Former Indiana Utility Regulatory Commission Chairman Andy Zay says he was fired less than six hours after an order in the AES Indiana rate case was placed on the commission’s agenda, and that he has never received a formal statement of cause for his removal.
“The agenda went out at 10 o’clock. The governor found out about noon, and I was fired at 3:35,” Zay said in an interview with Indy Politics.
Zay, a Huntington Republican who served 10 years in the Indiana Senate before Gov. Mike Braun appointed him to lead the commission, was removed Aug. 3. He sued Braun and several administration officials Aug. 10. The state settled the case Aug. 22 for $625,000.
Indy Politics sent the governor’s office a summary of Zay’s account and asked whether the governor knew of the AES item before the firing, whether Zay was given a written statement of cause, whether the State Personnel Department approved the staff bonuses, and how the administration handled the pre-suit settlement offer. The office did not answer the questions, but did provide a statement Thursday attributable to Griffin Reid, a spokesperson for the office.
“Hoosier ratepayers should rest easy knowing they no longer have to guard their wallets from Andy Zay’s terrible judgment, this latest unhinged rant is just another sad chapter in his failed career in public service,” Reid said.
The AES Order
Zay said he and then-Commissioner David Veleta were assigned to the AES case, including the petition from the Office of Utility Consumer Counselor asking the commission to reconsider the $71 million rate increase approved in June.
He said the two worked with the administrative law judge, agreed on language, circulated the order among commissioners and placed it on the agenda for Monday, Aug. 3. Zay said he spoke with Chairman Anthony Swinger the previous Friday about Monday’s caseload, including the AES item.
Zay did not say in the interview what the order would have done.
He said State Personnel Department Director Matt Brown and a deputy general counsel arrived at his office unannounced that afternoon and delivered a letter from the governor.
“It wasn’t a call,” Zay said. “Showed up completely unannounced.”
Asked about his conversations with the governor and administration officials about the rate case, Zay declined to go into detail.
“I think the litigation speaks for itself, and it being an open case, I don’t want to get into the intimacy of that,” he said.
Zay defended the original June order. He said AES requested $191 million, eight of 10 parties reached a settlement at about $90 million, and the commission reduced that to $70 million. He said the result was a 63% cut from the utility’s request.
“Is it what the administration wants? Clearly not,” Zay said. “We can’t arbitrarily pick numbers.”
Braun publicly criticized the June vote, removed Zay as chairman June 22 and named Swinger to replace him. Veleta, who also voted for the increase, later resigned.
The Allegations
On the day of the firing, the State Personnel Department said Zay was discharged for failing to file a required financial disclosure after his removal as chairman, improperly awarding payments and personal gifts to employees, and directing staff to change public meeting agendas without consulting the new chairman.
In an Aug. 16 court filing, attorneys for the state cited Zay’s use of campaign funds for ties and scarves given to commission staff, improperly awarded employee bonuses, and the financial disclosure.
“I sit with you today and I’ve still never seen official cause, which I find very odd,” Zay said. He said the first time he learned of any cause was the personnel department’s statement, and the more detailed version came in response to his lawsuit.
Zay said he has designed campaign ties and scarves for seven years and had chosen a utility motif because he served on the utilities committee and was applying to the commission. He said he bought about 100 in total. On the advice of the commission’s general counsel, he said, he did not hand them out, but made them available at an all-staff meeting.
“They twisted that to make it look, you know, really evil,” Zay said.
He said he also wrote birthday notes to employees and included $8 Starbucks gift cards. Zay said the agency was down 20% to 30% of its staff, and that improving morale was a goal set for him by the administration.
“In my six months as chair, I lost over 300 years of institutional knowledge at the IURC,” he said.
Zay said the campaign spending the state questioned, including a dinner at St. Elmo Steak House for his former Senate staff and tenderloin sandwiches for members of the Senate committee and his staff, occurred before his Jan. 10 deadline to stop using the account. He said the expenses appear on his Feb. 1 campaign finance report because that is when the credit card bill came due, and he displayed a redacted credit card statement during the interview.
The pre-primary report the state filed as an exhibit lists a $3,090.11 payment to Candor Threads dated Feb. 1.
Zay said the Indiana Election Division never flagged his campaign finance reports. A declaration from Steve Carter, an attorney for the governor, filed by the state referenced an inquiry to the Election Division.
On the bonuses, Zay said the agency was told it could award them if its budget allowed, and that the amounts had to be equal and go to all staff. He said the personnel department approved them.
“He approved the bonus, so I didn’t dream up handing out bonuses to my staff,” Zay said of Brown.
Zay said Energy Secretary Suzanne Jaworowski praised the bonuses as good for morale.
The Settlement
Zay said his side offered to settle before filing suit and gave the state about four days to respond.
“We actually offered settlement before we filed suit, and I don’t think they took it seriously,” he said.
Under the agreement released by the governor’s office, the state will pay Zay $185,000 in wages, $300,000 to resolve his other claims and $140,000 in attorney fees to Zay and his law firm, Betz + Blevins. Neither side admits wrongdoing, and Zay will not return to the commission.
Asked why the state settled, Zay said he was not certain.
“I think a lot of the causes that they had gone fishing for, there were a lot of holes punched in that,” he said.
In a statement announcing the settlement, Braun thanked Zay for his service to the state.
What Comes Next
The commission voted 3-1 on Sept. 2 to reconsider the AES rate increase. Joshua Bain, whom Braun appointed to Zay’s seat, and Joby Jerrells, who replaced Veleta, voted with Commissioner Bob Deig in favor. Swinger, who is recused from the case, did not participate. A prehearing conference is set for Sept. 17.
Zay said he hopes the commission can regain its independence and impartiality.
“I think it’s time for him to play governor and get on with that,” Zay said of Braun.
Zay said he will observe the one-year cooling-off period for former commissioners before considering work in the energy sector or public service. For now, he said, his family is waiting on the birth of his first grandchild.
“It’s a little brutal,” Zay said of being accused of financial impropriety. “There was nothing, absolutely nothing, I did to intentionally upset that apple cart.”
