It is hard to get over the way MidAmerican Energy President Bill Fehrman fumbled to provide the cost of a new nuclear reactor in Iowa to members of the Iowa Senate Commerce Subcommittee on March 17. Here was a man, president of a recognized and successful company that earned $279 million in profits in Iowa in 2010, and he has to resort to his smart phone for a quick calculation to answer a Senator’s question? It went something like… “let’s see 1 or 2 billion dollars divided by 40 or 50 years, divided by… $5 per month. It will be more like $5 per month.” Anyone who believed that number should stand on their head.

As a person who was a businessman most of my working life, I thought it was a poor performance for the representative of such a company. Why would Fehrman do such a thing? Did he have insufficient self control to say, “let me get back to you on that with some solid numbers?” Was the growing enthusiasm among some legislators for Senate File 390 rubbing off on him, making him blind with a similar enthusiasm? Did he believe that his personal relationship with the Senators would forgive any mistake and avoid all details? There may be another answer.

With the unexpected resignation of David Sokol, CEO of MidAmerican Energy Holdings, more about how the company performs financial calculations is being revealed in the media. Sokol left the company last week under a cloud of suspicion about possible insider trading during the acquisition of Lubrizol by Berkshire Hathaway.  That is a matter for the courts to work out, but what came to light was that Sokol had a history of making false calculations regarding project economics.

According to David Cohan of Daily Finance, “On April 2, 2010, the Omaha court concluded that MidAmerican had faked the project’s financial statements so it could wipe out the rights of its minority shareholders. Specifically […] it found that when it came to calculating (the minority shareholder’s) interest, MidAmerican wrongfully and contrary to the agreement of the parties did not use information that reflected actual project economics.”

It turns out this is not the first time MidAmerican’s Sokol has been accused of leveraging deception and personal relationships to do a deal. According to the Sioux City Journal, a shareholders lawsuit against MidAmerican Energy Holdings Co., claimed Sokol “tricked company directors into approving the 1999 sale of MidAmerican Energy to Berkshire Hathaway. Papers filed in the 1999 lawsuit claim David Sokol used personal relationships, fraud and deceit to manipulate the board’s decision.” The lawsuit was settled, but a pattern may be beginning to emerge. MidAmerican appears to be willing to misrepresent project economics and use personal relationships with others to do a deal. Enter Senate File 390, a bill to clear the financial hurdles for MidAmerican to build a new nuclear reactor in Iowa. More of the same?

SF 390 appeared to be on a fast track for passage before the public started to find out about it. According to some legislators, they received hundreds of phone calls and e-mails objecting to the bill because of its cost to rate payers. Even though it did not make it out of the second funnel, last Thursday it was placed on the calendar under unfinished business and could still be debated in the 2011 session.

We say nothing bad about Mr. Fehrman, only that as a businessman his performance on March 17 left something to be desired. However, if his performance was not a personal characteristic, but a manifestation of a corporate culture of misrepresenting project economics, and leveraging personal relationships to get SF 390 through the legislature, that would be another story.

With David Sokol’s history, and his relationship to MidAmerican Energy, the whole discussion leaves us wondering if Iowa is being duped into a commitment to new nuclear reactors, the same way shareholders felt when MidAmerican Energy was sold to Berkshire Hathaway in 1999.

Legislators need to do their homework before clearing the financial hurdles for MidAmerican and its parent to invest in nuclear power in Iowa.

~Paul Deaton is a native Iowan living in rural Johnson County and weekend editor of Blog for Iowa.