State of Indiana Indiana Utility
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STATE OF INDIANA INDIANA UTILITY REGULATORY COMMISSION VERIFIED PETITION OF DUKE ENERGY INDIANA, ) INC. SEEKING (1) APPROVAL OF AN ONGOING ) REVIEW PROGRESS REPORT PURSUANT TO IND. ) CODE §§8-1-8.5 AND 8-1-8.7; (2) AUTHORITY TO ) REFLECT COSTS INCURRED FOR THE ) EDWARDSPORT INTEGRATED GASIFICATION ) COMBINED CYCLE GENERATING FACILITY ) ("IGCC PROJECT") PROPERTY UNDER ) CONSTRUCTION IN ITS RATES AND AUTHORITY ) CAUSE NOS. 43114 IGCC-4 TO RECOVER APPLICABLE RELATED COSTS ) & 4S1 THROUGH ITS INTEGRATED COAL ) GASIFICATION COMBINED CYCLE GENERATING ) FACILITY COST RECOVERY ADJUSTMENT, ) STANDARD CONTRACT RIDER NO. 61 PURSUANT ) TO IND. CODE §§8-1-8.8-11 AND -12; (3) ) ESTABLISHMENT A SUBDOCKET PROCEEDING ) TO REVIEW THE COST ESTIMATE FOR THE ) IGCC PROJECT; AND (4) APPROVAL OF A ) SETTLEMENT AGREEMENT FILED SEPTEMBER ) 17,2010, INCLUDING A REQUEST TO UPDATE ITS ) DEPRECIATION RATES FOR PRODUCTION, ) TRANSMISSION, DISTRIBUTION AND GENERAL ) PLANT AND EQUIPMENT ) JOINT MOVANTS SUBMITTAL OF THE AFFIDAVIT OF KERWIN OLSON IN FURTHER SUPPORT OF PENDING MOTION TO ESTABLISH A SUBDOCKET AND INITIATE AN INVESTIGATION RE IMPROPER COMMUNICATIONS, UNDUE INFLUENCE AND OTHER MISCONDUCT IN THE REGULATORY REVIEW OF THE EDWARDSPORT PROJECT Intervenors Citizens Action Coalition of Indiana, Hoosier Chapter Sierra Club, Save the Valley and Valley Watch (“Joint Movants”) respectfully submit the Affidavit of Kerwin Olson (including appended Exhibits A to F) in further support of their pending motion to establish a subdocket and initiate an investigation regarding improper communications, undue influence and other misconduct in the regulatory review of the Edwardsport project. In explanation of their Submittal, Joint Movants represent to the Commission: 1. Joint Movants filed their pending motion for subocket and investigation on November 22, 2010 based on evidence which their witness Kerwin Olson had prefiled on November 15, 2010. 2. On December 27 and December 30, 2010 and January 5, 2011, Joint Movants received responses from Duke Energy Indiana (DEI) to their Discovery Request Set No. 18, which had been served on December 2, 2010. During roughly the same time period, Joint Movant Citizens Action Coalition also received responses to several public information requests from certain state agencies, including particularly the Commission. 3. In Mr. Olson’s opinion, certain of the DEI responses to Joint Movants’ Discovery Request Set No. 18 and the agencies responses to public information requests further substantiate his previous testimony that the Company and its representatives have been involved in improper communications, undue influence, and other misconduct in the regulatory review of the Edwardsport project. See Affidavit, ¶¶ 4 - 7. 4. For the most part, the documents further substantiate Mr. Olson’s previous testimony that Duke Energy Indiana has exercised undue influence over the conduct of the Commission's regulatory review of the Edwardsport project through improper communications and relationships among former Duke Energy employees Jim Turner and Mike Reed and former Commission Chair David Hardy and former Chief Administrative Law Judge Scott Storms. See Affidavit, ¶ 4. 5. However, the documents also raise serious issues about certain communications and other interactions between current Duke CEO Jim Rogers and former Chair Hardy, especially but not necessarily exclusively those which occurred in conjunction with the Santa Fe Conference at New Mexico State University in March, 2008, 2009 and 2010 and the breakfast meeting in 2 Indianapolis among Messrs. Rogers, Turner and Hardy on February 24, 2010. See Affidavit, ¶ 5 6. Further, the timing and content of many of the documents show a direct interplay between the Commission's regulatory process in its Edwardsport review (among other proceedings) and the Company's hiring process regarding Messrs. Reed and Storms. See Affidavit, ¶ 6 7. The documents also show an ongoing pattern and not simply an isolated incident or two of improper communications and other interactions which continued at least through the presentation of the (now withdrawn) settlement agreement in this cause on September 17, 2010. See Affidavit, ¶ 7. 8. In Mr. Olson’s opinion, the documents he cites further supports the need for the Commission to initiate a separate investigation and subdocket relating improper communications, undue influence and other misconduct in the regulatory review of the Edwardsport Project. See Affidavit, ¶ 8. 9. Joint Movants represent to the Commission that the issues raised by the documents are substantial and serious and include (but are not limited to) at least the following: A. Have DEI and several of its executives (Messrs. Rogers, Turner, Reed and Stanley) engaged in ex parte communications and other improper interactions with former Chairman Hardy regarding the Edwardsport project? B. Have DEI and at least two of its executives (Messrs. Turner and Reed) established and maintained inappropriate relationships with former Chairman Hardy? C. Has DEI exercised undue influence over the Commission’s regulatory review of the Edwardsport project through the ex parte communications, other improper interactions, and inappropriate relationships of several of its executives with former Chairman Hardy? 3 D. Were the DEI hires of former IURC employees Reed and Storms partial consideration for the Company’s undue influence over past and future Commission regulatory actions – including but not limited to the Edwardsport project? 10. Accordingly, Joint Movants respectfully submit the Affidavit (including appended Exhibits A to F) of Kerwin Olson in further support of their pending motion to establish a subdocket and initiate an investigation regarding improper communications, undue influence and other misconduct in the regulatory review of the Edwardsport project. Respectfully submitted, Jerome E. Polk Polk & Associates LLC 101 W. Ohio Street, Suite 2000 Indianapolis, Indiana 46204 (317) 636-5165 [Phone] (317) 636-5435 [Fax] [email protected] 4 CERTIFICATE OF SERVICE The undersigned hereby certifies that the foregoing submittal and attached affidavit and exhibits were served by electronic mail or U.S. Mail, first class postage prepaid, this 13th day of January, 2011, to the following: J. William DuMond Jack Wickes Kelley A. Karn Timothy L Stewart Duke Energy Indiana, Inc. Lewis & Kappes 1000 East Main Street One American Square, Suite 2500 Plainfield, IN 46168 Indianapolis, IN 46282 Randal Helmen Robert K. Johnson, Esq. Indiana Office of Utility Consumer Counselor P.O. Box 329 115 W. Washington Street, Suite 1500 South Greenwood, Indiana 46143 Indianapolis, IN 46204 Peter J. Matheis Damon Xenopolous Shaun Mohler Brickfield, Burchette, Ritts & Stone, P.C. Brickfield, Burchette, Ritts & Stone, P.C. 1025 Thomas Jefferson St., N.W. 1025 Thomas Jefferson St., N.W. 8th Floor, West Tower 8th Floor, West Tower Washington, D.C. 20007 Washington, D.C. 20007 Anne Becker Richard E. Aikman Stewart & Irwin, PC Two Market Square, Suite 1100 251 East Ohio Street Indianapolis, IN 46204 _________________________ Jerome E. Polk STATE OF INDIANA INDIANA UTILITY REGULATORY COMMISSION VERIFIED PETITION OF DUKE ENERGY INDIANA, ) INC. SEEKING (1) APPROVAL OF AN ONGOING ) REVIEW PROGRESS REPORT PURSUANT TO IND. ) CODE §§8-1-8.5 AND 8-1-8.7; (2) AUTHORITY TO ) REFLECT COSTS INCURRED FOR THE ) EDWARDSPORT INTEGRATED GASIFICATION ) COMBINED CYCLE GENERATING FACILITY ) ("IGCC PROJECT") PROPERTY UNDER ) CONSTRUCTION IN ITS RATES AND AUTHORITY ) CAUSE NOS. 43114 IGCC-4 TO RECOVER APPLICABLE RELATED COSTS ) & 4S1 THROUGH ITS INTEGRATED COAL ) GASIFICATION COMBINED CYCLE GENERATING ) FACILITY COST RECOVERY ADJUSTMENT, ) STANDARD CONTRACT RIDER NO. 61 PURSUANT ) TO IND. CODE §§8-1-8.8-11 AND -12; (3) ) ESTABLISHMENT A SUBDOCKET PROCEEDING ) TO REVIEW THE COST ESTIMATE FOR THE ) IGCC PROJECT; AND (4) APPROVAL OF A ) SETTLEMENT AGREEMENT FILED SEPTEMBER ) 17,2010, INCLUDING A REQUEST TO UPDATE ITS ) DEPRECIATION RATES FOR PRODUCTION, ) TRANSMISSION, DISTRIBUTION AND GENERAL ) PLANT AND EQUIPMENT ) AFFIDAVIT OF KERWIN L. OLSON JANUARY 13, 2011 1.L II amam thethe ProgramProgram DirectorDirector ofof the CitizensCitizens Action Coalition;Coalition; addressaddress 6026028 E WashingtonWashington St,St, SuiteSuite 502,502, Indianapolis,Indianapolis, ININ 46204. 2. II filedfiled Direct Testimony inin thisthis Cause on July 30, 2010 and Settlement Testimony on November 15,2010.15,2010. 3.3. The followingfollowing documents thatthat are appended to this affidavit have been provided by Duke Energy IndianaIndiana and obtained throughthrough public informationinformation requestsrequests sincesince II filedfiled my Settlement Testimony on November 15,15, 2010. In my opinion, these materials provide evidence inin addition toto thatthat presented inin my November 15,15,2010 2010 testimonytestimony thatthat thethe Company has exercised undue influence over thethe Commission's regulatoryregulatory oversight of thethe Edwardsport Project. •' DEI discovery response and e-mails between Jim Stanley, Jim Turner, and David Hardy regarding a breakfast meeting that occurred on February 24,24,2010 2010 at the Capital Grille in Indianapolis - Exhibit A. ' DEI discovery response and e-mails regarding dinner meetings between David Hardy and Jim Rogers that took place during the Santa Fe Conferences at New Mexico State University in March,March. 202010. 10, as well as March,March. 2008 and 20092009 - Exhibit B. •' E-mails between Mssrs. Reed, Turner, and Hardy dated