A scandal that won’t go away for Duke Energy CEO James Rogers revealed over the weekend, once again, that he will turn over every government rock he can to try to find money to pay for his irrational Green agenda, with reckless disregard for taxpayers and his customers.
The Indianapolis Star reported Sunday that Rogers, frustrated with the skyrocketing costs associated with the company’s experimental coal gasification plant that is under construction in Edwardsport, Ind., met with Indiana Gov. Mitch Daniels in February 2010 to discuss problems with the project. Reporter John Russell obtained from the Indiana Utility Regulatory Commission documents that provided details about the meeting, which Duke and IURC previously tried to keep confidential. They were pried loose after some legal wrangling.
According to a copy of a memo the newspaper acquired, it appeared that Rogers wanted from Daniels some kind of mediation or intervention between Duke and its subcontractors on the project: General Electric and Bechtel Corporation. A 2007 study estimated the cost of Edwardsport would be $1.9 billion, but now the price is near $3 billion. IURC has granted permission for Duke to recover $2.35 billion in costs from its ratepayers, but Rogers wants to charge them $350 million more. His meeting with Daniels came one day after a meeting of the Duke board, in which directors were briefed about the “significant cost challenges” at Edwardsport. The effect on shareholders and whether they would foot the cost was likely a discussion topic also.
“We explained (to the governor) that even though we are frustrated with GE and Bechtel because of the obvious differences between the 2007 (study) and the current design of the plant, our top priority is to work cooperatively to finish the plant in as timely and cost effective manner as possible,” Rogers wrote in his February 2010 board letter. “We offered to facilitate a meeting among the principals – Duke Energy (Rogers), GE (Jeffrey Immelt), and Bechtel (Riley Bechtel) – so that the governor could convey his concern about the cost pressures and his desire for us to complete this project in the best interests of Indiana consumers and stakeholders.”
Composing the memo and the language to the board for Rogers was James Turner, former president and COO of Duke’s U.S. Franchised Electric and Gas business, who also met with Daniels. Turner and another company executive were fired after the successful recruitment of IURC lawyer Scott Storms to join Duke, while Storms still oversaw cases that concerned the utility. Gov. Daniels also fired IURC chairman David Hardy over the scandal because he was aware of Storms’s conflict of interest and neglected to do anything about it.
As for Daniels’s response to the plea for a meeting with GE and Bechtel, he did not accede. Perhaps the Democrat-loving Rogers’s poorly-disguised appeal to Daniels to make Immelt and Bechtel play nice (“Think of the poor Indianans!”) did not sit well with the conservative, almost presidential candidate. Daniels did, however, offer a nugget of wisdom for Rogers and Turner: “Well, green is not cheap.”
Don’t they know it, not that it’s ever mattered to Duke executives. Turner suggested that Rogers tell board members about how they assured Daniels that Duke was “committed to working aggressively in Washington to secure any federal money that might be available for clean coal technology given that this plant – because of its size and CO2 capture/storage potential – is truly the premier clean coal facility in the world.” (Emphasis Turner’s)
Sound familiar? That’s because the strategy represents the business template that Duke Energy has followed under Rogers, with billions in windfall profits made thanks to investments in renewable power generation projects, which bring in big money through taxpayer-funded subsidies, tax credits, accelerated depreciation, and research grants.
In fact, Rogers sounded like he thinks public money is the utility’s entitlement. In a “Washington Update” summary he wrote to Duke’s board, he explained a trip he made to the nation’s capital in which he sought funds for Edwardsport out of the FutureGen program, which the Bush administration created as a public-private partnership “to add carbon capture and sequestration technology to (a coal gasification) plant.” Rogers noted that the Obama administration promised $1 billion for FutureGen, despite minimal private involvement.
“We have long held the view that Edwardsport represents ‘FutureGen 1.0,’” Rogers wrote to the board, “so we should have access to some of the support.”
Rogers then explained a meeting with Secretary of Energy Steven Chu and Under Secretary Kristina Johnson, who heads FutureGen, and then bemoaned the obstacles in Washington to getting the money he seems to believe Duke is entitled to.
“I called the issues ‘difficult’ because of the climate in DC and the partisanship that blocks getting anything done right now,” Rogers told the board. “But, success…would be a huge win for our shareholders and customers.”
Undoubtedly Rogers believes the source of the obstruction to “getting anything done” is Republican control of the House of Representatives. That might explain his $99,000 in contributions to the Democratic National Committee in recent years, and also his commitment to raise funds and guarantee a $10 million loan for next year’s Democratic convention in Charlotte, N.C.
As for the private meeting between Daniels, Rogers and Turner, citizen watchdog groups in Indiana were concerned about its propriety, according to The Star. Some believed all discussions about problems surrounding the plant should be discussed openly before the IURC.
“Only Duke and other important players can get a meeting like that,” said Kerwin Olsen, executive director of the Citizens Action Coalition of Indiana, who added that he’s never met with the governor.
What should be of greater concern to them is that Rogers made a personal appeal to the man – Daniels – who has the power to hire and fire the members of the IURC. Fortunately for them it looks like the governor has too much integrity for crass political paybacks, as The Star reported:
Daniels has since signaled that Duke should swallow most, if not all, of the cost overruns. In July, after the state’s Office of Utility Consumer Counselor recommended that Duke should foot the bill for all the overruns, Daniels was asked by a reporter if he agreed with that recommendation.
“I’m fine with the decision,” the governor said. “The counselor, I think, has been saying all along the plant ought to be built, but maybe Duke should not be compensated for costs it could have prevented. I’m just absolutely fine with that.”
That left Rogers – whose penchant for secret meetings, political power plays and an entitlement mentality about taxpayer money seems to know no bounds – to run to Washington for help. It’s crony capitalism on steroids, and it’s out of control.
Paul Chesser is an associate fellow for the National Legal and Policy Center.