Emails may suggest improper contact: Duke CEO

INDIANA - E-mails between a former Duke Energy official and a top Indiana regulator may suggest they talked privately about settling cost overruns in a power plant construction project, CEO Jim Rogers has told the Indiana Utility Regulatory Commission.

Exchanges of personal e-mails between Duke officials and regulators cost the jobs of former Duke Energy Indiana president Mike Reed and former commission chairman David Hardy last year. Jim Turner, former president of Duke's regulated gas and electric businesses, resigned in December after a newspaper published friendly messages to and from Hardy.

Last November, Rogers testified he knew of no improper communications involving the Edwardsport, Ind., power plant, which has seen large cost overruns. Duke now estimates construction costs at $2.88 billion, compared to an earlier estimate of $2.35 billion.

Customers will pay some of the overruns, but Duke could be forced to swallow the rest.

Rogers has filed an addendum. A review of 9,000 e-mails found some that "taken together, might be construed to suggest" that Hardy and Reed talked about settling the cost issue. Indiana law prohibits substantive private communications about pending cases.

Duke withdrew a proposed settlement dividing up the cost overruns in December, after Turner's resignation.

"I do not believe that these emails constitute any conclusive proof that there were improper communications," Rogers wrote the commission, "nor do I believe that if such conversations occurred it constitutes any evidence of undue influence" because the settlement was withdrawn.

Rogers' letter included several e-mails.

Last August, Reed wrote Turner that Hardy, the Indiana regulator, had "asked if a cost cap was on the table. I said not at this time."

Turner responded: "Did Hardy's question lead you to believe he thinks one needs to be on the table?"

Reed: "Perhaps or signaling me."

The following month, Turner wrote Rogers: "Mike R thinks, based on late breaking intel, that we're going to get a soft cap at some level well below 2.88 billion dollars... and hard cap at 2.88."

Rogers wrote that Duke has been unable to learn more about conversations between Reed and Hardy that the e-mails refer to.

The Indianapolis Star reported in February that Rogers met privately with Hardy in early 2010 to alert him to cost-overrun estimates of $530 million. Duke later said Rogers was just passing on information, not pleading his case.

The Indiana commission held new hearings on Edwardsport costs. Construction is 60 percent complete.

Neither Duke nor the Indiana commission had further comment on Rogers' letter. "We'll let the statement stand on its own and respect the process," said Duke spokeswoman Paige Sheehan.

Tim Stewart, a lawyer representing Duke's large industrial customers in Indiana, told the Star that he's convinced Duke took part in improper talks with regulators. His clients pulled out of the settlement before it was withdrawn, he said, because they suspected inside dealing.

"This pretty much puts the nail in the coffin," Stewart said.