FirstEnergy paid $4M to end a contract with an Ohio regulator, company says

FirstEnergy
FirstEnergy

Top executives at Akron-based FirstEnergy Corp. paid $4 million in early 2019 to end a consulting contract with someone who was subsequently appointed to be a full-time state regulator overseeing electricity distribution rates, according to a company filing with the Securities and Exchange Commission on Thursday.

The filing does not name who FirstEnergy Corp. paid.

The Public Utilities Commission of Ohio regulates utility companies, including FirstEnergy. Gov. Mike DeWine appointed attorney Sam Randazzo as PUCO chairman in February 2019 and the Ohio Senate confirmed that appointment in April 2019.

On Monday, the FBI executed a search warrant and seized boxes of material from the home owned by Randazzo. Randazzo could not be reached for comment.

ExploreFBI agents searched PUCO chairman's home, hauled off boxes of material

DeWine spokesman Dan Tierney declined to comment, saying in a written statement: “Our office did not have previous knowledge of this filing prior to media inquiries this evening. Because the excerpt does not provide the name of any individuals, it would be improper for us to comment at this time.”

On Tuesday, DeWine said he has no indication that Randazzo is under federal investigation or the target of an investigation.

ExploreWho is Sam Randazzo and what is the PUCO?

On his state ethics filing, Randazzo disclosed ownership of two consulting firms: Sustainability Funding Alliance of Ohio and IEU Administration Co.

Sustainability Funding Alliance of Ohio did work for FirstEnergy Solutions, according to federal bankruptcy filings. FirstEnergy Solutions, now called Energy Harbor, is an Akron-based company that owns two nuclear power plants in Ohio. It is a former subsidiary of FirstEnergy Corp.

The SEC filing discloses that FirstEnergy fired chief executive Chuck Jones and two other senior executives on Oct. 29 for violating company policies related to the $4 million payment.

The company said that the $4 million was “in connection with the termination of a purported consulting agreement” that had been in place since 2013. The counter party to the agreement was someone who was appointed as an Ohio government official directly involved in regulating Ohio companies, including with respect to distribution rates.

Miranda Leppla, lead energy counsel for the Ohio Environmental Council, said there is a very limited number of Ohio regulators who the FirstEnergy filing could be referring to.

“It’s critical that we have independent regulators in our state that are putting the best interest of Ohioans first, not the companies,” she said. “And this filing implies we have at least one regulator whose independence and dedication to protecting the interest of Ohioans is now seriously in question.”

Federal prosecutors in July arrested five men involved in House Bill 6, a new law that will deliver more than $1.3 billion in subsidies and other revenues to Akron-based FirstEnergy and its former subsidiary FirstEnergy Solutions, which emerged from bankruptcy this year under the name Energy Harbor.

Federal authorities allege that unnamed utility companies, identified by descriptions as FirstEnergy and FirstEnergy Solutions, funneled more than $60 million in bribes through dark money groups to position Republican Larry Householder to return as Ohio House speaker and then pass and defend House Bill 6.

Householder, lobbyist Neil Clark and former Ohio GOP chairman Matt Borges have pleaded not guilty to federal racketeering charges. Lobbyist Juan Cespedes and political strategist Jeff Longstreth pleaded guilty on Oct. 29.

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