Duke fires Indiana chief, lawyer after ethics flap

Duke Energy Corp. has fired the president of its Indiana operations and a staff attorney following an ethics flap over its dealings with state utility regulators.

Duke spokeswoman Angeline Protogere on Monday confirmed the company had fired Indiana president Mike Reed and attorney Scott Storms, who both formerly worked for the state regulatory commission. A Securities and Exchange Commission document filed by Duke on Monday also verified the firings.

Protogere said Duke notified its employees of the dismissals in an internal memo. The Associated Press wasn't immediately able to find phone numbers for Storms and Reed, and Protogere said she couldn't provide contact information.

Duke's SEC filing said Douglas F. Esamann would replace Reed. Esamann had been interim president of the Indiana operations since October 11, after Reed and Storms were suspended.

Duke's action came about a month after Gov. Mitch Daniels fired commission Chairman David Lott Hardy for allowing Storms to handle matters related to Duke while he pursued a job with the Charlotte, N.C.-based company.

The State Ethics Commission initially approved Storm's September move to work at Duke but later filed formal charges against Storms for negotiating the job while participating in decisions involving a nearly $3 billion coal-gasification plant the utility is building in southwest Indiana. Storms is scheduled to appear before the Ethics Commission on Thursday to answer questions about the controversy.

Duke CEO Jim Rogers told the commission last week he was confident Storms exerted no influence on decisions regarding the Edwardsport plant.

Duke suspended Storms and Reed last month pending the completion of a review by outside counsel. Reed became president of Duke Energy-Indiana in June, about 16 months after leaving the utility commission as its executive director.

A copy of the internal memo obtained by The Associated Press said Duke decided to fire Reed and Storms after "careful consideration" of the legal review's findings.

The Duke memo also said the company would change its hiring guidelines to "ensure that job candidates linked to regulatory and oversight groups are removed from all Duke Energy affairs prior to being considered for opportunities."

The Indiana Utility Regulatory Commission has opened its own investigation into the ethics controversy and said it will review four years of cases regarding the Edwardsport plant.

Watchdog group Citizens Action Coalition of Indiana has called for cancellation of the project. In July, Storms signed off on Duke's request to pass the rising costs of the plant, which is about 70 percent complete, on to its Indiana customers.

The project's costs initially would raise their bills by about 16 percent.