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Daniels fires IURC chairman

Gov. Mitch Daniels announced Tuesday that the IURC chairman, David Lott Hardy, has been fired.
Gov. Daniels

Emily Longnecker/Eyewitness News

Indianapolis - The governor has fired the man who oversees the agency that decides the utility rates you pay. The firing comes as one of the state's biggest energy providers makes its own moves affecting its man at the top.

At Governor Mitch Daniels' order, the ax fell Tuesday on David Lott Hardy, the chairman of the Indiana Utility Regulatory Commission. The IURC is the state agency that has the final say on energy rates.

Hours later, one of the state's largest energy providers, Duke Energy Indiana, had its own announcement. The company put its president, Mike Reed, and one of its attorneys on paid administrative leave.

The connection to both announcements? That Duke attorney now on leave is Scott Storms, who was once the IURC's top attorney.

"We did this out of an abundance of caution," said Angeline Protogere with Duke Energy.

According to Duke, Storms started working there last month. Before that, though, Storms oversaw IURC hearings, some of them with Duke Energy.

"Scott was not one of the commissioners who voted on our cases or made decisions on our case as to whether we got something or didn't," said Protogere.

"It looks bad. And it is bad," said Grant Smith with the Citizens Action Coalition of Indiana.

But watchdog groups say some of those hearings involved Duke's request to build a new plant in southwest Indiana, a request that got the green light.

"It looks like complete and utter corruption and we believe it is," said Smith.

The state's ethics commission drafted an opinion, saying Storms was in the clear to take the Duke job and didn't violate any state laws by doing so. But the governor's office says an internal review showed Storms talked with Duke about a job while hearing Duke cases and that then-IURC Chairman Hardy knew about the talks, but didn't take Storms out of the mix.

Now, investigations by the state and Duke could show whether appearances of impropriety are just that - appearances - or something more.

Previous version

Gov. Mitch Daniels announced Tuesday that the IURC chairman, David Lott Hardy, has been fired.

IURC Commissioner Jim Atterholt was appointed the commission's new chair.

The move comes after the departure of the IURC's general counsel Scott Storms, who accepted employment with Duke Energy of Indiana in September, and a letter Daniels sent shortly thereafter to Hardy outlining his expectations of the IURC in upholding a formal ethics opinion on the matter.

Also on Tuesday, Duke Energy said it placed Storms and Mike Reed, President of Duke Energy Indiana, on administrative leave pending the completion of an evaluation.

"There have been concerns raised about our hiring of an attorney Scott Storms to fill an opening in Duke Energy Indiana's legal-regulatory department. Mr. Storms was formerly employed by the IURC," Duke said in a statement.

"Duke Energy Indiana hired Mr. Storms after receiving a formal opinion from the Indiana Ethics Commission clearing him to work at Duke Energy with certain limitations that we have complied with and gone beyond. Nevertheless, because of the recent announcement by Indiana's Governor's Office regarding this matter, we have launched our own internal review to thoroughly examine those questions. During this review, we've placed Mr. Storms and Mike Reed, President - Duke Energy Indiana, on administrative leave pending the completion of a full evaluation," the company said.

"Today, Indiana's Governor's Office also announced a review by Indiana's Inspector General as well as an Indiana Regulatory Commission review of recent Duke Energy decisions before the commission. We will cooperate fully with all these steps."

David Pippen, the governor's general counsel, also sent a memo to all executive branch agency heads. It read:

"Recently, a former general counsel and administrative law judge (ALJ) for the Indiana Utility Regulatory Commission left state government to work for Duke Energy of Indiana, a regulated entity. 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. In short, he will not tolerate even the appearance of impropriety.

Upon the Governor's direction, an internal review of the matter revealed the lawyer was communicating with Duke regarding a position with the company at a time he was presiding over administrative hearings concerning Duke. Additionally, the agency head was aware of the communications and did not remove the lawyer from matters for which the lawyer was now conflicted.

So you understand the seriousness of this matter, I want you to know our response:

1. The Governor has terminated the employment of the chairman of the IURC;

2. The administrative opinions over which the ALJ presided regarding Duke will be reopened and reviewed to ensure no undue influence was exerted in the decisions;

3. The one-year cooling off period for decision makers are to be considered to include ALJs who preside over information gathering and order drafting; and

4. The matter has been referred to the Inspector General to determine if any laws were broken or misinformation given to the Ethics Commission when requesting a formal opinion;

To reiterate the ethics rules as they relate to regulated entities:

1. No ALJ should engage in communications with regulated entities regarding possible employment without recusing oneself from matters appearing before that regulator;

2. Administrative opinions over which an ALJ presided while pursuing employment opportunities with the regulated entity will be reopened and reviewed to ensure no undue influence was exerted in the decision;

3. The one-year cooling off period for decision makers includes ALJs who preside over information gathering and order drafting; and

4. Violations of these points will be referred to the Inspector General.

Please advise your staff to avoid this circumstance in the future.

Atterholt's appointment is effective immediately. The governor will request that the IURC Nominating Committee begin the process of accepting applications to fill the open position on the commission."

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