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Does Indiana Have a Lower Tolerance for Corruption than Colorado?

The Hoosier State is roiling over inappropriately cozy relationships between state regulators and the utility they oversee. It started when a top lawyer for the Indiana Utility Regulatory Commission took a job with Duke Energy shortly after acting as a judge in a major rate-case before the utility. That got Governor Mitch Daniels’ attention. Then the Indianapolis Star unearthed a trove of emails revealing a troubling intimacy between IURC staffers (including Commissioners) and Duke Energy. So far four people have been sacked (the lawyer who started it all, and three utility execs) and the scandal is growing.

Compare Indiana’s palpable outrage to the situation in Colorado, where the General Assembly enacted legislation written by energy companies to benefit themselves…and no one cares.

I’m talking about HB 1365, the Clean Air Clean Jobs Act, legislation that effectively mandated fuel switching from coal to natural gas for almost 1,000 megawatts of electricity generation.

Conceptually, HB 1365 was proposed by energy producers. On July 27, 2009, representatives from six major gas companies met with Governor Bill Ritter. The meeting objective was to “discuss possible roles the Administration might play in leveraging natural gas in Colorado.” After a syrupy introduction about the “The Natural Gas Story,” the gas lobbyists cut to the chase: fuel switching from coal to gas was the only way that the Governor could meet his Climate Action Plan goals.

While the gas guys co-opted the Ritter Administration by appealing to the Governor’s sense of legacy, the utility spearheaded the legislative work. On February 4, a lawyer for Xcel Energy circulated the foundational draft of HB 1365. Given that the legislation was written by Xcel, it should come as no surprise that the bill is very generous to Xcel, which stands to make at least $130 million profit off HB 1365.

It would have been even more lucrative for Xcel, if the Ritter Administration had gotten its way. During the drafting period, on February 28, Department of Natural Resources administrator James Martin asked if there “is any way to add a factor that encourages the PUC to facilitate purchases of these resources [i.e., replacement natural gas plants] by Xcel?” For whatever reason, the DNR director was trying to skew the wholesale electricity market in Xcel’s favor at the expense of its competitors.

This troubling solicitousness for Xcel’s profits was shared by the Department of Public Health and Environment and the Governor’s Energy Office in the course of Public Utility Commission deliberations on HB 1365 implementation startegies. Both threw their collective bureaucratic weight behind Plan 6.2J, which just so happens to accord Xcel the most generation assets of any plan before the PUC.

Do I think that members of the Ritter Administration benefitted financially from their involvement in HB 1365? No, I highly doubt it. I do think that this Administration was so desperate to notch a victory for the “New Energy Economy” that it was quick to concede to these energy companies whatever they wanted in order to ensure that they’d play along.

Just because there’s an absence of malice, however, doesn’t mean there should be an absence of outrage. Big business wrote a self-serving bill whose biggest booster was the Ritter Administration and which passed through the State House of Representatives in a week with minimal deliberation. Coloradans should care that their elected officials are so easily manipulated.

William Yeatman is an energy policy analyst at the Competitive Enterprise Institute