12/02/2010 02:35 pm ET | Updated May 25, 2011

Indiana and Duke Energy Officials Bantered While Ratepayers Picked Up the Tab

Drawing on hundreds of emails, the Indianapolis Star is providing Indiana with the most unsavory political drama it has seen for a while: the romance between Duke Energy officials and the Indiana Utility Regulatory Commission.

While the IURC has been nailing electric ratepayers for spiraling construction cost overruns at Duke's Edwardsport coal gasification plant, state and Duke officials have bantered back and forth like schoolboys.

In its most recent revelation, the Star has pulled Duke Energy executive James L. Turner onto the stage. You'd think the second highest paid executive at Duke would know better than to chatter with the chairman of the IURC in emails that might end up in the hands of a journalist via an open records request.

Star reporter John Russell writes that Duke executive Turner and IURC chairman David Lott Hardy:

schmoozed and joked over all sorts of personal topics, sometimes trading messages eight or 10 times a day. At one point, Hardy offered advice on what kind of BMW Turner should buy. Another time, they talked about Butler University's basketball championship games. Several times, they had frank discussions on private personnel matters involving Duke officials and job candidates.

Taken together, the e-mails paint a picture of a cozy relationship that extended far beyond a professional association between a utility executive and a powerful state regulator.

With the Turner-Hardy emails, the tangled tale draws in Duke's Charlotte, N.C. headquarters, where Turner holds the weighty title of Group Executive; President and Chief Operating Officer-U.S. Franchised Electric and Gas. Before he rose to such heights, he represented industrial utility customers for an Indianapolis law firm and before that was Indiana Utility Consumer Counselor.

As I mentioned in my last post, the current storm over the revolving door between Duke Energy and its regulators broke loose in September when lawyer Scott Storms moved directly from his job as IURC general counsel and administrative law judge to take a position with Duke--a move approved by the state ethics commission. ("It was impressive that you did not laugh during the Ethics hearing," Storms emailed to Hardy and Duke Indiana President Michael Reed, former executive director of the IURC.)

The Citizens Action Coalition of Indiana, longtime critic of the Edwardsport project, questioned the propriety of Storms's swish through the revolving door. Indiana Governor Mitch Daniels fired Hardy. Duke Energy fired Storms and Reed. Loraine L. Seyfried, the IURC ethics officer who had cleared Storms' move to Duke, has lost her ethics duties (but not--interestingly--her job) and has been taken off all cases involving the Edwardsport plant.

Multiple investigations of ethics violations continue, and more Star stories are likely to emerge from the cache of emails. Meanwhile, citizens' groups continue their campaign to get Duke's Indiana ratepayers off the hook for the steep price they're paying for the Edwardsport plant. Four organizations have asked the IURC to launch an investigation that could lead to a refund to ratepayers for "any illegally confiscated dollars" they have put into the project.

The Citizens Action Coalition, the Sierra Club Hoosier Chapter, Save the Valley, and Valley Watch want the IURC to study how the Edwardsport project has been affected by "fraud, concealment or gross mismanagement" on the part of Duke and its contractors and "improper communications, conflicts of interest, undue influence, or other misconduct" by officials of the State of Indiana and Duke Energy. Such conduct could make Duke ineligible for the financing ratepayers have provided for the plant.

The IURC brushed aside this coalition's earlier request for public hearings (a request which I and about 2,500 other ratepayers signed on to). I am glad to see the Star adding its own weight to the question mark hanging over the misguided 618-megawatt Edwardsport plant, which is sucking up dollars that could be used to develop wind and solar power.

Editorializing on the IURC-Duke scandal, the Star writes, "The validity of the Edwardsport coal-gasification plant, already far along with $2 billion invested, hangs in the balance." More than that hangs in the balance: faith in honest government, democracy, and the rule of law.