Duke deal still tainted by coziness

February 28, 2011-An Editorial Opinion in the Indianapolis Star.

While federal, state and Marion County authorities look into the chummy relationships between Duke Energy executives and state regulators, the taxpaying and rate-paying public may already have seen enough.

Last week came the revelation, via John Russell’s account in The Star, that the frequent indulgence in breezy personal contacts between the two camps reached all the way to the top at Duke.

E-mails obtained by this newspaper show that Duke chairman James Rogers met privately at least four times with David Lott Hardy, who was chairman of the Indiana Utility Regulatory Commission when the IURC was confronting huge cost overruns at Duke’s coal gasification plant at Edwardsport.

Hardy later was fired from his post by the governor for his coziness with Duke, particularly Duke vice president James Turner, who set up a breakfast with Hardy and Rogers. Turner eventually resigned in the Hardy fallout.

Public domain illustration credit: John Blair

Amid all these eruptions, many observers — including ethicists, consumer advocates and thousands of customers who stand to get the bill for the $3 billion Edwardsport plant — question how any private contact between the petitioner and the state’s utilities watchdog agency could be tolerated.

They appear to have state law on their side. It states that utilities with cases before the IURC “may not communicate, directly or indirectly, regarding any issue in a proceeding while the proceeding is pending” without inviting all interested parties — whether they can afford the lobster eggs Benedict at Capital Grille or not.

Duke has fallen back on exceptions in the law that allow limited discourse for informational purposes. It strains the imagination to picture a breakfast conversation that narrow while a $1 billion cost overrun is looming.

The various investigators must decide whether the so-called ex parte communication ban, or other state laws, might have been breached. But the rightness or wrongness of this sordid affair does not rest on strict legality.

The Duke episode has cost several people their jobs, and rightly so. And although the new IURC leadership insists it has cleaned up its act, there has been no change in the selection process for the commission, which has long been a revolving door to and from the regulated industry. Absent that, the IURC has a long way to go toward building public trust. The agency did take one welcome step last week: An expanded review of the Edwardsport case that will include allegations of fraud and gross mismanagement.

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