Critics, including the Sierra Club and Citizens Action Coalition, want the project scrapped, even though Duke already has invested nearly $2 billion and construction is more than 50% completed. The plant is scheduled for commercial operation in August 2012.

Since the project was approved three years ago by the IURC, its estimated price tag has soared by about $1 billion. A deal to cap the plant’s costs to consumers was negotiated last fall by several parties, including Duke, the Indiana Office of Utility Consumer Counselor and the Duke Energy Indiana Industrial Group, and sent to the commission for final approval. But it came undone after a third high-ranking Duke official left the company under a cloud of controversy tied to the ethics flap.

Under pressure from consumer advocates, Duke asked state regulators on December 9 to withdraw the settlement, just days before a planned IURC evidentiary hearing on the agreement.

In early December, Duke Executive James Turner abruptly resigned. Turner, who headed the company’s franchised electric and natural gas businesses in the U.S., left Duke after e-mail communications revealed he shared a cozy relationship with former IURC Chairman David Hardy, who was fired October 5 by Republican Governor Mitch Daniels for allowing former IURC general counsel and chief administrative law judge Scott Storms to pursue a job with Duke while he presided over Edwardsport cases. Storms and Mike Reed, who was Duke Energy Indiana’s president, recently were fired by the company as part of an ongoing internal investigation into Edwardsport. Turner, Hardy, Storms and Reed have been unavailable for comment.

Several investigations are continuing, including an internal inquiry by Duke and a probe by the FBI.

The industrial group and OUCC urged Duke to abandon the pending settlement and negotiate a new one. Although “disappointed” by the decision, James Rogers, Duke chairman, president and CEO, said new negotiations represent “the best path forward for the Edwardsport project at this time. The support and cooperation of the settling parties is important to us, so we have agreed to re-examine and renegotiate the terms of the cost settlement. The merits of the Edwardsport plant are strong and construction continues to move forward.”

While the OUCC still supports the project, “due to recent revelations about communications between Duke Energy and the former IURC chairman, our office has called into question the integrity of the process that led to the settlement agreement,” said David Stippler, the Consumer Counselor. “For these reasons, it is appropriate to reopen the negotiation process and take a fresh look at the issues addressed in this case.”

Indianapolis Attorney Tim Stewart, who represents the industrial group, said the new negotiations must be wrapped up by January 25 and any agreement filed with the IURC. If that happens, the commission said it expects to issue a final order in March.