CAC speaker discusses Duke Energy’s Edwardsport scandal

Kerwin Olson, project manager for the Citizens Action Coalition, discussed a scandal surrounding Duke Energy’s Edwardsport plant at a meeting Tuesday at the Monroe County Public Library.

The scandal revolves around the firing of two officials of the Indiana Utility Regulatory Commission and one Duke Energy employee, Olson said.  

Duke Energy began lobbying for the construction of the Edwardsport Integrated Gasification Combined Cycle Station, a coal power plant located in Edwardsport, Ind., in 2006.

Duke Energy’s initial cost estimates for the project ranged from $1.2 to $1.6 billion.

Duke Energy’s cost estimates rose every six months from 2006 onward while the plant’s power load capacity estimates decreased by more than 50 percent.

All of these estimates were approved by the IURC.

All of the employees who were fired regarding this matter were believed to have been overseeing the plans for the construction of the Edwardsport plant.  

Scott Storms was the former administrative law judge for the IURC,  who supervised all of the Indiana Duke Energy cases. E-mails revealed that Storms was pursuing employment with Duke Energy while working for the IURC, an independent regulatory body, while presiding over the Duke Energy cases.

“A settlement was reached and announced the very same week Scott Storms, at least publicly, accepted employment with Duke,” Olson said.

Storms was hired by Duke after he left the IURC but was put on administrative leave Oct. 5.

Former IURC Chairman David Lott Hardy was fired because the e-mails revealed he was aware of Storms pursuing employment with Duke but didn’t report it.  

Michael Reed, a Duke Energy employee and a former IURC director, was terminated the same day as Storms.

The Indiana Governor’s office, the IURC, the Indiana Inspector General’s office, the United States Department of Justice and Duke Energy are all currently conducting investigations concerning alleged gross mismanagement and concealment of the Edwardsport power plant in Edwardsport, Ind., Olson said.  

Duke Energy also hired a Washington, D.C. law firm to conduct an independent internal investigation.

Olson also said the Federal Bureau of Investigation was questioning IURC employees.

“We’ve had at least five ongoing, open investigations in this case,” Olson said. “The public should not be forced to pay a single dime more until these questions are answered.”

Because banks will not finance large capital projects, public funding goes to support the construction of projects such as the Edwardsport plant, Olson said.

Danielle McGrath, public information officer for the IURC, said in a phone call that the IURC is currently auditing all cases involving the inception of the Edwardsport plant.

McGrath estimated an audit will be available by the end of 2010.

The CAC recommended that three steps be taken to remedy the problem.

First, the CAC urged the IURC reject the settlement filed by Duke in August of 2010.

Second, the CAC requested that Duke Energy hold two additional field hearings to hear testimony from Duke Energy rate payers. The only field hearing in this case was in October 2007, when the Edwardsport cost estimate was $1.9 billion.

“Three years and $1 billion  later, rate payers have not been afforded an opportunity to speak about this,” Olson said.

Duke’s current cost estimate for the Edwardsport Plant is $2.975 billion.

The CAC’s final recommendation was the IURC should indefinitely suspend all orders dealing with the Edwardsport plant.

During the public comment section of the meeting, Tomilea Allison, Bloomington resident and former mayor of Bloomington from 1983 to 1995, expressed her resentment about Duke being allowed to use customers’ money to finance
projects.

“All the risk was put on the rate payer, not the private enterprise,” Allison said. “That’s where the problem started. Nobody had any reason to worry about cost.”