Former Indiana utility regulator calls firing a ‘fishing expedition,’ denies spending allegations

Despite agreeing to settle his contentious lawsuit against the state, fired Indiana utility regulator Andy Zay maintains that his dismissal was manufactured to change the outcome in a now-pending review of a $71 million electricity rate increase for AES Indiana.

In an interview with the Capital Chronicle, Zay rejected the Braun administration’s allegations he misspent campaign money from his previous role as a state senator — but said he agreed to the $625,000 settlement because he didn’t have the time or money to see the lawsuit through.

“I never would have done anything to embarrass the administration, the (Indiana Utility Regulatory Commission), the work that we were doing,” he said Tuesday. “… They were on a big fishing expedition to move myself on, to get somebody in that would vote for the appeal, and I think that played out very publicly.”

Griffin Reid, a spokesperson for Gov. Mike Braun, slammed Zay’s remarks.

“Hoosier ratepayers should rest easy knowing they no longer have to guard their wallets from Andy Zay’s terrible judgment,” Reid said, in response to a request for comment from the Capital Chronicle. “This latest unhinged rant is just another sad chapter in his failed career in public service.”

The five-member IURC plays a key role in determining how much Hoosiers pay for electricity, natural gas, water and more.

Zay was one of three commissioners who voted in June to approve a $71 million base rate increase on AES Indiana customers.

Braun — who previously appointed Zay to the commission as chairman — denounced the rate decision, demoted Zay and called for a redo. Indiana Utility Consumer Counselor Abby Gray filed a petition asking regulators to reconsider or rehear the case.

“Honestly, there wasn’t much new,” Zay said of the petition. “It was a lot of the stuff in the main case carried forward and repeated.”

“The problem, at that point, was if we don’t set the guardrails, if we don’t protect the IURC, we’re going to be looking over our shoulder on every decision we make,” he said. “And our intent at that point was just to stand by the order.”

A denial was finalized for consideration at an upcoming meeting.

“On Monday we (published) the agenda, the governor found out about noon, and I was fired at 3:35,” Zay said.

“I feel it’s greatly compromised now,” he said of the commission. “I think they are beyond the … mission of the IURC, they’re beyond statute with the political influence.”

Campaign finance allegations disputed

Zay filed a lawsuit alleging the firing was illegal — commissioners can only be dismissed “for cause” under Indiana law — and motivated by the Braun administration’s desire for control over the AES rate case.

Braun’s legal team fired back with allegations that Zay improperly used about $3,000 in campaign funds to give utility-themed ties and scarves emblazoned with his initials to commission staffers after he’d left the Indiana Senate.

Zay, a Republican from Huntington, resigned on Jan. 8 from the Senate seat he’d held since 2016 and began work at the IURC on Jan. 12.

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But Zay said he made the purchase before switching jobs, even though the credit card statement didn’t come until Feb. 1. He provided the Capital Chronicle with a credit card statement showing the spending went through before he started at the IURC.

“I already had somebody announced to run against me in that seat in the primary, so I had some money,” he told the Capital Chronicle. “… And once (the appointment) was announced, I knew that hard deadline.”

He has been designing custom ties and scarves for about seven years and has cycled through a variety of symbols over that time, like the state flower. Zay said he considered an education theme when he began designing his latest order in November or December, but chose energy after hitting five years on the Senate utilities committee.

“I had a lot of campaign stuff left over, and I worked with my general counsel,” Zay said. “She said, ‘No, don’t hand them out, but have them there as surplus. And if people want to grab them, offer that to them. And that’s exactly how they were done.”

Fifty scarves and 50 ties, worth about $30 each, went up for grabs.

Zay shuffled through papers during this week’s interview, looking through other transactions made just before his departure from the Statehouse: tenderloins at Loughmiller’s Pub for Senate commerce committee members to celebrate the chamber’s passage of his state sandwich bill, a farewell dinner with his Senate staffers at St. Elmo Steak House.

There was another, too: a $15,000 donation to a Braun-aligned campaign fund.

“To show I was a team player, and knowing I couldn’t access my campaign money, I made a pretty good donation to the governor at that time, and that check didn’t clear (until after the job switch) either,” he said. “But, you know, it was kind of interesting that that didn’t come up in the conversation.”

‘Fighting the bank’

Despite his denial of the campaign finance and other claims, Zay agreed to settle with the state.

He received $485,000 in pay and benefits through the end of his expected four-year term on the utility commission, plus $140,000 in legal expenses.

“I’m fighting the bank, so to speak, and going against the house,” Zay said. “And, you know, I didn’t know what to do at that point. And I think there were a lot of wrongs, which has been pretty clearly delineated in litigation, but to take it all the way would have been very difficult.”

Zay plans to lay a low during his statutory yearlong “cooling-off” period from any lobbying work involving the Statehouse and the commission. He said he is watching his son’s football season at the University of Toledo and expecting a fifth grandchild while thinking about what’s next.

The IURC is scheduled to meet Thursday afternoon for a prehearing conference and preliminary hearing in the AES Indiana case.