Wednesday, May 11, 2011

Rogers wavered on Indiana hire

The latest release of internal e-mails that fueled the Duke Energy ethics scandal in Indiana show some staff members, including CEO Jim Rogers, squirming over the hire of a former state regulator.

Messages published today by the Indianapolis Star show Rogers sensing it would be "a bad move" to hire Scott Storms, the former general counsel for the Indiana Utility Regulatory Commission. Duke had already hired another commission official, Mike Reed, to head its Indiana operation.

Rogers had good reason to engage his radar. Months before, Duke had asked the commission to approve $530 million in additional costs to build its $2.9 billion Edwardsport coal-fired power plant. Customers will likely pay most of the plant's costs.

For reasons the e-mails don't make clear, Duke hired Storms anyway last summer.

Within months, as Duke's relationship with the former regulators came to light, the fallout began. Indiana Gov. Mitch Daniels sacked David Lott Hardy, the commission's chairman, and Duke fired Storms and Reed. Jim Turner, who had led Duke's regulated businesses from Charlotte, resigned in December following publication of e-mails between him and Hardy.

The latest e-mails suggest that Hardy and Reed wanted Duke to hire Storms. They show Duke staff members initially ruling out Storms for the job of handling Indiana legal affairs, but worrying that Hardy would be offended.

"This could all blow up with Hardy being mad that we won't hire Scott," says a July 1 exchange between Duke lawyers. "I'm really not sure how to get out of this mess."

Three weeks later, Turner wrote Rogers that he had talked to David Pippen, Daniels' general counsel. Pippen supported Duke's hiring Storms, Turner said.

Rogers responded that "it bothers me but I don't know why ... feels like a bad move at this time ... coming on the heels of Mike ... "

By the next day, more e-mails say Rogers had signed off on the hire.

The e-mails are among evidence before the Indiana State Ethics Commission, which heard accusations that Storms violated state law by taking the Duke job while continuing to handle cases involving Duke. The commission is expected to decide the case Thursday, the Indianapolis Star said.

"We are letting our testimony before the commission serve as our statement on this issue," Duke Indiana spokeswoman Angeline Protogere said.

Duke, meanwhile, offered in March to cap the Edwardsport costs passed to customers to $2.7 billion. The commission will hold hearings in October. It has scheduled more hearings in November on allegations of mismanagement, fraud and concealment filed by opponents of the plant.


Anonymous said...

Great job, Bruce Henderson. If you looked at the Board of directors of Wachovia, BofA, CitiBank, you would see a thieves den of rubber-stamp cronies who do nothing to regulate the companies, but use the gigs for stepping stones like this or cushy retirement gigs.

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