The head of the commission that regulates Ohio utilities resigned in the wake of a widening federal bribery and racketeering scandal tied to subsidies for two struggling nuclear plants.
Sam Randazzo stepped down from the Public Utilities Commission of Ohio on Friday. It comes one day after the reactors’ ex-owner, FirstEnergy Corp., disclosed that former top executives made an improper payment in early 2019 for a consulting agreement tied to someone who was later appointed as an Ohio state regulator.
Federal authorities raided Randazzo’s home Nov. 16. He was a lawyer in the utility industry before becoming a regulator in April 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,” Randazzo said in his resignation letter.
FirstEnergy declined to comment. Last month, the company fired Chief Executive Officer Charles Jones and two other senior executives, saying they violated company policies.
The company’s shares fell as much as 6%.
Guggenheim Securities called FirstEnergy’s disclosure of the payment “a strong negative.” Bank of America downgraded the stock, saying more states could open investigations. Fitch Ratings cut the company to junk status.
Katie Bays, an analyst for FiscalNote Markets, said FirstEnergy’s close relationship to Randazzo may “further embroil” the company.
The scandal broke in July, when federal authorities arrested Ohio House Speaker Larry Householder and four political associates, accusing them of a racketeering conspiracy involving almost $61 million in bribes to secure a bailout for two nuclear plants owned by the former FirstEnergy unit, now named Energy Harbor Corp. Prosecutors said the money came from a corporation — identified in court papers only as “Company A” — in exchange for supporting the measure.
The company was widely believed to be FirstEnergy. At the time, FirstEnergy sought to distance itself from the corruption case, saying it had done nothing wrong and was cooperating with the investigation. Ohio’s Attorney General has since filed a civil lawsuit against FirstEnergy and Energy Harbor, accusing them of “corrupt activity” in connection with the bailout.
FirstEnergy said Thursday it had identified “material weakness” in its internal controls, but said that those didn’t result in a “material misstatement” of its annual or interim consolidated financial statements.
“We view these violations of company policies very seriously,” said company spokesperson Jennifer Young.