CARMEL, Ind. — MISO will next week begin conducting the election for three open seats on its Board of Directors.
The RTO’s Nominating Committee has settled on incumbents Phyllis Currie and Mark Johnson along with Minnesota Public Utilities Commission Chair Nancy Lange. If Lange earns enough of the vote, she will replace outgoing Chairman Michael Curran, who has reached the three-term limit.
Before being formally selected by MISO’s Nominating Committee, Currie was elected as chair for 2019. (See MISO Board Selects Currie as New Chair.)
Madison Gas and Electric’s Megan Wisersky, who holds one of two stakeholder seats on the Nominating Committee, said the committee narrowed a pool of about 30 candidates to two candidates for each of the three open seats, including those held by Currie and Johnson. MISO turned to management firm Russell Reynolds for help assembling a candidate pool.
“The quality of the candidates was exceptional,” Nominating Committee member and Director Baljit Dail said.
“We look forward to another newbie,” Curran added.
MISO Senior Vice President and Secretary Stephen Kozey said polls will be open Sept. 27 to Nov. 2, with a quorum representing 25% of MISO voting members (at least 35 members). Candidates must receive a majority of member support after quorum to be placed on the board. For each candidate listed on the ballot, MISO members can vote “for,” “against” or “withhold.”
“Should a member fail to collect a majority of the voting, the Nominating Committee process would begin all over again,” Kozey said.
MISO membership will also vote during that time on whether to increase the board’s compensation beginning in 2019. The board, after consulting with Russell Reynolds, voted to give itself a $7,000 raise for all directors, raising the current base retainer from $89,000 to $96,000 per year. Currently, directors are paid $116,000, committee chairs get $124,000 and the board chair gets $131,000. The last director pay increase took place in 2016. (See Board OKs Pay Hike, Change to Independence Rules.) The board also voted to increase the chairman’s stipend from $15,000 to $20,000 in 2019.
Curran said increases to director compensation would be frozen for two years should the increase take effect.
Kozey said under MISO’s Transmission Owners Agreement and bylaws, it would take at least two-thirds of the quorum of voting RTO members to reject the compensation increase.
Board election and compensation results will be announced at the Dec. 6 board meeting in Carmel, Ind.
MISO Spending Closely Tracks 2018 Limit; RTO Ups 2019 Budget
After earlier forecasts of a small year-end overage, MISO is now on track to be $1.2 million under its $265 million expected budget in December.
MISO Chief Financial Officer Melissa Brown said the savings are primarily attributed to delays in planned investments.
The RTO is likewise expected to come in under its capital expense budget, likely spending $28.8 million of the allotted $29.6 million. The decrease comes from deferring some vendor work on its market platform replacement and reclassifying other capital expenses as operating expenses.
MISO staff are proposing a $269.6 million operating budget for 2019, a $4.7 million increase over last year. The RTO, however, is planning for a smaller capital budget, at $27.2 million.
The 2019 budgets include $81.2 million in both operating and capital spending on technology.
The total 2019 budget includes $20.5 million of spending on MISO’s market platform replacement project, broken down into $10.7 million in capital expenses, $4.2 million in operating expenses and $5.6 million dedicated to the salaries and benefits of staff working on the project.
MISO leadership said it will reveal in late 2019 its chosen vendor to construct the new platform. In June, the RTO said preliminary vendor General Electric was months behind schedule on developing the platform, especially on the complex software needed to clear the day-ahead market. (See MISO Platform Replacement Risks Delay, Budget Overrun.)
Curran asked that MISO provide the board updates on its preferred vendor and reasoning before releasing the information next year.
MISO Reviewing FTR Process
After PJM experienced a major default in its financial transmission rights market, MISO is ramping up an ongoing review of its own FTR market.
Officials said they began the review in 2017 and will continue to look for any weaknesses in its process. The evaluation is expected to extend into next year, and MISO said it plans to bring results of the evaluation to stakeholders.
Brown said staff are looking at other RTOs’ practices to identify the best combination of procedures.
FERC filings indicate PJM’s financial fallout from the incident that began with GreenHat Energy’s $1.2 million FTR default might become as high as $110 million. (See PJM Reeling from Major FTR Default.)
But MISO last week said its FTR market differs from PJM’s in one key way that may protect it against a significant default: MISO does not net auction bid prices with estimated congestion credit value. MISO said the netting difference results in a conservative credit calculation and higher collateral, preventing “thinly capitalized” parties from buying large portfolios.
“We believe this is a key component for minimizing the magnitude of a default,” MISO said.
Brown said bid prices in MISO are required to be collateralized.
“So you’ve got to bring the cash to play the game,” she told the board.
MISO also said it limits FTR terms to one year, while PJM allows rights for up to four years. It additionally pointed out that it estimates the value of transmission congestion more frequently than PJM, updating congestion estimates monthly rather than once per year.
In response to a question from Director Barbara Krumsiek about whether GreenHat could resurface to apply to operate in MISO, Brown said the screening process for credit worthiness would most likely exclude it early in the process.
Directors asked if there was a downside to being more conservative in its FTR market requirements.
Brown said MISO’s collateral requirment protects the membership class, not MISO, because the costs of a default would be passed on to members.
“I’m on the conservative side, just so we’re clear,” Director Currie said.
Director Thomas Rainwater said it appeared that MISO’s credit policy hasn’t diminished “robust” FTR market activity.
— Amanda Durish Cook
