Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
Editor’s note: This story has been updated from its original version to include terms of the settlement that the state shared after first announcing the agreement.
The state of Indiana and former Indiana Utility Regulatory Commission Chair Andy Zay have reached a $625,000 settlement over a lawsuit that Zay filed after he was fired from the position early this month, Gov. Mike Braun announced Saturday.
Zay will not be reinstated as the IURC chair, as he had desired. However, the state has agreed to pay Zay $625,000 to cover his compensation as chair through March 31, 2030, and his legal fees, according to settlement terms provided to the media by the Governor’s Office.
“I am disappointed that I will no longer be directly involved in this important work, but I believe resolution with the State is in everyone’s best interest at this time,” Zay was quoted as saying in Braun’s press release. “I appreciate Governor Braun’s willingness to reach satisfactory terms so that we can all move forward in a positive direction.”
Reached by IBJ on Saturday afternoon, Zay confirmed that he had reached a settlement agreement in the case, and that the comments attributed to him in the release were indeed his.
“I am pleased that we have been able to reach a resolution,” Braun said in the release. “This agreement allows all involved to move forward constructively in the best interest of Hoosiers.”
The settlement apparently puts to rest an issue that cropped up last week. AES Indiana asked the IURC to refrain from taking action that leads to a reduction of its previously approved rate hike while Zay’s spot on that board remained in dispute.
The lawsuit filed in Marion County Superior Court claimed that the Braun administration did not show cause when it fired Zay, a former state lawmaker. And the suit accused the Governor’s Office of engaging in prohibited conversations with Zay about a case in which AES Indiana is seeking a rate increase.
Zay had asked the court to immediately reinstate him to his role on the IURC, to which Braun appointed him in January. Initially, Braun named Zay to chair the utility commission, but after Zay voted to approve a $71 million rate hike for AES Indiana, the governor removed him as chair, leaving him on the panel. Then on Aug. 3, Braun fired Zay from the commission.
Zay’s lawsuit named Braun and several other state employee as defendants: Secretary of Energy and Natural Resources Suzanne Jaworowski; Matthew Brown, director of the state’s personnel department; Steve Carter, an attorney for the Governor’s Office; and Joshua Bain, who was appointed to the IURC to replace Zay.
Zay has agreed to end the lawsuit, and all of the defendants were parties to the settlement. The agreement does not constitute any admission of guilt, according to the terms of the settlement.
The State Personnel Department had accused Zay of several “potential violations” of state policy, but Zay contended the firing was really about his vote to support the rate increase and for control over what happens next.
Braun’s legal team submitted a response to Zay’s lawsuit late Sunday, according to the Indiana Capital Chronicle. The team said that the governor’s office learned Zay used campaign funds for impermissible purposes – namely the purchase of ties and scarves emblazoned with his initials, images of utility-themed objects such as a power plant and electrical station. The tag read “Designed exclusively for Andy Zay by Candor Threads.”
A campaign expenditure report shows a $3,091 purchase from Candor Threads on Feb. 1. Zay, a Republican from Huntington, resigned from the state Senate seat he held since 2016 on Jan. 8 and began work at the IURC on Jan. 12.
Indiana Election Division staff told the governor’s office the expenditure didn’t appear to be legitimate, according to Braun’s response.
Carter filed an affidavit saying he initially had concerns about Zay’s appointment.
“I was concerned that he thoroughly understood his obligations to leave politics and partisan activities behind if he was appointed to, and accepted, the role,” Carter said.
Carter, a former state attorney general, spoke with Zay by phone to make sure he understood his obligations before Braun appointed Zay to the IURC.
On July 26, Carter was made aware of the ties and scarves.
Additionally, the filing said Zay improperly awarded bonuses to IURC employees. The Capital Chronicle reported Zay gave $900 “spot bonuses” to the entire staff on May 9. Zay in his lawsuit said those bonuses went through the State Personnel Department.
Please enable JavaScript to view this content.