The defense contends that the funds were actually meant for members of IEU–Ohio — not for Randazzo as a bribe.
Testimony by Ebony Yeboah-Amankwah, an attorney and onetime chief ethics officer for FirstEnergy, confirmed that FirstEnergy handled payments for IEU–Ohio “through a black-box settlement.”
That’s unusual. Standard legal practice calls for any funds held by lawyers for clients to be placed in secure accounts for the clients’ benefit, not disbursed to companies owned by their lawyers.
Testimony by Ohio attorney George Jonson, an expert in legal ethics, further established that basic requirements for a settlement include identification of the parties, the released claims, signatures, and other terms.
The $4.3 million payment made to Randazzo in early 2019 was ultimately disclosed in a Nov. 19, 2020, securities filing. Regulators didn’t order any investigation into the 2015 deal to drop IEU–Ohio’s opposition to a coal and nuclear bailout until December 2020.
Yeboah-Amankwah suggested that the payments to Randazzo’s company weren’t unusual enough to raise a red flag.
“If you thought there was something wrong, you wouldn’t have kept silent … You didn’t see any problem. Is that right?” asked Jones’ attorney, Carole Rendon.
“That’s correct,” said Yeboah-Amankwah, who testified under a grant of immunity.
FirstEnergy dismissed her and its chief legal officer Robert Reffner in November 2020, less than two weeks after it dismissed Jones, Dowling, and Dennis Chack, another former vice president, who testified on Feb. 24.
An “Ohio hole”
Other allegations claim Randazzo used his position as utilities commission chair in 2019 to get rid of a requirement that would have forced FirstEnergy to file a new rate case in 2024. The company’s last rate case had been in 2007, and it had relied on add-ons called riders to increase charges to utility customers without a full review of all costs and expenses.
Testimony by Eileen Mikkelsen, FirstEnergy’s former head of rates and regulatory affairs, confirmed the existence of an “Ohio hole.”
“Our expenses were lower than the revenue we were collecting,” she testified. “So, absent action between 2018 and 2024, all else equal, we would be subject to a rate reduction.”
Evidence in the state case includes texts discussing Randazzo’s action to remove the requirement for a new rate in November 2019. He resigned from the utilities commission one year later, following an early-morning search of his home by federal agents. The rate case requirement was later reinstated.
Last fall, the commission ordered rate decreases for FirstEnergy’s Toledo Edison and Ohio Edison customers, and an increase for its Cleveland Electric Illuminating Co. ratepayers that was millions less than the company wanted. The company plans to file another rate case this year.
Mikkelsen’s testimony also illustrated how interactions between Randazzo and FirstEnergy led to language in HB 6 that pegged the company’s revenues from customers to the level it collected in 2018, when expenses were unusually high. Jones once said the terms would have made the company “somewhat recession proof.”
FirstEnergy referred to the since-removed provision as “decoupling” — a term that generally refers to a true-up process in which utilities are assured of being able to cover their current expenses while promoting energy-efficiency measures. But such decoupling was irrelevant in the case of HB 6: The law effectively removed any additional efficiency requirements for the company.
Instead, Mikkelsen’s testimony suggested the law’s terms were meant to replace extra revenue the company had gotten as a result of the energy-efficiency standard through shared savings and lost distribution revenue. The purpose of lost distribution revenue is to make up for shortfalls when energy efficiency leads to lower electricity sales. And shared savings are a portion of ratepayers’ reduced costs, which Mikkelsen said was to incentivize utilities to promote energy efficiency.
When asked about FirstEnergy’s position on HB 6 gutting Ohio’s clean energy standards, Mikkelsen suggested that it helped the bill’s promoters cast it as something that wouldn’t raise rates.
But that explanation didn’t account for the benefits of either the energy-efficiency standard or the renewable-energy standard — or the economic and environmental harms caused by years of subsidies and blocked competition for aging power plants that can’t compete economically with renewables.
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Great Job Kathiann M. Kowalski & the Team @ Canary Media for sharing this story.
