Chair Of Ohio PUC Submits Resignation, Follows Disclosure By FirstEnergy Of Consulting Contract Termination Payment To Entity Associated Unnamed Individual Who Was Later Appointed As State Regulator

Randazzo Says Electric Security Plan Statute Should Be Eliminated, Default Service Should Be Set Via "Proper" Competitive Bidding Process

November 20, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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Sam Randazzo has submitted his resignation as chair of the Public Utilities Commission of Ohio

"Regardless of disclosures of prior business relationships to you and your team prior to my PUCO Nominating Council interview (January 31, 2019), the impression left by an FBI raid on our home, the statement included in FirstEnergy Corp.’s filing with the Securities and Exchange Commission yesterday and the accompanying publicity will, right or wrong, fuel suspicions about and controversy over decisions I may render in my current capacity. In present times, when you, good sir, are valiantly battling to save Ohioans from the surging attack of COVID-19, there is no room or time for me to be a distraction. Accordingly, I hereby resign from my position as Chair effective immediately," Randazzo wrote in a resignation letter

Randazzo's resignation comes a day after FirstEnergy made the following disclosure in a 10-Q, in which the company said that certain former members of senior management, "did not reasonably ensure that relevant information was communicated within our organization and not withheld from our independent directors, our Audit Committee, and our independent auditor."

Specifically, FirstEnergy said in the 10-Q that, "Among the matters considered with respect to the determination by the committee of independent members of the Board of Directors that certain former members of senior management violated certain FirstEnergy policies and its code of conduct related to a payment of approximately $4 million made in early 2019 in connection with the termination of a purported consulting agreement, as amended, which had been in place since 2013. The counterparty to such agreement was an entity associated with an individual who subsequently was appointed to a full-time role as an Ohio government official directly involved in regulating the Ohio Companies, including with respect to distribution rates. At this time, it has not been determined if the payments were for the purposes represented within the consulting agreement."

Randazzo further wrote in his resignation letter to the governor that, "Since being appointed by you, much has been accomplished inside the PUCO to shed a dysfunctional Chair-centric operating system and to transparently render PUCO decisions based on the law, good engineering, good accounting and, of course, the public interest. The worst out-of-market compensation abuses of the Strickland Administration’s electric security plan (ESP) statute, all of which were imposed on customers well prior to my arrival, have been mitigated or cut short where possible. The next step is, in my view, elimination of the ESP statute itself and focusing on the use of a proper competitive bidding process to set the generation supply price for retail electric customers not served by a competitive supplier. Ohio’s pro-competitive legal framework, which I greatly helped to get incorporated into Ohio law, is working for customers. The elimination of the too-utility-friendly ESP statute will improve outcomes for customers and fairly compensate Ohio’s electric distribution utilities while, hopefully, reducing the number, size and scope of riders that transfer utility business and financial risk to captive customers with little or no recognition in the specification of a just and reasonable return. And, in this regard, the legislation currently being advanced by Representative Romanchuk is a fine vehicle to rescind the nuclear bailout, the OVEC bailout, rescind the unbalanced version of decoupling given to FirstEnergy Ohio’s operating companies (despite the concerns we raised), put the ESP statute out of commission and allow Ohio’s electric customers to enjoy an even greater electric bill reduction (in excess of $300,000,000) that is scheduled to take place through current law on January 1, 2021."

"Among other things, the PUCO and Federal Energy Advocate have taken on the runaway electric transmission service rate increases by proactive intervention and advocacy at the Federal Energy Regulatory Commission, a federal agency that has exclusive jurisdiction in this area and seems eager to give transmission utilities money for nothing. Prior to my arrival, this important work was not getting much if any attention and the customer impacts of federal decisions on the price and availability of energy in Ohio were not getting their deserved attention," Randazzo wrote

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