Gov. Mike Braun and former Indiana Utility Regulatory Commissioner Andy Zay have agreed to terms of a $625,000 settlement in the lawsuit Zay filed over his firing, according to a copy of the agreement released by the governor's office Saturday.
The five-member IURC presides over rate change cases from utility companies in the state.
The agreement ends Zay’s bid to be reinstated to the IURC and comes before an Aug. 27 hearing on his request for a preliminary injunction.
According to the text of the settlement agreement, the state will pay Zay $625,000 in three lump sum payments: $185,000 in wages, reported on a W-2; $300,000 to resolve his other claims; and $140,000 to Zay and his law firm, Betz and Blevins, for attorney's fees and costs. The agreement says the first two payments reflected the net present value of the salary and benefits Zay would have received had he served as a commissioner through his term of March 31, 2030.
In exchange, Zay agreed to drop all claims against the state, Braun and the administration officials named in the lawsuit:
Secretary of Energy and Natural Resources Suzanne Jaworowski, State Personnel Department Director Matthew Brown, Steve Carter, the deputy counsel for appointments at the governor’s office, and IURC commissioner Joshua Bain who was appointed by Braun to replace Zay.
The agreement states it isn't an admission of wrongdoing by either side, and both parties continue to deny violating any law. Both sides are also required to take steps to dismiss the lawsuit.
Zay was provided the settlement on Aug. 19. He has 21 days to accept it.
Pleased and disappointed
Zay sued Braun Aug. 10 in Marion Superior Court alleging the governor illegally removed him earlier in the month without cause. Zay alleged Braun’s own public statements indicated the real reason for removing him was a political disagreement after Zay voted to approve a $71 million rate increase for AES Indiana customers.
Braun denounced the rate hike and demoted Zay as IURC chair in June, then fired him Aug. 3 and replaced him with appointee Joshua Bain.
Braun's legal team argued, in an Aug. 17 court filing, that the governor had cause to remove Zay and pointed to allegations that Zay used campaign funds on gifts, including monogrammed ties and scarves for IURC staff. They also alleged Zay improperly awarded staff bonuses and failed to file a required financial disclosure form.
“I am pleased that we have been able to reach a resolution. This agreement allows all involved to move forward constructively in the best interest of Hoosiers,” Braun said in a statement. “I want to recognize Andy for his service to the state. Public service is demanding work, and I appreciate his contributions over the course of a decade on behalf of Hoosiers.”
Zay, in a statement released by Braun's office, said he was proud of the IURC's work and his role as chair and commissioner.
"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 said. "I appreciate Governor Braun’s willingness to reach satisfactory terms so that we can all move forward in a positive direction.”
The commission is bound by state code to balance the interests of utility companies and ratepayers in its decisions. It must also balance the state’s five pillars of energy policy — reliability, resilience, stability, affordability and environmental sustainability.
The commission is still dealing with the fallout of the AES Indiana rate increase. The Indiana Office of Utility Consumer Counselor filed a petition asking the IURC to revisit AES’s rate increase. The IURC must decide whether to revisit the rate case by Sept. 8.
Eric Weddle is WFYI's education editor. Contact Eric at eweddle@wfyi.org or follow him on X at @ericweddle.
