Original article: http://www.indystar.com/apps/pbcs.dll/article?AID=201011200335
8:05 AM, Nov 20, 2010
Written by John Russell and Ted Evanoff
In the aftermath of an ethics scandal, the state commission that approves the utility rates paid by millions of Hoosiers will get a new member.
Twelve candidates -- including the chairman of the State Parole Board, the top lawyer at the State Lottery Commission and the top lawyer at the state Natural Resources Department -- have applied for what has become a bit of a hot seat.
Gov. Mitch Daniels' appointment to the Indiana Utility Regulatory Commission is sure to invite plenty of scrutiny.
The commission is still reeling from the ethics scandal, which came to light in September when the governor fired its chairman, David Lott Hardy, and ordered a review of dozens of decisions involving one of the state's largest utilities, Duke Energy.
At the heart of the controversy was the practice of state regulators going to work for the companies they regulate, sometimes known as the "revolving door" between government and industry.
The current crop of candidates for the open seat on the five-member commission is heavy with government officials and light on industry executives. Daniels will choose from among three finalists selected by a nominating committee and appoint that person to a four-year term.
Indiana is one of only a few states in which utility regulators are not elected by voters or appointed by a legislative body.
Commissioners are responsible for about $14 billion a year in utility rates paid by Indiana consumers. The commission makes decisions on a wide raft of projects, including new power plants, rate increases, financing, bonding, environmental compliance plans and service territories. It oversees electric, gas, steam, water and sewer utilities, as well as portions of the telecommunications and cable industries.
Current commissioners who have served several terms earn an annual salary of about $104,000.
Among the people who have submitted applications are Gregory Server, chairman of the Indiana State Parole Board, who served on the utility commission from 2005 to 2009; Kari Evans Bennett, chief legal counsel for the Indiana Department of Natural Resources and former environmental policy director to Daniels; and Andrew Klinger, general counsel of the Indiana State Lottery Commission.
Server said his previous experience on the IURC would allow him to jump right into the job of regulating more than 300 utility companies without a long learning curve.
"There would be no training period for me," he said. "I could hit the ground running and relieve some of the workload for the other commissioners."
Other government workers include James Huston, district director for U.S. Rep. Steve Buyer; Michael Gallagher, the IURC's chief accountant; and Peter Bisbecos, former director of the Indiana Family and Social Services Administration's Division of Disability and Rehabilitative Services.
The opening also has attracted some industry officials, which could raise the "revolving door" issue among some critics. The most prominent industry official is Buz Nesbit, who took a buyout in March as Indiana division president of Bright House Networks, an Indiana cable company.
Nesbit brushed aside concerns that he shouldn't apply for a seat on the commission because he previously worked for a company regulated by it.
"I believe the IURC deserves to have competent and knowledgeable commissioners," he said. "It is important that the commission understand the businesses they regulate."
Commissioners are not required to have any technical skills. Many have been utility lobbyists, lawyers and executives.
"The role has been pretty much dominated by lawyers," John Mutz, the retired Public Service Indiana president and former lieutenant governor, said of the commissioners. "But this is a very complex business. It is getting more complex as we handle questions about alternative energy sources. You don't need everybody on the commission to have a large degree of technical knowledge, but they shouldn't all be lawyers."
William Stephan, a vice president at Indiana University who is chairman of the nominating committee, said he hopes to present a list of finalists to Daniels by late December so the appointee could take office in January. He declined to say what skills or experience the committee planned to consider. But he said the discussion would be open to the public.
Controversial selection
Five years ago, consumer groups howled when Daniels, in his first year as Republican governor, chose Hardy as IURC chairman. Hardy, a Fort Wayne lawyer, once was an attorney for Public Service Indiana, a company later owned by Duke Energy.
Hardy found himself at the center of controversy a few months ago over the "revolving door" issue. The commission's top lawyer, Scott Storms, resigned to take a job with Duke, but a state investigation later revealed that Storms had failed to remove himself from IURC regulatory matters involving the company while he was talking to the utility about working there. Daniels fired Hardy, saying he was aware of the situation but took no action.
Duke, based in Charlotte, N.C., later fired Storms and the top executive in Indiana who hired him, Michael Reed.
At the IURC, Hardy had overseen Duke's planning for a coal gasification plant in Edwardsport, and Storms had served as an administrative judge who presided over much of the evidence gathered on the project for the commission. The plant, now priced at $2.9 billion, is designed to turn high-sulfur Indiana coal into a gas-producing steam for the turbines generating electric power. The plant has come under fire for cost overruns and raised a debate about whether it is even needed.
Ties that bind
Three of the four remaining commissioners have direct or indirect ties to industry:
James D. Atterholt, a commissioner since 2009 who succeeded Hardy as chairman in September, formerly worked as a lobbyist for AT&T Indiana, which is regulated by the IURC. He has a long political resume, having served as Indiana state insurance commissioner; a special assistant for U.S. Rep. Dan Burton, R-Ind.; and an Indiana state representative seated on the committee overseeing utility legislation.
Larry S. Landis, a commissioner since 2002, once worked at the former marketing firm of Handley & Miller, whose clients included AT&T Indiana. He also had worked as a campaign aide in Richard Lugar's first Indianapolis mayoral race, and later as a vice president for advertising at American Fletcher Corp., now part of JP Morgan Chase.
Carolene R. Mays, a commissioner since February, comes from a family with utility ties. Her father, the late Theodore Clarence Mays Jr., served on the board of directors at Vectren, an Evansville gas and electric utility. Her uncle is a principal in BMHH Energy Services, which was awarded a recent bid by the Indianapolis International Airport board to build and run an airport electric plant. BMHH includes Citizens Energy Services, a subsidiary of Indianapolis-based Citizens Gas & Coke, a utility regulated by the IURC. Mays was previously the publisher and president of the Indianapolis Recorder newspaper and the Indiana Minority Business magazine.
David E. Ziegner, a commissioner since 1990, has made the IURC a career. He previously served as a staff attorney for the Legislative Services Agency and was general counsel for the IURC.
At a glance: The candidates
Here are the 12 people who have applied for the open seat on the Indiana Utility Regulatory Commission.
Kari Evans Bennett: Chief legal counsel, Indiana Department of Natural Resources.
Peter Bisbecos: Former director, Division of Disability and Rehabilitative Services, Indiana Family and Social Services Administration.
Dwight Coats: Retired small-business owner.
Michael Gallagher: Chief accountant, Indiana Utility Regulatory Commission.
James Huston: District director for U.S. Rep. Steve Buyer.
Walter Jessen: Retired senior manager, Northern Indiana Public Service Co.
Andrew Klinger: General counsel, Indiana State Lottery Commission.
Robert Marischen: Attorney and compliance adviser, BP North America.
Buz Nesbit: Took a buyout in March as Indiana division president, Bright House Networks.
Gregory Server: Chairman, Indiana State Parole Board.
James Wallace: TWG Capital.
David Yount: Self-employed investment manager.
Source: IURC nominating committee