Indiana Utility Regulatory Commission and Regulation and Coal and Electric and Energy & Environment and Utilities

IURC clears ex-judge in Duke Energy ethics scandal

December 7, 2010

The Indiana Utility Regulatory Commission has concluded an internal investigation into Duke Energy Corp. cases heard by a former administrative law judge for the agency who was simultaneously seeking a job with the utility.

Scott Storms “did not deviate in his rulings or decisions from commission procedure or standard practice,” the state agency said Tuesday afternoon in a prepared statement.

The scandal-plagued IURC recently reopened Storms’ cases for review after Gov. Mitch Daniels fired IURC chairman David Lott Hardy this fall for failing to pull Storms from Duke cases after learning Storms applied for a job at Duke.

Storms presided over a number of cases related to Duke’s controversial Edwardsport coal-gasification generating plant, a $3 billion project that is running more than $1 billion over original cost estimates.

While the IURC appeared to find no irregularities with Storms’ work surrounding Edwardsport, it said Tuesday it has reopened a case Storms handled in July that the Indiana Office of Utility Consumer Counselor appealed Aug. 12 before the Indiana Court of Appeals.

Storms wrote a decision last July that gave Duke the ability to seek $11.6 million in cost recovery in a future rate case for storm damages incurred during a January 2009 ice storm in southern Indiana.

As IBJ reported Oct. 16, the OUCC appealed the decision, saying such “retroactive” ratemaking to recover past, rather than future costs, is forbidden except under extraordinary circumstances.

The IURC said Tuesday that its technical staff issued a “more neutral” report than the storm damage decision written by Storms. “Although the audit of the case showed no anomalies with regard to procedure, this was the only order in the internal audit to be recently appealed to the Indiana Court of Appeals,” the commission said.

“If we find the Duke storm damage case was flawed in any way, we will not hesitate to reverse the commission’s decision,” said IURC Chairman David Atterholt, whom Daniels named to replace Hardy.

Critics of the commission for decades have complained of a revolving door between the commission and the state’s utility companies.

Disclosure of e-mails between Hardy and Storms emerged recently that raised new concerns. Hardy and Storms, in e-mails the agency recently disclosed, made light of the Indiana Ethics Commission procedures required to clear him for employment with Duke, which he accepted in September. Storms also traded e-mails with then-Duke Indiana president Mike Reed about his potential employment with the utility.

Duke put Storms and Reed on administrative leave after media disclosure of the e-mails, obtained through public records requests. Duke later fired both.  Another Duke executive, who enjoyed a chummy relationship with Hardy, stepped down or was fired from his job this week.

Meanwhile, the agency’s conduct is still being reviewed by the state’s Office of Inspector General.  The IURC acknowledged previously it had been contacted by the FBI as part of a possible federal investigation.

 

 

 

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