Indiana Gov. Mitch Daniels has terminated state utilities chief David Lott Hardy for allegedly allowing an agency official to continue presiding over a Duke Energy Corp. case even after talking with the utility about a job opportunity.

“In short, he [Daniels] will not tolerate even the appearance of impropriety,” said a memo to state agency heads from David Pippen, Daniels’ general counsel.

The governor in an announcement Tuesday morning said he was immediately replacing Hardy with Jim Atterholt as chairman of the Indiana Utility Regulatory Commission. Atterholt serves on the IURC and is the state’s former insurance commissioner.

The firing of Hardy follows the recent departure to Duke’s Plainfield office of Scott Storms, an administrative law judge for the IURC. Storms was presiding over a handful of cases involving Duke, including matters involving cost overruns at Duke’s Edwardsport generating plant.

Storms and Duke previously sought an advisory opinion from the state ethics commission on whether Storms would be subject to a one-year cooling-off period from employment at Duke. The ethics commission said the cooling-off period didn’t apply to Storms, but rather to IURC commissioners involved in direct decision-making.

Critics, including the Citizens Action Coalition, said Storms, even as an administrative law judge, made critical decisions, such as whether or not to admit key evidence in utility cases.

Pippen said an internal review found that Storms was communicating with Duke about a job even while he was presiding over administrative hearings concerning Duke.

"Additionally, the agency head (Hardy) was aware of the communications and did not remove the lawyer from matters for which the lawyer was now conflicted,” Pippen told agency heads.

He added: “I wrote a letter to the IURC explaining the governor’s interpretation of the spirit and intention of the ethics reform he spearheaded when he came to office.”

Moreover, Daniels has directed that administrative opinions over which Storms presided will be reopened and reviewed “to ensure no undue influence was exerted in the decisions.”

It was not immediately clear which Duke cases those involved.

Daniels also directed that a one-year cooling off period for decision makers is to be considered for those at the administrative law judge level, as well.

Further, the administration said it has referred the matter to the Inspector General to determine if any laws were broken or whether misinformation was presented to the Ethics Commission.