December 25, 2024
Texas PUC Approves ERCOT Board’s 83.9% Pay Increase
ERCOT stakeholders observe the PUC's June 29 open meeting.
ERCOT stakeholders observe the PUC's June 29 open meeting. | Admin Monitor
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The Texas Public Utility Commission unanimously approved ERCOT’s request to nearly double compensation for its independent directors, the board’s first increase since 2012.

The Texas Public Utility Commission on Thursday unanimously approved ERCOT’s request to nearly double compensation for its independent directors, the board’s first increase since 2012.

The order increases the eight directors’ annual compensation from $87,000 to $160,000, an 83.9% increase. It also raises the supplementary compensation for the board chair from $12,800 to $35,000 and from $7,500 to $15,000 for the vice chair. Committee chairs also will now receive an additional $25,000, up from $5,600. (54444).

“There have been a lot of changes and a lot has happened at ERCOT over the last decade and we should compensate appropriately,” PUC interim Chair Kathleen Jackson said during the open meeting.

Commissioner Will McAdams noted that until 2021 legislation removed market participant representatives from the board in favor of independent directors, ERCOT was able to compensate its board at lower levels. Under the new rules, the grid operator’s directors are required not to have fiduciary duty or assets in the ISO’s market and must divest themselves of energy-related investments.

“That makes this a fairly restrictive framework around finding qualified people who can serve,” McAdams said. “In principle, I want a system managed by individuals who can dedicate the time and focus to a grid that is in the midst of [a] most significant energy transition. I believe this will allow us to recruit and retain a dedicated governing body for the system, independent of the industry, which was the legislature’s intent and to be able to execute the reforms that we are required to implement along the timetables that we are required to implement them by.”

Commissioner Jimmy Glotfelty said he struggled with compensation increases for grid operator executives and their board members, saying comparing their salaries to those of publicly traded companies is not a “correct comparison.”

“We have to protect ratepayers … I just hope that in time, we set this and we leave it. We can’t let this be a spiraling issue where costs go unchecked for the consumers of this state,” he said before voting in favor of the increase.

Commissioners Lori Cobos and Peter Lake were both absent from the meeting for personal reasons. Lake’s term expired Friday.

The ERCOT board and its Human Resources and Governance (HR&G) Committee both approved the increase in June following its annual review of director compensation.

The board hired executive compensation consulting firm Meridian Compensation Partners to perform a benchmarking analysis that analyzed compensation at other ISOs and RTOs, comparably sized general industry companies, ERCOT market participants and other public companies.

ERCOT said the firm consulted with HR&G in making its recommendation, which was based on considerations that included the directors’ high volume and complexity of work, recruitment considerations and external optics and standards.

The compensation became effective July 1.

The ISO’s eight independent directors are appointed by the state’s three-person ERCOT Board Selection Committee, which is comprised of appointees from the governor, lieutenant governor and the Texas House of Representatives’ speaker.

The board’s non-voting ex officio members — the ERCOT CEO, PUC chair and the Office of Public Utility Counsel’s CEO — are not covered by the order.

Recent legislation will increase the board to 12 members in September when a second PUC commissioner becomes an ex officio member.

ERCOT Board of DirectorsPublic Utility Commission of Texas (PUCT)Texas

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