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Whos who
Scott Storms: The state inspector general ruled the IURC general counsel broke state ethics law by seeking a job with Duke while overseeing hearings and other matters related to the Charlotte, N.C.-based electric company. He was hired by Duke in October and fired in November.
David Lott Hardy: A former Fort Wayne attorney, Hardy was chairman of the Indiana Utility Regulatory Commission when Storms was in communication with Duke Energy about a job with the company, and he signed off on Storms’ hiring. Gov. Mitch Daniels fired Hardy on Oct. 5. E-mails later surfaced that revealed a close friendship between Hardy and Duke executive James Turner.
Mike Reed: About 16 months after leaving his post as executive director of the IURC, Reed was named president of Duke Energy-Indiana and allegedly began talking to Storms about joining him at the utility giant. He was fired by Duke in November.
James Turner: The Indianapolis Star published e-mail communications between the IURC’s Hardy and Turner, president and chief operating officer of Duke’s U.S. Franchised Electric and Gas business, revealing a close personal relationship. He resigned last Monday.
Gary Varvel | Indianapolis Star

Independent probe for IURC case

If Gov. Mitch Daniels and others in state government believe an internal review will put to rest questions about the Indiana Utility Regulatory Commission’s cozy relationship with Duke Energy, they’re mistaken. An ethical breach that has led to the firings or resignations of four men demands more than a review by the agency. The web of dealings between the IURC and a company it is charged with regulating demands an independent investigation.

Concerns were raised when an IURC attorney, Scott Storms, left for a job at Duke. To the governor’s credit, he quickly fired IURC chairman David Lott Hardy, who signed off on the questionable move.

But Hardy’s removal prompted a deeper look into communication between the state and the utility company. The Indianapolis Star requested e-mails and found that the former chairman and Duke executive James Turner were good friends. On July 2, Turner e-mailed Hardy to say he was on his boat, heading out to Lake Michigan:

“Would the ethics police have a cow if you and the woman came up some weekend?” Turner asked.

“It would be a nice run in the M5 and a cheaper journey as usually we only go to so the woman can go to Nieman Marcus,” Hardy wrote.

According to the Star, the two men traded as many as 10 e-mails a day, sometimes discussing private personnel matters involving Duke employees and job candidates.

Communication between a Duke official who earned compensation totaling $4.35 million last year and a state regulator earning $109,000 a year begs scrutiny. It points to a relationship allowing access unavailable to utility consumers and watchdog groups.

In its review, the state found only one decision – a ruling that Duke could charge electric consumers for costs related to a 2009 ice storm – that should be reconsidered. The agency did not release the review related to Duke’s controversial Edwards- port power plant, a $2.9 billion project. Citizens Action Coalition, Sierra Club Hoosier Chapter and others have charged that its escalating cost is one result of conflicts of interest, undue influence and other misconduct related to regulatory oversight.

In the interest of economies of scale, for-profit utility companies are granted monopoly status in exchange for government regulation of price and service. For the balancing act to work, government must do its part in exercising oversight. The relationship between Duke Energy and the IURC strains the public trust.

Resistance from Duke’s large industrial customers has scuttled the deal allowing the Edwardsport plant cost overruns to be passed on to ratepayers. Continuing demands for answers in the growing ethics scandal, as well as an FBI investigation now under way, should help to allay concerns that state officials have forgotten their proper role in regulating Duke Energy.