Watchdog groups are criticizing Duke Energy's hiring of the top attorney for Indiana's utility oversight panel, saying his role handling issues related to a nearly $3 billion power plant the company is building raises serious ethics questions.
Scott R. Storms begins his new job Monday as a lawyer in Duke Energy's regulatory division, just days after leaving his job as general counsel of the Indiana Utility Regulatory Commission.
In that capacity, he's served as the panel's chief administrative law judge, presiding over matters that include those pertaining to Duke. He has taken testimony and evidence and overseen numerous proceedings about the coal-gasification plant Duke is building in southwestern Indiana.
That plant has seen its construction costs climb sharply, rising to about $2.9 billion — or about twice the project's original 2007 estimate. Those costs will result in higher electrical rates for Duke's Indiana customers.
Environmental groups who call that 630-megawatt plant a costly boondoggle and have sued to try to stop the project said Storms' hiring is troubling. They say it raises questions about the relationship between power companies and regulators who approve utility rates.
"This certainly brings into question every Duke-specific commission order signed by Mr. Storms in recent months," said Grant Smith, executive director of the Citizens Action Coalition. "At a minimum it is difficult to maintain the appearance of impartiality when the person overseeing the regulatory process is either shopping for work or being courted by the utility he regulates."
A message seeking comment was left Thursday at Storms' IURC office.
Administrative law judges submit proposed orders for review by the regulatory agency's commissioners, who then approve, reject or modify those orders. The judges also review filings in cases and help determine which parties or evidence are permitted.
On June 14, Storms and one of the IURC's commissioners signed an order granting a petition by the Wabash Valley Power Association to become part of the proceedings of the coal-gasification plant being built near Edwardsport.
Those kinds of decisions are crucial parts of a company's regulation, Julia Vaughn, policy director for the government watchdog group Common Cause/Indiana, told The Courier-Journal of Louisville, Ky.
Vaughn said the administrative law judge "is a really key person at the commission. They do the heavy lifting in a case. They're the ones who are intimately knowledgeable about the details of these regulated entities."
The Citizens Action Coalition, a consumer and environmental rights group, charges that the move by Storms from the IURC's top administrative law judge to Duke Energy's legal department is a violation of a state ethics law. That law requires a one-year cooling off period before state employees can go to work for companies they've regulated.
But the Indiana Ethics Commission said that prohibition didn't apply to Storms because he never made a regulatory or licensing decision on behalf of the state affecting Duke. Nor did he negotiate or administer a contract with Duke, it said.
"This provision would not be triggered by Mr. Storms' work at the IURC as he was neither a commissioner nor a voting member of the regulatory body that may have made license or permit decisions regarding Duke," the panel wrote in a decision issued this month.
But it added that Storms would be prohibited from representing or assisting Duke on any matter in which he was "personally or substantially involved as a regulator." Those include several cases involving the Edwardsport plant.
Duke spokeswoman Angeline Protogere said Storms removed himself from the IURC's Duke-related cases in August when he applied for the Duke position. She said he sought an opinion from the ethics commission "out of an abundance of caution."
"We needed someone with utility regulatory background, so it's not unusual that we would consider candidates at the commission," Protogere said.