FERC has approved a set of amendments to SERC Reliability’s bylaws, jointly submitted by the regional entity and NERC last year, aimed at creating “a more strategic, efficient and effective governance body” (RR20-2).

The new bylaws, approved July 1, will take effect Jan. 1, 2021, and will implement a number of structural changes, including:

• transitioning SERC’s Board of Directors to a hybrid board containing 15 sector representatives and at least three independent directors (with a maximum of five);
• requiring that a majority of the board, as well as a majority of the independent directors, be present to have a quorum for meetings;
• eliminating the use of alternates and proxies for directors and independent directors;
• formalizing SERC’s membership body by transitioning the existing board structure into a members group, which will include a representative from each member company and meet at least annually to advise the board on the business plan and budget, elect independent directors and approve bylaw changes as needed;
• changing the Board Compliance Committee into a Board Risk Committee; and
• adding a Human Resources and Compensation Committee, Nominating and Governance Committee and Finance and Audit Committee.

NERC’s Board of Trustees approved the revised bylaws at its meeting last November. At the time, NERC Chair Roy Thilly called the changes “a very positive development,” and Trustee Fred Gorbet said they would “[move] SERC to the front of the pack in terms of good governance.” (See “SERC Bylaw Changes OK’d,” NERC Board of Trustees Briefs: Nov. 5, 2019.)

Consumer Group Demand Voice in SERC

The proposal by NERC and SERC did not go entirely unopposed. Earlier this year, consumer advocacy group Public Citizen filed a protest requesting further amendments to the planned changes.

Public Citizen supported the desire for greater board independence but felt the RE’s plan did not go far enough to ensure “effective reliability and cybersecurity governance” because the resulting board structure would still lack representation by consumer advocates. The group asked that FERC require SERC to reserve at least one seat on the board for such a representative, that the RE also be made to include household consumer advocates in its broader membership and that at least one advocate should serve on the new members group.

In their response to Public Citizen, NERC and SERC reminded the commission that in its Order 672, it had given REs “flexibility … to find a governance structure appropriate to their regions” and that it would not “prescribe limits on board composition [or] representation of industry segments.” The organizations noted that consumer advocates could join the members group and pointed out that they also “have numerous opportunities for involvement at SERC outside of the membership body.”

The commission sided with NERC and SERC, agreeing that Order 672 prohibits it from creating specific conditions for board composition and that consumer advocates can participate in SERC’s decision-making process without the RE being obligated to allow them on its board.

With the new bylaws accepted, SERC will now begin its search for qualified independent director candidates to fill the new board seats, along with beginning transition activities to implement the other governance changes. SERC’s goal is for all changes to be in place when the new Regional Delegation Agreement, approved by NERC’s board at its May meeting, takes effect. (See “Other Approvals,” NERC Board of Trustees/MRC Briefs: May 14, 2020.)