Jamming revolving doors

Would you trust your public utilities — which are usually monopolies — to regulate themselves?

And for the line between government and business to blur and fade?

And if such a situation were to occur and was ignored by your State Ethics Commission, or even approved and deemed legal by it, would you gawk and gape in wonderment at the Ethics Commission members, who regulate the very administration that appoints them?

You might want to start — immediately — and question your increasingly jacked up utilities bill.  

The debacle involving Scott Storms and David Hardy brought corruption within the Indiana Utility Regulatory Commission to light, but it is only the beginning.

Storms, who played general counsel to the IURC as well as an administrative law judge for major Duke Energy cases, had been in touch with Duke regarding a job offer while presiding over hearings related to a $2.9 billion coal-gasification plant (a price-tag that has increased tremendously from its original estimate of less than $2 billion).

He accepted the job this past September after taking a twirl in the revolving door between IURC and Duke, not even completing the one-year “cooling-off period” required between a decision-maker regulatory post and work at the regulated entity.

And yet, the State Ethics Commission ignored ethics rules and cleared the path for Storm’s new career.

When it came to light that Hardy, the IURC Chairman, was aware of Storms’ negotiations whilst regulating, Governor Mitch Daniels fired him promptly.

But, as Rep. Win Moses, D-Fort Wayne, said, “This is just the beginning of the solution, but the firing doesn’t solve the problem.”

While Daniels should be lauded for this rightful action, much reform is needed in the system, reform that he appears resistant to.

Moses and House Speaker Patrick Bauer, D-South Bend, call for “greater enforcement over the whole ethics structure” and especially for an independent voice in the modus operandi, but Daniels claims “it wouldn’t have prevented this.”

Daniels is leery, no doubt, because their suggested reforms would limit his power.

Moses and Bauer’s sound solutions, however, are crucial to ratepayers’ rights (in fact, it is shocking that they are not in place already).

First, they encourage that the state inspector general be made more independent, as it is a conflict of interest for him to investigate and expose corruption and waste in the administration of the governor that appointed him.

Second, they suggest requiring legislative confirmation of the IURC’s five members, all of whom are currently appointed by our governor.

Daniel’s resistance should be called into question.

Perhaps such changes “wouldn’t have prevented this,” as he claimed, but such would be true only if the case of Storm and Hardy were an isolated incident.

In actuality, state regulators and the industries they are intended to regulate are buddy-buddy through and through.

Hardy himself worked for the predecessor of Duke, Public Service Indiana, before joining the IURC.

David Joest, once a coal industry lobbyist, is now a lobbyist for the Indiana Department of Environmental Management, and Thomas Easterly, the current head of IDEM, formerly headed a utility company.

Frankly, the one-year revolving door rule doesn’t cut it.

Regulators do not need a background working in the industry they regulate — in fact, it should be undesirable to ratepayers.

Take, for instance, Duke’s planned “clean coal” plant (an oxymoron if there ever was one). Duke asked for electricity rates to be spiked 19 percent to cover the costs of this plant.

Challenged by various organizations — such as the Citizens Action Coalition, Valley Watch and Sierra Club — as being unnecessary for Hoosiers’ electrical needs and prohibitively expensive, the plant has been approved by the IURC.

This decision was made even though a $15 million study, funded by ratepayers, showed the building site to be wholly unsuitable for carbon capture and sequestration of the nine million tons of CO2 projected to be released each year by the plant, a process Duke insincerely claimed would be “on site” and part of the nearly $3 billion bill.

As Storms was largely involved in the plant’s approval, Daniels will have his administrative opinions for the case reviewed to determine whether “undue influence was exerted in the decisions,” as David Pippen, Daniels’ general counsel, wrote in a memo.

However positive this action may be, the ethics process in Indiana state government must be restructured to form a vanguard against future mishaps and abuses.


E-mail: celgrund@indiana.edu