Former Indiana Utility Regulator Settles Suit, Alleges Political Interference in Firing

Former Indiana utility regulator Andy Zay has settled his contentious lawsuit against the state for $625,000, yet maintains his dismissal was orchestrated to alter the outcome of a pending review concerning a $71 million electricity rate increase for AES Indiana customers. Zay also rejected allegations from the Braun administration that he misspent campaign money during his prior role as a state senator.

In an interview, Zay stated he agreed to the settlement because he lacked the time or financial resources to pursue the lawsuit further. He characterized his firing, saying, "They were on a big fishing expedition to move myself on, to get somebody in that would vote for the appeal." Griffin Reid, a spokesperson for Gov. Mike Braun, strongly criticized Zay's statements, remarking that "Hoosier ratepayers should rest easy knowing they no longer have to guard their wallets from Andy Zay’s terrible judgment."

The five-member Indiana Utility Regulatory Commission (IURC) holds a critical role in setting rates for electricity, natural gas, and water across Indiana. In June, Zay was one of three commissioners who voted to approve the $71 million base rate increase for AES Indiana customers.

Following this decision, Gov. Braun, who had previously appointed Zay as chairman, denounced the rate hike, demoted Zay, and called for a reconsideration of the ruling. Indiana Utility Consumer Counselor Abby Gray subsequently filed a petition asking regulators to reconsider or rehear the case. Zay commented that the petition contained "a lot of the stuff in the main case carried forward and repeated," and that his intent at the time was to "stand by the order" to protect the IURC's mission.

A denial of the petition was finalized for consideration at a future meeting. Zay stated he was fired on a Monday afternoon, just hours after the agenda including this denial was published. He now believes the commission is "greatly compromised" and operating "beyond statute with the political influence."

Zay's lawsuit contended that his firing was illegal under Indiana law, which requires commissioners to be dismissed only "for cause," and alleged it was motivated by the Braun administration's desire to control the AES rate case outcome. In response, Braun's legal team alleged Zay improperly used approximately $3,000 in campaign funds. They claimed he purchased utility-themed ties and scarves, emblazoned with his initials, for commission staffers after he had left the Indiana Senate.

Zay, a Republican from Huntington, resigned from his Senate seat on January 8 and began his work at the IURC on January 12. He countered the allegations by asserting he made the purchase before transitioning jobs, providing a credit card statement to the Capital Chronicle showing the transaction occurred prior to his IURC start. He explained that he had designed custom ties and scarves for about seven years and chose an energy theme for this order after serving five years on the Senate utilities committee. Zay consulted his general counsel, who advised him to offer the 50 scarves and 50 ties, valued at about $30 each, as surplus if people wished to take them.

Zay also noted other expenditures made just before his departure from the Statehouse, including a farewell dinner for his Senate staffers and a celebration for a bill's passage. He highlighted a $15,000 donation he made to a Braun-aligned campaign fund, made before his job switch, which he noted was not mentioned by the administration.

Despite his denials of the campaign finance allegations and other claims, Zay ultimately agreed to the settlement. The agreement provides him with $485,000 in pay and benefits through the end of his expected four-year term on the commission, along with $140,000 for legal expenses. Zay described the situation as "fighting the bank" and felt it would have been too difficult to see the lawsuit through to the end.

Zay plans to observe a statutory year-long "cooling-off" period from any lobbying activities involving the Statehouse and the commission. He is currently focused on his son's football season and awaiting a fifth grandchild while considering his next steps. The IURC is scheduled to convene Thursday afternoon for a prehearing conference and preliminary hearing in the AES Indiana case.