INDIANAPOLIS, Ind. (WOWO) — Former Indiana Utility Regulatory Commission Chairman Andy Zay is suing Gov. Mike Braun, seeking to regain his seat on the state panel and alleging he was illegally removed after voting to approve a controversial rate increase for AES Indiana customers.

Zay filed the lawsuit Monday in Marion County Superior Court, just one week after Braun removed him from the commission.

The timing of the lawsuit is significant because the IURC is preparing to consider whether to reconsider a roughly $71 million rate increase for AES Indiana customers. A scheduled vote on that issue was canceled following Zay’s removal.

Zay’s lawsuit asks the court to restore him to the commission immediately and prevent Braun’s replacement, former Indianapolis City-County Councilor Joshua Bain, from exercising the powers of the seat while the case is pending.

At the center of the dispute is Zay’s allegation that his removal was not actually about the policy violations cited by the administration, but about his vote in the AES Indiana case and the governor’s desire to change the makeup of the commission before the rate case could be reconsidered.

“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,” Zay’s complaint states.

The governor’s office declined to comment on the lawsuit.

Braun appointed Zay and two other commissioners in December. Zay, a Republican, had previously served nearly a decade in the Indiana Senate before leaving the legislature to join the IURC.

He became commission chairman in January.

During his tenure, Zay made utility affordability a major focus. He launched an affordability investigation in February, questioned Indiana’s largest investor-owned utilities about their rates and participated in a statewide listening tour with utility customers.

That relationship with the Braun administration deteriorated after the IURC considered the AES Indiana rate request.

On June 17, Zay joined Commissioners David Veleta and David Ziegner in voting 3-1 to approve the rate increase. Commissioner Bob Deig opposed the increase, while Commissioner Anthony Swinger recused himself.

Zay’s lawsuit alleges that the governor’s office was unhappy with the decision.

According to the complaint, Indiana Secretary of Energy and Natural Resources Suzanne Jaworowski contacted Zay before the vote and emphasized that affordability was a priority for Braun.

The lawsuit alleges that Jaworowski later communicated the governor’s disappointment with the outcome.

Zay also claims representatives of the governor’s office told him he had “let the governor down” and that they had previously told him not to support the action.

The following day, Zay attended a meeting with Braun, Chief of Staff Joshua Kelley, Jaworowski and Utility Consumer Counselor Abby Gray.

According to Zay’s complaint, the discussion turned to the AES rate case. Zay alleges Braun then asked Gray, “How are we going to fix this?”

Zay says he left the meeting because he believed the discussion had crossed into prohibited ex parte communication — an attempt to influence a decision-maker in a pending case without all parties present.

The lawsuit says Zay subsequently contacted the Indiana Office of Inspector General for guidance concerning the alleged communications and questions about the commission’s independence.

Zay alleges that later that same day, Jaworowski asked him to make changes to an upcoming IURC meeting agenda and provide an unreleased affordability report.

He says he refused.

According to the complaint, Jaworowski then asked Zay to resign at Braun’s request.

When Zay refused, Braun removed him as commission chairman and elevated Swinger to the chairmanship.

The dispute continued into July, when the Indiana Utility Consumer Counselor’s office asked the IURC to reconsider the AES Indiana rate increase or rehear the case.

The lawsuit alleges that the request was made in accordance with Braun’s wishes.

Then, on August 3, Zay was fired from the commission.

The administration has offered a different explanation for the dismissal.

State Personnel Department spokesman Kirollos Barsoum said Zay was discharged for “multiple potential violations of state policy,” including allegedly failing to file a required financial disclosure following his removal as chairman, improperly awarding payments and personal gifts to employees, and directing staff to change a public meeting agenda without consulting the new chair.

Zay disputes those allegations.

His complaint says he was not required to file another financial disclosure after his demotion. He also says employee payments were approved by the State Personnel Department and Jaworowski.

Records obtained by the Indiana Capital Chronicle show that the IURC’s 64 employees each received $900 bonuses in May.

Zay also acknowledged giving IURC employees $8 Starbucks gift cards for their birthdays, but says the gifts came out of his own pocket.

He disputes the allegation that he directed staff to manipulate the commission’s meeting agenda. Zay says he did not instruct staff to put a particular item on the agenda and that he was unaware of any policy requiring the commission chairman to approve an item before it was placed on the schedule.

The circumstances surrounding Zay’s dismissal also involve Indiana’s statutory protections for utility commissioners.

Under state law, IURC commissioners serve four-year terms and can be removed only “for cause.”

Zay’s lawsuit argues that the administration did not provide him with adequate notice of the allegations or an opportunity to respond before he was removed.

According to the complaint, State Personnel Department Director Matthew Brown and Steve Carter, deputy counsel for appointments in the governor’s office, went to Zay’s office and attempted to interview him.

Zay declined to participate without an attorney.

The lawsuit says he was then told he could resign or be fired.

He refused to resign and was given a dismissal letter signed by Braun.

The governor has publicly defended the decision.

Asked last week about Zay’s removal, Braun said he was disappointed that Zay had not taken a sufficiently aggressive approach toward utility affordability and holding utilities accountable.

Braun also said he had been looking for commissioners who were “ratepayer-conscious.”

“If you don’t have staff, people working with you in the same mindset, it’s better to find somebody that does,” Braun said.

Braun’s comments are likely to be significant in Zay’s argument that his removal was motivated by his policy position rather than the alleged personnel violations.

The lawsuit says the timing of Zay’s dismissal, Braun’s comments and the pending AES rehearing demonstrate that the governor was seeking to change the commission’s composition before the rate case could be reconsidered.

Zay is asking the court to prevent Bain from taking over the seat while the legal dispute is resolved.

He argues that simply awarding him monetary damages later would not adequately address the harm because the commission could make decisions during his absence that cannot be undone.

The lawsuit specifically warns that if the IURC considers the AES Indiana rehearing while Zay is excluded and Bain occupies his seat, the case would be decided by a commission whose composition Zay alleges was unlawfully changed.

The case could therefore affect more than Zay’s employment.

The IURC has broad authority over utility rates and services in Indiana, meaning the dispute could have consequences for how the state regulates electricity and other utilities — and for the customers who ultimately pay those rates.

For now, Braun’s replacement is in place, while Zay is asking a judge to restore him to the commission before the AES Indiana rate case moves forward.

The governor’s office has not publicly commented on the lawsuit itself.