For Corrupt Lobbyists or Public Utility Commissions, Sunshine is the Best Remedy

Ohio’s $60 million bribery scandal is what ethics expert Kedric Payne calls “complex corruption.’’ It includes a scheme that installed a utility-friendly House Speaker, passed a law that stuck customers with the cost of bailing out uncompetitive nuclear power plants, and then killed an effort to overturn that self-dealing law.

And the entire three-pronged scheme was bankrolled with dark money from FirstEnergy – the utility that benefitted.

“Complex corruption requires complex reform,’’ said Payne, General Counsel and Senior Director of Ethics for the Campaign Legal Center. “There is not one law that you can change that would address all of the different issues that occurred as a result of this most recent scandal.’’ Such layered, intentional corruption requires a layered, intentional response, he said.

Payne offered advice on what should be included in that response as part of the second session in Blueprint for Democracy, a Common Cause Ohio-sponsored series aimed at updating Ohio’s ethics and democracy laws.

Common Cause Ohio Executive Director Catherine Turcer moderated the discussion that also included a presentation on how to reform the Public Utilities Commission of Ohio (PUCO), the state panel that helps decide who pays how much for things such as electricity, gas and phone service.

Turcer reminded the audience that since the first Blueprint presentation, PUCO chairman Sam Randazzo had abruptly resigned. The resignation came soon after the FBI raided his condo and the public learned that a person meeting Randazzo’s description received $4 million from FirstEnergy to terminate a consulting

Turcer also pointed out that Ohio’s ethics law was enacted way back in 1973 and has not been updated since the 1990s.

“We are way overdue for an update,’’ she said, especially now that Ohio is embroiled in an on-going federal probe that resulted in indictments against former House Speaker Larry Householder and four others, two guilty pleas and Randazzo’s resignation.

Among the reforms Payne suggested: Require grassroots lobbyists to register.

Under Ohio’s current law, lobbyist registration only is required for those who have “direct contacts’’ intended to influence a legislator. It does not include the kind of “indirect contacts’’ that were used to influence the nuclear bailout.

With help from the dark money group Generation Now, TV, radio and digital ads urged hundreds of people to support the bailout and the legislators believed to support it, too.

“So if you meet with a legislator and you are trying to influence legislation, and you have a few meetings one on one between the legislator and yourself, that may trigger registration,’” Payne explained. “But if you have 200, 300, 400 people do the exact same thing, to communicate with that same legislator and express the same content that you have, that would not trigger lobby registration. Which leaves a big gap. This is the ‘grassroots lobby’ I’m referring to.”

Reporting requirements in Ohio are scant. Lobbyists are required to report just three times a year – and disclose only lobbying expenditures. Payne suggested more frequent disclosures and requiring lobbyists to disclose their political giving, what they spent it on – and provide the original source. Many of the pro-bailout ads identified Generation Now as the entity paying for the ads but did not disclose that FirstEnergy was Generation Now’s primary funder.

“Clearly, we know contributions are disclosed under the campaign finance laws, but it’s been seen to be effective to also have those contributions under the lobbying reports so that everything can be seen,” Payne said. “You can see the timing, you can see the push that the lobbyist was engaged in with the amount of the contribution, the time of the contribution. All of that gives a clean picture of what may be potential conflicts of interest.”

Shining a light on dark money was also among the reforms proposed by OSU’s Ned Hill, a Professor of Economic Development at the John Glenn College of Public Affairs.

Hill insisted that Ohio’s intentionally complex method of setting utility rates, the secrecy that surrounds the process and what he called “obnoxious’’ amounts of utility donations conspire to tilt ratemaking in favor of utilities.

“The amount of cash that has been flying around Capitol Square is just jaw-dropping and obnoxious,’’ Professor Hill said. “These IOUs (Investor-Owned Utilities) use political power to generate market power…. If corporations can put in unaccountable amounts of money to influence political discourse and not be held accountable for it, then the free marketplace of ideas is thoroughly perverted.’’

“Sunshine,” Hill said, “is the single most important thing we can do when it comes to this.’’

In many rate cases, the PUCO signs off an agreement that calls for some customers to get a discounted rate – but the agreement is so technical that it’s hard for the public to know that the discount is not given by the utility. Instead, the cost is spread around to the rate base.

Any discounts “should be made perfectly public,’’ Hill said, and Ohio must end the practice of hiding the details of rate-making by letting businesses insist they constitute trade secrets.

The same passion to make utility regulation intentionally confusing often extends to lawmaking, Hill said. Legislation should be in plain English. Yet House Bill 6 – the nuclear bailout – “was written in a way to make it impenetrable and confusing.” Hill takes a stab at making it simple: “We have a nuclear subsidy that is being
demanded not because the nuclear plant can’t make electrons efficiently. In fact, the regional grid says it is efficient. The reason it can’t make money is the debt that was incurred by the bad business mistakes of FirstEnergy since the year 2000.’’

Ohio is now in the market for a new PUCO member. Hill opposes electing them, insisting that dark money from utilities will find a way to influence the process. But he said new members must not only understand the laws and policies surrounding utility regulation, they also must be conflict free. He referenced a recent newspaper report showing that Randazzo had friends in high places who helped his steady ascent from utility lawyer to utility regulator.

The report identified former House Speaker Jon Husted as one of Randazzo’s benefactors. Husted is now Ohio’s lieutenant governor, and Gov. Mike DeWine appointed Randazzo to the post at Husted’s urging. “Maybe we should hire the FBI to vet all candidates for those positions,” Hill said. “They seem to have done a pretty good job of figuring out what is going on.”