Ethics Scandal Prompts Indiana Regulators to Investigate Edwardsport IGCC Cases

The Indiana Utility Regulatory Commission (IURC) on Friday said it would conduct a legal and technical audit of cases concerning Duke Energy Indiana’s $3 billion Edwardsport gasification facility in which a former administrative law judge had presided.

The IURC, whose mission is to ensure utilities use adequate planning and resources to provide them at a reasonable cost, said that the audit would be “comprehensive.” Essentially, it would determine whether any activity—including bench rulings and final orders—by former administrative law judge Scott Storms “did not follow normal processes or failed to be supported by evidence or another legal basis.”

The audit would look at Duke Energy cases over which Storms presided from January through September of this year. More significantly, the commission stated, it would internally audit all Edwardsport plant cases dating back to 2006 because “The continuing need for the Edwardsport project is a foundational issue to Duke Energy’s request in Cause No. 43114‐IGCC4‐S1.”

To accomplish this, the commission said it had requested Duke Energy CEO Jim Rogers to appear at a Nov. 3 “technical conference” to describe the continuing need for the company’s Edwardsport plant, which is under construction—and about 50% complete—in southwest Indiana. All four commissioners will preside over the case—as opposed to one commissioner and an administrative law judge, who are typically assigned to a case.

The IURC’s announcement came on the heels of charges formally filed against Storms by the State Ethics Commission for negotiating a job with Duke Energy even as he took part in decisions regarding the integrated gasification combined cycle (IGCC) plant.

Storms’ contact with Duke officials was found in a probe by the office of Gov. Mitch Daniels. Duke Energy said that the company had “recently” hired the attorney to fill a job in its legal department. The scandal has so far led to the firing of former IURC Commissioner David Hardy and Duke Energy’s placement of its Indiana president, Mike Reed, on administrative leave. The company has since appointed Doug Esamann interim president of its Indiana service region.

In September, Duke Energy reached a settlement (though the case is still pending, with a hearing scheduled for Nov. 29) with key consumer groups that capped the Edwardsport project’s costs at $2.975 billion. The company’s current cost estimate is $2.88 billion.

“The settlement lowers the customer rate impact from an overall average 19 percent to 16 percent by 2013. The average residential rate increase will be a total of 14 percent by 2013,” Duke Energy said in a statement.

Sources: POWERnews, IURC, Duke Energy