What is IEU-Ohio and how were UA and other members hurt by the FirstEnergy HB6 scandal?

When Ohio Attorney General Dave Yost announced the latest indictments in the FirstEnergy scandal, he highlighted an energy trade group whose members included the University of Akron and TimkenSteel.

Yost and his staff said Industrial Energy Users-Ohio lost “millions of dollars” because of the actions of Sam Randazzo, a Columbus attorney who represented the trade group while also secretly serving as a consultant for FirstEnergy.

Randazzo is accused of skimming money owed to IEU-Ohio and keeping it for himself, funneling some of the funds to a personal retirement account, according to an indictment filed this month against Randazzo and two former FirstEnergy executives.

IEU-Ohio is still around, though it is now called Ohio Energy Leadership Council (OELC) and continues to represent many large-scale energy users who want breaks in their utility rates.

“OELC is a victim,” Amily Imbrogno, the assistant interim general counsel for Ohio Energy Leadership Council, said in a recent email.

So, what is this trade group that is tied to the FirstEnergy scandal and how did it lose so much money without its prominent members knowing?

The answers to these questions can be found in the indictment filed this month in Summit County Common Pleas Court against Randazzo, the former chairman of the Public Utilities Commission of Ohio; former FirstEnergy CEO Charles “Chuck” Jones; and Michael Dowling, FirstEnergy’s ex-senior vice president of external affairs.

The three men are charged in a pay-to-play scandal that already landed ex-Ohio House Speaker Larry Householder in federal prison for 20 years.

More: Indictments raise concerns about future of FirstEnergy in Akron

All three men, who face numerous felony charges including engaging in a pattern of corrupt activity, theft, bribery, and money laundering, have pleaded not guilty. They are scheduled for pretrials on April 19 before Judge Susan Baker Ross.

What is IEU-Ohio?

IEU-Ohio is a nonprofit trade group made up of Ohio businesses that are seeking “reliable energy supplies at reasonable prices,” according to the website for the group, now known as Ohio Energy Leadership Council.

The group’s members together spend about $3 billion a year on energy, according to its website.

Cristine Boyd, a spokesperson for the University of Akron, said the university joined the group around 2011-2012 to “educate ourselves on ways to best manage our energy use and costs.”

UA, which continues to be a member of the trade group, spent about $10.2 million last year on energy, Boyd said.

Boyd referred other questions on IEU-Ohio and how it was impacted by the FirstEnergy scandal to the Attorney General’s Office.

Jennifer Beeman, a spokesperson for TimkenSteel, declined to comment on the FirstEnergy indictments.

Beeman said the company was a member of IEU-Ohio but wasn’t a FirstEnergy customer. She said the company’s industrial steelmaking plants are in Canton and receive power from American Electric Power (AEP).

IEU-Ohio’s other members included Abbott Nutrition in Columbus, Marathon Petroleum in Findlay, Aurora Plastics in Streetsboro, Babcock & Wilcox Co. in Copley, the Cleveland Cavaliers, Kent Elastomer Products in Mogadore, and 17 McDonald’s franchises with more than 125 restaurants, according to a 2015 list of members.

How was IEU-Ohio impacted by the FirstEnergy scandal?

Sam Randazzo started IEU-Ohio in 1992, pioneering a trade organization that others have since replicated.

Randazzo was the general counsel for IEU-Ohio and was in charge of the group’s books, according to the 50-page indictment against Randazzo and the two former FirstEnergy executives.

Randazzo also was a consultant for FirstEnergy from 2013 to 2019 and made millions lobbying state officials for the company. This included FirstEnergy paying Randazzo $4.3 million in January 2019, shortly before he was appointed to head the Public Utilities Commission of Ohio (PUCO).

IEU-Ohio didn’t know Randazzo was working for FirstEnergy for a decade when he was representing the trade group, according to the indictment.

Randazzo created two shell companies, Sustainability Funding Alliance of Ohio (SFA-Ohio) and IEU-Ohio Administration Company. The companies were owned by Randazzo, and the income they received went to him.

Randazzo had FirstEnergy send money that was supposed to go to IEU-Ohio to his shell companies. Before he sent the money to the trade group, he skimmed money off the top and never told them, according to the indictment.

Randazzo negotiated a “side deal” between FirstEnergy and IEU-Ohio for favorable rate terms. He arranged to funnel the settlement payments to his shell companies, investigators say.

Between 2016 and 2019, FirstEnergy paid nearly $13.2 million to the two shell companies. Randazzo gave about $7.8 million to IEU-Ohio and kept close to $5.4 million for himself, according to the indictment.

In another side deal with American Electric Power in 2015, Randazzo negotiated a nearly $9.9 million settlement for IEU-Ohio. Randazzo enrolled SFA-Ohio as an “anonymous member” of IEU-Ohio and took 12% of the settlement for himself, according to the indictment.

Randazzo never reimbursed IEU-Ohio for $1.2 million he stole from the AEP settlement in January 2016, leaving IEU-Ohio with “over a million-dollar loss,” according to the indictment.

Randazzo set up a Charles Schwab account in the name of IEU-Ohio, which he said was intended as a retirement account for him and his wife. He funded this account with funds he stole from IEU-Ohio, investigators say.

The unclear nature of side deals allowed Randazzo to operate in secret. Side deals, which are controversial, allow large industrial energy users to get rebates or cash payments that average Ohioans don’t receive.

“The lack of transparency enabled Mr. Randazzo to steal from his clients with little chance of being caught,” Deputy Attorney General Carol O’Brien said during a press conference to announce the indictments.

Several of the charges against Randazzo, including aggravated theft and grand theft, relate to his alleged thefts from IEU-Ohio.

However, the exact amount he is accused of stealing from IEU-Ohio is unclear in the indictment, which says he stole “millions of dollars” from the trade group.

Randazzo also is facing federal charges for accepting money from FirstEnergy to help the company in his role as a utility regulator. He has pleaded not guilty.

When did IEU-Ohio become OELC?

The name of IEU-Ohio was changed to Ohio Energy Leadership Council with the Ohio Secretary of State’s Office in March 2023.

Ohio Energy Leadership Council is now represented by Meyers, Roman, Friedberg & Lewis, a Cleveland law firm. Pease Bell CPAs in Cleveland handles the trade group’s accounting and back-office support, according to its website.

The trade group is made up of “energy-intensive manufacturing, industrial, information technology, and retail businesses.” The group’s members consume more than 4 billion kilowatt-hours in electricity in Ohio per year, which is equivalent to the electricity usage of nearly 400,000 residential homes, according to the website. 

Imbrogno, who is with the Cleveland law firm, said OELC approached and cooperated with law enforcement and “will continue to cooperate in their pursuit of justice.”

“Given that this is part of an ongoing law enforcement prosecution, OELC does not have any further comment at this time,” Imbrogno said.

Stephanie Warsmith can be reached at swarsmith@thebeaconjournal.com, 330-996-3705 and on Twitter: @swarsmithabj. The Columbus Dispatch contributed to this story. 

This article originally appeared on Akron Beacon Journal: IEU-Ohio lost 'millions' in FirstEnergy scandal. What is it?