Clubby Relationship With IURC Officials Extended To NiSource

According to a Northwest Indiana Times report today, the clubby relationship between utility executives and IURC officials was not limited to executives of Duke Energy. Keith Benman uncovers e-mails between a NiSource executive and former IURC Chairman David Hardy that are strikingly similar to the e-mails the Indianapolis Star uncovered between Hardy and Duke executives. Benman reports:

A day after Indiana's top utility regulator approved an order authorizing NIPSCO to hike electric rates, a director of the utility's parent company sent a thankful e-mail inviting him to take in thoroughbred farms and the races in Kentucky Bluegrass country.


In the next two weeks, the invitation was firmed up with offers of a stretch limo, a racetrack suite and dinner at an exclusive Lexington restaurant for then-Indiana Utility Regulatory Commission Chairman David Lott Hardy and his wife.

In one of the final e-mails, NiSource Inc. director Dennis Foster told Hardy: "I will arrange for a driver so we can all have fun. We have dinner reservations at Jonathon's at 6:45 Thursday (they are busy during races but promised a quiet table). ... And of course races Friday afternoon."

Hardy responded, "Regret the delay but - yes, party on."

Consumer groups already have been outraged by the clubby relationships Hardy cultivated with executives at Duke Energy. Those relationships first were reported by the Indianapolis Star in October when it published e-mails between Hardy and then-Duke Indiana President Michael Reed, a former IURC executive director.

But the newly discovered e-mails point to Hardy weaving an even wider web of relationships within the industry. NIPSCO is one of the largest utilities in the state, with 457,000 electric and 712,000 natural gas customers. Its parent, NiSource Inc., has 3.8 million energy customers stretching from the Gulf of Mexico to New England.

In the e-mails, Hardy also suggests inviting Duke Indiana President Reed to attend the outing and Foster obliges.

"This is all about (Hardy) trying to live the lifestyle of a CEO when he's actually the chief regulator," said Kerwin Olson, utility campaign organizer for the Citizens Action Coalition. "How can you be independent when you are in constant communication and wined and dined by those you regulate?"

While Duke responded to the damning e-mails between its executives and Hardy by firing its top Indiana official and its second-highest paid executive in the company, NiSource doesn't seem to there is anything wrong with the cozy relationship its official seemed to enjoy with Hardy.

NiSource Inc. officials say the arrangements being made between Foster and Hardy were entirely appropriate under its code of business conduct.


"Any time Mr. Foster hosted a visit by Mr. Reed and Mr. Hardy to Lexington, they always paid their own expenses," said NiSource spokesman Karl Brack. That information is based on NiSource's own review of the events, Brack said.

NiSource's code of business conduct warns that "entertainment that might be usual and customary in the private sector may be improper or even illegal when dealing with government employees."

Reed and Foster are good friends from their days working at communications provider GTE, and Hardy came to know Foster through Reed, Brack said. Reed worked at the IURC under Hardy as executive director from September 2006 to February 2009.

As it turned out, Foster, Hardy and Reed never partied on in Lexington because of the Star's disclosure of Reed's cozy relationship with Hardy that led to both men being fired from their positions. Hammond Mayor Tom McDermott lamented the relationship the utility executives enjoy with top IURC officials:

Hammond Mayor Thomas McDermott Jr. responded to the e-mails, saying it is no wonder the IURC always seems to side with utilities in rate cases.


"We'll never get a fair shake because we are not lobbying the IURC like the millionaires are," McDermott said.

As long as the governor keeps appointing people with strong ties to utilities, who seem to be the only people he considers for positions at the IURC, expect more of the same.