Former Indiana Utility Regulatory Commission chair Andy Zay reached a settlement with the state, resolving the lawsuit he filed to challenge his firing, Gov. Mike Braun’s office announced Aug. 22.
Under the settlement, Zay will not rejoin the IURC. Indianapolis City-County Councilor Josh Bain, tapped by Braun earlier this month, will remain in his role as Zay’s replacement.
“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 wrote in a statement shared by the governor’s office. “I appreciate Governor Braun’s willingness to reach satisfactory terms so that we can all move forward in a positive direction.”
No documents related to the settlement were posted on the case’s online court docket at the time of this story’s publication. Braun’s announcement did not say whether the settlement included monetary terms, and a lawyer for Zay and a spokesperson for Braun did not immediately respond to requests for comment on the details of the settlement.
Braun appointed Zay, a former Republican state senator, to the IURC in January. But Zay clashed with the governor after the commission voted in June to approve a $71 million rate increase for AES Indiana, the utility firm that provides electricity to Indianapolis.
Braun demoted Zay from his position as commission chair shortly after the IURC greenlit the AES rate increase. Then, in August, Braun fired Zay, accusing him of making improper gifts to IURC employees and failing to file a required financial disclosure.
A week later, Zay sued, claiming the governor had broken state law by firing him without cause. He argued that he missed no financial disclosures and denied that he used state funds to pay for employee gifts, and he asked to be reinstated to the commission.
“Commissioner Zay occasionally provided de minimis gifts to IURC employees using his own personal funds by giving them $8.00 Starbucks gift cards on their birthdays,” his complaint stated.
Zay also paid $900 spot bonuses to IURC employees in May, records from the state comptroller’s office show. Those payments were made with the approval of the State Personnel Department, his lawyers wrote in the complaint.
The lawsuit cast Zay’s firing as a clash over the commission’s independence from the governor. Zay’s lawyers wrote that the governor’s office asked to review materials related to an IURC investigation before they became public. Complying would violate the ex parte law that limits IURC members’ ability to discuss legal proceedings outside the courtroom, the complaint said.
On Aug. 3, according to the complaint, two state officials — State Personnel Department director Matthew Brown and Braun’s deputy counsel for appointments Steve Carter — appeared at Zay’s office. Brown and Carter demanded that Zay resign. When he refused, they presented him with a letter informing him that he was fired and escorted him out of the building.
A copy of the letter included in Zay’s complaint does not state the reasons for his dismissal.
In response, the state said in a legal filing that Zay used campaign funds to purchase ties and scarves for IURC staff, patterned with utility-related symbols and bearing the woven message “Designed exclusively for Andy Zay by Candor Threads.” Campaign finance records show that Zay paid Candor Threads $3,090 on Feb. 1.
The Marion County Superior Court judge overseeing the case, Christine Klineman, shot down two requests from Zay for a temporary restraining order that would prevent Bain from taking office until the end of the month.
What does the settlement mean for electricity rates?
Zay’s removal tilts the balance of the five-member IURC as it considers requests to revisit the AES rate case from the Office of Utility Consumer Counselor, a state agency that advocates for ratepayers, and the nonprofit Citizens Action Coalition.
When the rate increase passed in July, three IURC members, including Zay, voted in favor. But two of them — Zay and David Veleta, who stepped down this month — have now been replaced by Braun. The governor has said he chose “ratepayer-conscious” appointees. That means Bain and Joby Jerrells, Veleta’s replacement, may be more sympathetic to requests to pare back or reverse the rate increase.
AES Indiana had asked the IURC not to make a decision on rates until Zay’s lawsuit was decided.
“The allegations in the Zay Complaint, if true, may well invalidate any attempted action by the Commission on the [Office of Utility Consumer Counselor] and [Citizens Action Coalition] Petitions in which Mr. Bain participated as a member of the Commission and Mr. Zay did not,” AES lawyers wrote in a motion to the IURC.
The settlement does away with any remaining uncertainty about the IURC’s composition, clearing the path for a final decision on rates.
Tilly Robinson is a Pulliam Fellow for the Indianapolis Star. She can be reached at tilly.robinson@indystar.com.
This article originally appeared on Indianapolis Star: Gov. Mike Braun reaches settlement with fired utility commissioner
Reporting by Tilly Robinson, Indianapolis Star / Indianapolis Star
USA TODAY Network via Reuters Connect
By Tilly Robinson, Indianapolis Star | USA TODAY Network
