumed ownership of the plants after the bankruptcy, from collecting from customers to bailout the plants. In court motions, Yost cited the property sales and transfers as evidence of an intent to defraud the state out of potential damages, and later won an order blocking Randazzo from further transfers.

Yost’s filings also reveal Randazzo owned a 2015 Porsche Macan, a pink Porsche 911 convertible, and a 1994 Mazda Miata.

After FirstEnergy directly implicated Randazzo in its deferred prosecution agreement, Randazzo issued a statement to the Cincinnati Enquirer denying wrongdoing. It is believed to be his last public statement on the matter.

“At no time prior to or after my appointment to the PUCO was I asked or did I agree to exercise my authority as a public official or to perform any official action on my capacity as Chair to further FirstEnergy’s legislative, regulatory or other interests,” Randazzo said.

“All payments made under the consulting agreement with FirstEnergy, including those relating to its termination, were in accordance with the terms of that agreement, and following review and approval by senior executives at FirstEnergy.”

An earlier version of this report misidentified the International Union of Operating Engineers. 

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Jake Zuckerman
Jake Zuckerman

Jake Zuckerman is a statehouse reporter. He spent three years chronicling the West Virginia Legislature for The Charleston Gazette-Mail after covering cops and courts for The Northern Virginia Daily.

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