Taking heat for utility oversight

November 23, 2010-Indianapolis Star Editorial.Rolling heads at this point may repair some credibility damage, but it leaves unanswered a glaring question about the validity of Duke’s highly controversial and hugely expensive Edwardsport coal gasification plant.

The revolving-door scandal that forced the firing of its chairman would seem to call for a wholesale makeover of the Indiana Utility Regulatory Commission. That’s unlikely to happen without a change in how the powerful body is formed.

illustration by John Blair

Of the 12 applicants for the seat previously occupied by David Lott Hardy — the chairman who was fired by the governor — at least three have ties to regulated industries and five hail from the executive branch of state government.

Gov. Mitch Daniels, as the state’s chief executive, will appoint one of three finalists selected by a nominating committee.

In most states, that process is too close for comfort. Indiana is one of the few that do not choose utility regulators by general election or the vote of a legislative body.

The resulting Hoosier tradition has been one of mostly quiet cronyism, with commissioners and staff often coming from utility companies and often leaving for jobs in those industries.

The quiet was disturbed in the Hardy case by consumer watchdogs who pointed out that then-IURC general counsel Scott Storms had been negotiating for a job with Duke Energy while involved in a $2.9 billion Duke case before the commission.

At first, Hardy, the IURC and the State Ethics Commission cleared Storms of any wrongdoing. The outside critics persisted and were vindicated. Duke fired the newly hired Storms and Daniels fired Hardy (who is, by the way, a former lawyer for Duke’s predecessor company).

Rolling heads at this point may repair some credibility damage, but it leaves unanswered a glaring question about the validity of Duke’s highly controversial and hugely expensive Edwardsport coal gasification plant. Beyond that, the administration has acknowledged no issue in the fact that three of the four remaining IURC members have industry connections.

The reasoning commonly given for this coziness, not only with IURC but also with regulators in such areas as environment and insurance, is know-how. But know-how is attainable outside the industries, as has been shown. More important to governance is knowing how — how consumers are affected.

Throwing the selection process out to elections or legislative review, both of which have been proposed, would not necessarily be a panacea. Corporate dollars would influence voters; lobbying and partisanship would have their usual effect on lawmakers. But at least the public and/or its elected representatives would have some say over whom to entrust with, among other public business, $14 billion a year in utility rates. With all due respect to the governor, it’s time to invite the payers of the heat bill in from the cold.

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