Ohioans deserve an end to PUCO shill game
Lawmakers created the PUCO Nominating Council for a reason, and understanding that reason helps to understand the current conflict-of-interest controversy surrounding PUCO nominee Sam Randazzo, a long-time former lobbyist and general counsel for Industrial Energy Users-Ohio.
Ohio Citizen Action actively opposes Mr. Randazzo joining the Commission on the grounds that:
- Lawmakers created the Nominating Council and designed its makeup specifically to ensure that various competing interests were represented on the Commission;
- Utility representation on the Nominating Council and the Commission is already secured; and
- Mr. Randazzo’s history indicates he would vote reliably in the utilities’ interest.
A timely update from an Ohio Citizen Action report originally released Feb. 12, 2007 Sandy Buchanan, Executive Director (1993-2013)
Updated January, 2019 by Rachael Belz, Executive Director (2013-Present)
History lends context
In 1911, Ohio began regulating telephone, electric, gas, and water companies through a three-person commission appointed by the governor with the advice and consent of the Senate. There was no Nominating Council.
By the 1970s, the Commission had stopped regulating. Governor Jim Rhodes, whose political base was the coal industry and electric utilities, appointed commissioners who were certain to approve whatever the electric utilities wanted.
For example, Ohio’s electric utilities wanted to go on a nuclear power plant construction spree. Rhodes’ Commission agreed and then allowed utilities to charge their customers for electricity that had not yet been produced, through the notorious “construction work in progress” charges.
This rubber-stamp regulation hit consumers hard. In 1981 alone, the cost of gas, electricity, and telephone for the typical Ohio family climbed 14.5%. The next year, 1982, it jumped 27.7%.
Ohio consumers did not take this lying down, and there were years of conflict:
- 1976: Consumer activists put three utilities measures on the Ohio ballot: to establish procedures for legislative hearings and approval of nuclear power plants safety features, to provide for representation of residential utility consumers before the Commission, and to limit the rates which may be charged to residential consumers for fixed amounts of gas and electricity. Proponents could not afford an effective ballot campaign, so the utilities’ “No” campaign crushed these proposals.
- 1978: Cincinnati Gas and Electric (now Duke Energy) canceled the Zimmer 2 nuclear power plant (Zimmer 1 was canceled in 1984).
- 1978: CEI (now FirstEnergy) and local banks threw the City of Cleveland into financial default to try to force the city to sell its municipal electric system to CEI.
- 1979: Clevelanders voted two-to-one to keep the city’s public power system after a mid-winter door-to-door campaign led by Citizen Action, United Auto Workers, community groups, and Mayor Dennis Kucinich.
- 1979: The Three Mile Island nuclear power plant in Harrisburg, Pennsylvania, suffered a partial core meltdown, the worst accident in US commercial nuclear power history. For the next 28 years, no utility would be licensed to build a new commercial US nuclear plant.
- 1980: Ohio Edison (now FirstEnergy) canceled the Erie 1 and 2 nuclear power plants near Sandusky.
- 1981: Toledo Edison (now FirstEnergy) canceled the Davis-Besse 2 and 3 nuclear power plants near Sandusky.
- 1982: Consumer activists put a measure on the statewide ballot requiring the direct election of commissioners. Again, utility money defeated the proposal.
Commonly, during ballot issue campaigns, legislators propose bills on the same topic. This confuses voters and enable opponents to argue, “There is no problem to solve. The legislature has already dealt with it.” It can also, however, be a way to extract progress out of a defeated ballot campaign.
So, for example, a byproduct of the defeated 1976 ballot issues was the legislated creation of the Ohio Consumers’ Counsel.
Similarly, a byproduct of the defeated 1982 ballot campaign for direct election of commissioners was the legislated creation of the PUCO Nominating Council and expansion of the Commission from three to five members.
In sum, the PUCO Nominating Council was created for an express purpose: to stop the conflicts of interest that can emerge when any governor has a free hand to appoint commissioners.
This is not just a Columbus insider “good government” issue. It is a statewide pocketbook issue. The 1983 creation of the Nominating Council, curbing “construction work in progress,” and other reforms by the incoming governor, Richard Celeste, made a big difference for Ohio families.
Gas, electricity and telephone utility
To serve its intended purpose, the new law required that the 12 member Nominating Council be broadly based, with members chosen as follows: one appointee each by the Ohio house speaker and the Ohio senate president, three appointees by the governor representing regulated utilities, the business community, and organized labor, and representatives of the Ohio Consumers’ Counsel Governing Board, Accountancy Board, State Board of Registration for Professional Engineers and Surveyors, Ohio State Bar Association, Ohio Municipal League, Ohio Department of Development, and Ohio Department of Aging.
So far, so good. Regulated utilities have one representative out of 12 on the panel, so they have a voice but can’t skew the outcome.
Of course, without a commitment to the spirit as well as the letter of the law, nothing is foolproof. Over time, the process has gone haywire.
In 2007, one utility representative became five
Had all concerned followed the spirit of the law, utilities would have been represented on the Nominating Council by one person. In 2007, that person was Marvin Resnick of American Electric Power, chosen by Governor Ted Strickland in the regulated utility category. Instead, other choices by the governor, house speaker, senate president, and Ohio Bar Association created a five-member utility bloc on the Council of that time:
- House Speaker Jon Husted chose Dan Helmick, lobbyist for Embarq and First Communications (FirstEnergy).
- Ohio Senate President Bill Harris chose Thomas Green, lobbyist for AT&T and Columbia Gas.
- Governor Ted Strickland chose as the representative of the business community Christie Angel, an AT&T lobbyist.
- Ohio State Bar Association President John Stith was an attorney for the Porter Wright law firm. He chose as his representative fellow Porter Wright attorney Dan Conway, who represented American Electric Power.
This trend has consistently overrepresented utility interests in Commission decisions, undermined public representation and must not continue.
Controversial Commissioners can do real damage for many years
Todd Snitchler, nominated by Governor Kasich and PUCO Chair from 2011-2014, was a climate change denier who adamantly and publicly opposed to renewable energy projects. It’s no surprise that renewable projects were stymied during his tenure, at the same time the Ohio legislature attempted numerous efforts to kill the state’s energy efficiency and renewable energy standards.
Columbus Dispatch, Jan 12, 2013
“The Public Utilities Commission of Ohio’s ruling this week against a solar-energy project may not have come as a surprise to anyone following Chairman Todd Snitchler’s Twitter account.
The former lawmaker from Uniontown, Ohio, frequently shares material critical of solar, wind and “green” energy, even re-tweeting a story called “Elites of West have cranked up myth of Global Warming” from Pravda, a Communist Party-connected newspaper in Russia, calling it “interesting.”
Among more than 1,000 tweets from the past year, Snitchler did not once share anything positive about renewable energy. Instead, he tweeted about how “clean-energy aid racks up losses” and “the Himalayas and nearby peaks have lost no ice in past 10 years, study shows”; shared the conservative website Drudge Report’s “complete list of green energy failures” and conservative political commentator Laura Ingraham’s “windbag & greeniac update”; and re-tweeted “electric cars pose environmental threat,” “after Sandy no one lined up for wind turbines” and that the “‘green’ religion is taking over from Christian religion.”
In 2016 the Ohio Senate rejected Governor Kasich’s nomination on the grounds of perceived “conflicts of interest”
In 2016, Howard Petricoff, a Columbus lawyer, was nominated by Governor Kasich to the PUCO. However, the Ohio Senate rejected Petricoff’s nomination, ironically in part, due to Mr. Randazzo’s opposition from within the Nominating Council, as outlined in Dave Anderson of the Energy and Policy Institute’s January 28 blog:
“Emails sent by Randazzo in 2016, when he was himself a member of the PUCO Nominating Council, show how he opposed two earlier candidates for the commission on the grounds that they would have to recuse themselves from cases due to possible conflicts of interest involving their former clients and law firms.
In the emails, Randazzo targeted then-PUCO candidate Howard Petricoff over Petricoff’s past work for wind farm developers, as well as tech companies like Amazon that are known for supporting renewable energy. Randazzo argued that Petricoff would have to “recuse himself from many cases” before the PUCO.
“… once you do that kind of stuff, you can’t then vote on the issues for the commission in cases in which he participated,” Randazzo later told Columbus Business First.
Randazzo could face similar recusal concerns as he seeks appointment to PUCO, given his long record of work for IEU-Ohio and other clients before the commission.”
And then the Senate, led by then Senate President Keith Faber and Senator Bill Seitz, did Randazzo’s bidding:
Statehouse News Bureau, December 1, 2016:
“Months of tension between the Senate and Gov. Kasich over his nomination of Columbus lawyer Howard Petricoff to the Public Utilities Commission of Ohio reached a tipping point when a committee voted to reject Petricoff.
The Senate is called to advise and consent on gubernatorial nominations. Usually these committee votes are just a formality and most appointments go through unscathed.
But Republican Senate President Keith Faber, of Celina, has said Petricoff would have too many conflicts of interest as a commissioner because of his time advocating for different energy groups.
Fellow Republican Senator Bill Seitz of Cincinnati echoed that sentiment during the committee meeting.
“There were concerns about the process by which this has come to us and there were concerns about the number of recusals that he would have to be engaged in by the important business of the Public Utilities Commission,” said Seitz.”
Two utility representatives already serve on the Commission, no need for a third
Former utility representatives already occupy two of the four remaining seats on the Commission:
- Governor Kasich appointed Lawrence Friedeman to the PUCO in 2017. He served as vice president of regulatory affairs for IGS Energy, an independent supplier of gas and electricity and formerly with Columbia Gas of Ohio.
- Kasich also appointed Daniel Conway to the PUCO in 2017. Prior to joining the PUCO, Conway represented public utilities, primarily electric, natural gas utilities and telecommunications companies in cases before the PUCO, in appeals to the Ohio Supreme Court and in actions in the federal courts. Throughout his career he also represented utility customers in PUCO proceedings, and advised industrial and commercial clients on energy and regulatory matters.
The Nominating Council announced finalists on January 31, 2019
- Dennis Deters (Republican), First District Court of Appeals judge, who garnered 7 of 11 affirmative Nominating Council votes.
- Gene Krebs (Republican), a former lawmaker and past chairman of the Ohio Consumers’ Counsel Governing Board, with 8 of 11 Nominating Council affirmative votes.
- Bryce McKenney (Republican), an attorney examiner and administrative law judge for the PUCO, with 6 of 11 Nominating Council votes.
- Sam Randazzo (Independent), a lobbyist and general counsel for Industrial Energy Users-Ohio, who was the only nominee to garner 11 of 11 affirmative votes.
- Shannon Jones was not in attendance, and is the 12th member of the PUCO Nominating Council that conducted the interviews.
Consumers and customers deserve a better choice than Mr. Randazzo
The Energy and Policy Institute January 28 blog also outlined some of the most important reasons why Mr. Randazzo’s nomination is so bad for Ohio consumers:
- As a lobbyist for the Industrial Energy Users of Ohio (IEU-Ohio), Randazzo helped to draft controversial legislation aimed at rolling back Ohio’s renewable energy and energy efficiency standards.
- He has represented individual IEU-Ohio member companies like Marathon Petroleum Company before the PUCO as they seek approval for so-called “reasonable arrangements” with utilities. These deals allow some industrial ratepayers to pay lower rates for energy, at the expense of residential consumers.
- Randazzo has also fought the development of wind power in Ohio as a lobbyist and attorney for Greenwich Neighbors United, an anti-wind group that refers to climate change as a “hoax” on its website.
There are better choices
Ohio need not end up with what utility shills like Sam Randazzo offer.
- Governor DeWine could choose one of the other recommended applicants now before him who do not have such conflicts.
- “Nothing in this section shall prevent the governor in the governor’s discretion from rejecting all of the nominees of the council and reconvening the council in order to select four additional nominees” (ORC 4901.021(F)).
- If Governor DeWine chooses one of the conflicted candidates, the Ohio Senate could block the appointment, just as they did with Petricoff. “Each appointment by the governor shall be subject to the advice and consent of the senate” (ORC 4901.021(F)). In this particular political climate and divisive legislature, that would be very unlikely to happen in Mr. Randazzo’s case.
- Governor DeWine has thirty days to decide.