Utility regulator targeted by FBI saw a whirlwind rise

COLUMBUS, Ohio (AP) — Sam Randazzo told Ohio state senators last year that he had been poised to retire at the end of 2018 when he was recruited to help the incoming administration of Republican Gov. Mike DeWine review looming big-picture energy and utility issues.

Within three weeks of DeWine taking office, Randazzo was named the state’s top utility regulator.

“Very humbling stuff!” Randazzo gushed during his April 2019 confirmation hearing.

How Randazzo went from retiring utility lawyer to chairman of the Public Utilities Commission of Ohio over such a short period is a matter of new attention.

Randazzo resigned his chairmanship Friday after a week that included an FBI search of his Columbus townhome and the revelation Thursday that FirstEnergy Corp., Ohio’s largest electric utility, had paid the firm of an Ohio regulator fitting Randazzo’s description more than $4 million early last year to end a six-year consulting contract.

Randazzo’s appointment to the commission was made amid a swirl of closely timed resignations, appointments and votes overshadowed by the DeWine transition and a nasty battle for control of the Ohio House speakership.

The man who won that fight, Republican Rep. Larry Householder, has since become the lead target of a $60 million federal bribery investigation with FirstEnergy at its center. Householder and four other men were arrested by FBI agents in July and were soon indicted on federal racketeering charges.

Householder pleaded not guilty and was quickly removed as speaker after his arrest. He was reelected Nov. 3 with write-in candidates as his only opponents.

The FBI has not said the Randazzo search is connected to the bribery investigation, but if he is the regulator described in FirstEnergy’s U.S. Securities and Exchange Commission filing — it is.

As PUCO chairman, Randazzo held immense sway over the fortunes of FirstEnergy and other investor-owned utilities. The position also made him chair of the Ohio Power Siting Board, which has approval power over new electric generating facilities, including wind and solar projects.

Randazzo’s five decades as a lawyer included representing industrial customers before the commission and lobbying against renewable energy. That’s why criticism was swift from environmental and consumer groups when he was nominated to the PUCO on Jan. 31, 2019.

But indications are the deal to make him chair had already been sealed.

Randazzo, 71, testified during a confirmation hearing before a state Senate committee that he was asked before DeWine and Lt. Gov. Jon Husted took office on Jan. 14, 2019, to forgo plans to retire to Naples, Florida, where he owns an expensive waterfront home, and to return to government at the utility commission, where he began his career in the 1970s as a technical staffer. Randazzo subsequently served as an assistant Ohio attorney general assigned to that office’s PUCO section.

He specified during the confirmation hearing that Husted and Laurel Dawson, DeWine’s chief of staff, were among those who helped recruit him.

Husted, when he was House speaker in 2007, appointed Randazzo to the Public Utilities Commission Nominating Council. The next year, during the legislative fight over Democratic Gov. Ted Strickland’s proposal to revisit electricity deregulation in the state and to require power companies to use more alternative and renewable energy sources, Husted and Randazzo were allies.

The Republican-led Senate had already agreed to much of Strickland’s plan when Husted threw a wrench in negotiations. He introduced a new version of the bill more amenable to a coalition of utilities led by FirstEnergy, which has been generous to Husted’s political campaigns over the years. Randazzo’s name appeared as the creator of the electronic document Husted distributed.

Randazzo, who formed and for years represented the nonprofit Industrial Energy Users-Ohio, later remarked that the Strickland energy plan’s requirement for power companies to generate 25% of their energy from renewable and alternative sources by 2025 was “equivalent to saying 20 percent of air travel must be by hot-air balloon.” A Husted compromise had set up a series of interim targets for utilities to meet on renewables.

Many whose work involves navigating the often-opaque language of energy law suspect Randazzo also had a role in formulating 2019 legislation that sought to bail out two FirstEnergy nuclear plants and is at the center of the bribery investigation.

A document submitted as part of a FirstEnergy subsidiary’s bankruptcy case indicated this year that a company Randazzo owned, Sustainability Funding Alliance of Ohio, was owed $43,000 as an unsecured creditor. In his resignation letter, Randazzo indicated he had disclosed all his prior business relationships to DeWine and his transition team before his nomination interview last January.

A coalition of environmental groups, including the Sierra Club and Audubon Society, wrote DeWine the day after Randazzo’s nomination that Randazzo had “worked earnestly to dismantle Ohio’s energy efficiency resource standard and renewable portfolio standard since 2012 via multiple pieces of legislation.”

But Randazzo had already been laying the groundwork for his new job. He left his law firm and withdrew from all his remaining cases before the utilities commission on Dec. 31, 2018. Three days after DeWine and Husted took office on Jan. 14, 2019, he submitted his application to the commission.

On Jan. 28, Randazzo resigned from the commission’s 12-member nominating council. Householder appointed Randazzo’s law firm colleague, Scott Elisar, to the vacancy. Elisar was subsequently hired as the PUCO’s legislative and policy director.

When the council announced its four finalists for the open commission seat three days later, Randazzo was the only nominee who received unanimous support.

Four days after that, DeWine announced he had selected Randazzo and intended to make him the commission’s chair. Asim Haque, commission chair at the time, had announced his resignation six hours earlier.

“Sam Randazzo has the knowledge and experience to lead the PUCO, with expertise in a wide range of utility-related issues,” DeWine said in a statement.

That April, Randazzo’s appointment sailed through the Ohio Senate confirmation process in two days.

Energy companies including FirstEnergy took an apparent interest in how the DeWine administration might remake the commission, donating well over $100,000 to his transition fund in the weeks after the 2018 election. Three of the four men accused alongside Householder in the government’s bribery probe — Matt Borges, Juan Cespedes and Jeffrey Longstreth — also gave to the fund, along with Randazzo, records show.

The Nominating Council was created in 1983 as a check and balance on the governor after a period of activism against skyrocketing rates and other perceived utility abuses under Republican Gov. James Rhodes’ commission culminated in a statewide ballot measure calling for the direct election of commissioners.

Eugene Krebs, a former state lawmaker who applied for the seat to which Randazzo was appointed, said now utility companies have co-opted that system, too.

“No reform can survive that long without eventually what you’re looking to reform figuring out to go ahead and subvert it,” he said. “And it happened. So it needs to be removed.”

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Gillispie reported from Cleveland.

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This story has been updated to correct the bribery investigation figure to $60 million, instead of $60 billion.