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Thursday, February 24, 2011

Ind. Gov't. - "Was there undue influence between Duke execs and IURC?"

John Russell continues his Duke / IURC series today with a lengthy front-page Indianapolis Star story headed "Private talks between Duke execs and IURC chief raise concerns that utility swayed regulator on costs."

A sample:

Despite state law that sharply restricts private communication between regulators and company officials on pending cases, Rogers, Turner and another Duke executive met last February for breakfast with Hardy at the Capital Grille, a swanky Downtown restaurant where the menu features eggs Benedict with lobster for $21 and filet mignon hash for $15.

During the meeting, the Duke executives told Hardy that the power plant was facing a $530 million cost overrun -- the second major overrun in less than two years. All told, that would push the price tag up nearly $1 billion more than the IURC originally approved in 2007.

It was an enormously significant bit of news for the utility. Opponents of the project would argue that the cost overruns were Duke's fault and that the company should absorb the loss instead of being allowed to pass it along to customers in the form of a rate hike. If Duke were required to cover the cost, its profits and stock price would almost certainly take a hit.

Part of Turner's job was to help persuade IURC officials to pass those costs along to customers -- or to the contractor on the project. Incentives were built into his bonus, and e-mails from him indicated he took the task very seriously.

It was also critical news for Duke's customers. The plant would require a double-digit percentage hike in electricity rates by 2013 for hundreds of thousands of Indiana customers, from households and schools to shopping centers and steel mills.

With such high stakes, experts in utility regulation say, it is imperative that utilities release such news to all stakeholders at the same time during open public hearings.

Posted by Marcia Oddi on February 24, 2011 08:55 AM
Posted to Indiana Government