The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
FirstEnergy’s former in-house lobbyist Justin Biltz took the stand Tuesday in a utility commission hearing about House Bill 6 — the bill at the heart of Ohio’s utility political bribery and corruption scandal.
His testimony filled in some of the details of what prompted the company to bribe former Public Utilities Commission of Ohio Chair Sam Randazzo.
“The Ohio hole”
Sometime before 2019, FirstEnergy realized it had a problem. As a regulated monopoly, the company set rates in hearings before the PUCO. But it was becoming clear that FirstEnergy wouldn’t be able to justify rates as high as it currently charged when it went back before regulators.
Biltz explained they had a special name for it.
“The Ohio hole,” Biltz described, “was the difference in revenues that were established from the company’s last base distribution case as compared to what the company could justify if it were to go in for another rate case in 2024 and the difference being that it would have been a lower amount.”
Concerns about that lower rate led Biltz and other FirstEnergy employees to start working on different strategies to fill in that hole.
“There was a broad kind of working group at the company who were coming up with these different options that could be put in front of Mr. Randazzo,” Biltz explained. “I don’t recall him arriving at any conclusion in any of those meetings, but rather, the information was presented and he had it.”
Biltz acknowledged FirstEnergy executives wanted to see Randazzo installed as PUCO chair, but said they simply saw him as a person with “subject matter expertise” who could “bring some stability to the agency.”
Biltz described at least three meetings between himself, FirstEnergy Vice President Michael Dowling, and Randazzo at Randazzo’s home in Columbus, his condo in Cuyahoga Falls, and a FirstEnergy office.
These meetings occurred around the time Randazzo was tapped to lead the PUCO but prior to his term officially beginning.
“Was it your understanding at the time,” Ohio Consumers’ Counsel attorney Thomas Brodbeck asked, “that it was okay for yourself and others at FirstEnergy to discuss business that would be before Mr. Randazzo as chairperson of the PUCO, with Mr. Randazzo, so long as those discussions occurred before he was seated as chief?”
“Yeah, that was my understanding,” Biltz said. “That as long as his term had not yet started, that the company’s lawyers were involved and seemed okay with it.”
But that wasn’t the last of communications between the company and Randazzo. Evidence in the case is littered with text messages between FirstEnergy executives describing interaction with Randazzo, and even a few with Randazzo himself. Biltz said he was unaware of those at the time.
Still, there was at least one apparent incident he knew about.
“Is it your understanding that Mr. Randazzo helped FirstEnergy draft House Bill 6?” Ohio Manufacturing Association attorney Kim Bojko asked.
“I can recall being on a conference call with Mr. Randazzo during the legislative drafting process, there were several other internal employees, discussing some of the language in House Bill 6,” Biltz said. “I think we were sharing different language approaches. I don’t recall exactly the outcome of that and whether you’d consider that helping FirstEnergy.”
Randazzo officially assumed his post as PUCO chairman on April 11, 2019. House Bill 6 was filed the very next day.
Biltz didn’t put a date on the conference call he described, but FirstEnergy’s deferred prosecution agreement describes Randazzo having a direct hand in the legislative efforts in June and July of 2019. The measure passed in late July.
The payments
On Jan. 30, 2019, an “urgent and confidential” request went out to the accounting team at FirstEnergy. Could they track down any payments to an organization called ‘Sustainability Funding Alliance’ — or something like that? The following day, the ask was expanded to include ‘McNees Wallace’ and ‘Randazzo.’
Sustainability Funding Alliance was a consulting firm controlled by Randazzo, and McNees Wallace was the law firm he worked for.
Gov. Mike DeWine tapped Randazzo to lead the PUCO on Feb. 4 that year.
Biltz explained the internal review started up in response to a reporter’s request. They’d found a connection to Sustainability Funding Alliance in bankruptcy proceedings for a subsidiary called FirstEnergy Solutions.
“In late January 2019, Mike Dowling had asked or informed me that this was a contract that was being managed out of the legal department,” Biltz said. “He wanted to know exactly how much had been paid to that entity over time, and by which entities those costs were being allocated to.”
The review found FirstEnergy had paid almost $20 million to Sustainability Funding Alliance since 2010, including “a 4.3 million lump sum that was paid in December 2018.”
Brodbeck emphasized the timeline — lump sum payment in December, and Randazzo’s appointment to the PUCO two months later in February.
“Do you know what that lump sum was for?” he asked Biltz.
Biltz insisted, “I was never involved in any discussions regarding that lump sum.”
Brodbeck pressed on, asking whether those dollars got passed along to consumers.
“I was not able to determine that,” he said. “I knew which entities they were allocated to, but whether they eventually made it into rates or riders, that was not something that I had been asked to look into and did not.”
As for whether the expenses were applied to Ohio utility companies, Biltz acknowledged that they had.
Brodbeck asked if the company had discussed concealing the records from the public or sharing them with the PUCO.
“Not to my knowledge,” Biltz said.
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