Fired Indiana utility regulator sues governor over his removal

The lawsuit comes exactly a week after Gov. Mike Braun abruptly dismissed Zay from the IURC, which plays a key role in determining how much Hoosiers pay for electricity, natural gas, water and other utility services.

The State Personnel Department has accused Zay of several “potential violations” of state policy, but he contends the firing is really about his vote to support the rate increase and for control over what happens next.

“It is clear that Commissioner Zay’s removal as IURC Commissioner was motivated by a desire to alter the composition of the Commission before final action is taken on the Petition for Rehearing in the AES Rate Proceeding,” the complaint, filed in Marion County Superior Court, reads.

Braun has already appointed a successor, former Indianapolis City-County Councilor Joshua Bain, who began serving effective immediately Thursday.

Zay fired from utility regulator panel weeks after AES hike demotion

In addition to Braun and Bain, the complaint names Secretary of Energy and Natural Resources Suzanne Jaworowski, State Personnel Department Director Matthew Brown, and Steve Carter, the deputy counsel for appointments at the governor’s office.

A spokesperson for the governor’s office declined to comment.

Goodwill sours

Braun appointed Zay and two others to the IURC in December, describing the trio as “aligned with Governor Braun’s commitment to making energy affordable for families and businesses.”

Zay, a Republican, resigned from an Indiana Senate seat he’d held for nearly a decade in order to join the commission — as chair — in January.

He launched an affordability inquiry in February, questioning the “big five” investor-owned utilities on their rates in March and holding a listening tour for frustrated ratepayers around the state through April.

But his relationship with Braun and the administration soon soured.

Zay joined Commissioners David Veleta and David Ziegner on June 17 in a 3-1 vote to approve the increase. Commissioner Bob Deig voted in opposition, while a fifth member, Anthony Swinger, recused himself.

Zay’s complaint alleges that Jaworowski called him on June 15, two days before the decision to tell him, “You know affordability is a big deal to this governor” — as well as the day of, to “conve(y) Governor Braun’s disappointment with the outcome.”

Other representatives of the governor’s office told Zay he had “let the governor down” and that they’d “told (him) not to do this” in a meeting he attended later on June 17, according to the complaint.

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Zay was called into another meeting on June 18 — this time featuring Braun, Chief of Staff Joshua Kelley, Jaworowski and Utility Consumer Counselor Abby Gray, whose office represents ratepayers in IURC matters.

“During that meeting, after discussion concerning utility rates and the AES Rate Proceeding decision, Governor Braun asked Gray, ‘How are we going to fix this?'” Zay’s complaint alleges.

He excused himself from the meeting, believing discussions had crossed into banned “ex parte” communications — seeking to sway a decision-maker in a case without the other parties to the case present.

Zay reported seeking guidance on June 22 from the Office of Inspector General about his ex parte communications and impartiality concerns.

That day, according to the complaint, Jaworowski asked Zay to change the agenda for an upcoming IURC meeting and provide her with an unreleased affordability report. He declined, according to the complaint.

Demotion bleeds into firing

Zay’s complaint alleges that later on June 22, Jaworowski asked him to resign from the IURC, at the governor’s request. When Zay refused, Braun demoted him and elevated Swinger to the chairmanship.

In July, Gray petitioned the IURC to reconsider the AES Indiana increase or rehear the case, in accordance with Braun’s wishes.

Last Monday — days before the IURC was scheduled to vote on the petition — Zay was fired. The vote was called off.

In his complaint, Zay recounts how Brown and Carter came to his office and attempted to interview him. When he declined to participate without a lawyer present, they “told Commissioner Zay that he could resign or he would be fired.”

Zay declined. They handed him a letter, already signed by Braun, immediately removing him from the commission.

Commissioners are appointed to four-year terms and can only be dismissed “for cause” under Indiana law.

The lawsuit asserts Zay wasn’t provided with any reasons for his firing or given a chance to respond to any allegations before he was forced to collect his personal belongings from his office and was escorted from the building.

“Zay was discharged from employment with the State of Indiana today, August 3, 2026, for non-adherence to state policies and laws related to his role as Commissioner at the IURC,” SPD spokesman Kirollos Barsoum said in an email to the Capital Chronicle the night of his dismissal.

More specifically, Barsoum said he was dismissed for “multiple potential violations of state policy; including failing to file a required financial disclosure after his removal as Chair, improperly awarding payments and personal gifts to employees, and directing staff to alter a public meeting agenda without consulting the new Chair.”

Asked why alleged violations were framed as “potential,” Barsoum only said his previous statements “provid(e) the factual basis for the discharge,” adding, “No additional information is available regarding this matter.”

In his complaint, Zay responded that he didn’t have to file an additional financial disclosure after his demotion and that payments to employees were made with approval from SPD and Jaworowski.

Records obtained by the Capital Chronicle show that the IURC’s 64 employees each received $900 bonuses on May 9. A spokesperson for the commission didn’t respond to a request for comment on the justification for the bonuses, while SPD didn’t respond to questions on its approval of the bonuses or for spot bonus guidance directed to agencies.

Zay also reported that he used his own money to give IURC staff $8 Starbucks gift cards on their birthdays.

Additionally, while he didn’t direct any staffers to put any particular item on an agenda — and that it was staff alone who put the AES Indiana petition on last week’s meeting schedule — Zay said he wasn’t aware of any policy requiring the chair’s approval to put anything on an agenda.

Lawsuit’s goals

Zay alleged the real reason for his firing was political, pointing to the governor’s comments to reporters in the days after.

“Nothing else to announce there other than I was disappointed that he didn’t take on affordability and holding utilities accountable,” Braun said last week.

Asked what led to the firing, and if he asked Zay to resign beforehand, he replied, “No, it was from the very beginning, when it was clear I was looking for folks (who are) ratepayer-conscious, and the first thing out of the gate was granting a big increase — and that was not part of the interview. … If you don’t have staff, people working with you in the same mindset, it’s better to find somebody that does.”

Zay wants his seat on the IURC back immediately. He also asked the court to stop Bain from taking over the spot or exercising any commissioner powers until the lawsuit is settled.

“Each matter heard, considered, voted upon, or decided by the Commission during Commissioner Zay’s exclusion constitutes an exercise of governmental authority in which Commissioner Zay is prevented from performing the duties of his position,” his complaint reads.

It asserts that, even if Zay wins the lawsuit, no amount of money in damages will make up for the decisions he’ll be excluded from if he’s left off the IURC while the lawsuit is pending.

“If the IURC acts upon the Petition for Rehearing while Commissioner Zay remains excluded and Bain occupies his seat, the Petition will be considered and voted upon by a Commission whose composition was unlawfully altered by Governor Braun,” the complaint reads.

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