By Suzanne Herel

When Terry Boston took the helm of PJM seven years ago, the RTO was in turmoil, its reputation as the model for running competitive deregulated electricity markets in the balance.

Top management was battling allegations by PJM’s electricity price watchdog that the system was allowing generators to inflate rates. Amid the clash, Chief Operating Officer Audrey Zibelman and Chief Executive Officer Phil Harris abruptly resigned within months of each other, leaving the RTO rudderless.

In stepped the former executive vice president for the Tennessee Valley Authority, who early on in the deregulation of the market had focused on the importance of reliable transmission when the conversation — and profits — had drifted toward the generators.

“Terry brought PJM through a difficult period,” said Joe Bowring, the employee who challenged PJM’s credibility under former management and is now Independent Market Monitor for the RTO. “When he first got to PJM, he actively reached out to the Market Monitor unit, which we appreciated very much. He listened to us and all market participants.”

Now, North America’s largest power grid operator finds itself at the edge of another major change as Boston, 64, prepares to retire by the end of the year.

“I’ve been working in the utility industry for 43 years. It’s been a wonderful and rewarding career, but all good things must come to an end,” Boston told RTO Insider. “I am looking forward to spending more time visiting our kids, helping out our daughter Rachel with her career as an actress and getting out on our boat, which I haven’t been on in two years.

“I will continue on several boards and industry/professional groups. Most recently I’m involved with the Bipartisan Policy Center on energy policy and grid security and the National Academy of Engineering working on energy and the environment and improved analytics for the power system. I hope to remain engaged with the industry at a somewhat less demanding pace than working half days — that’s 12 hours per day,” Boston said.

Encouraging Team-Building

Boston is widely regarded by those who have worked with him during his time at PJM as a forward-thinking, approachable leader, a straight-shooter who strives for consensus and encourages team-building. The Tennessee native also enlivens meetings with his quirky sense of humor: To invoke the feel of a “fireside chat” at PJM’s General Session in February 2014, he propped up a tablet showing a video of a burning yule log on the stage.

“He’s been a real positive player in terms of a stable presence at PJM, with the vision of trying to see where it’s going. Particularly in the last year they’ve been very helpful in, No. 1, admitting they didn’t take gas-electric [coordination] as seriously as they should have, and No. 2, doing something about it,” said Federal Energy Regulatory Commissioner Philip Moeller. “He’s a great guy — he’ll be missed. But he deserves a lot of accolades as he winds it down.”

Sonny Popowsky, a former Pennsylvania state consumer advocate, sat with Boston on the board of the North American Electric Reliability Corp.

“He came in to PJM at a time of some turmoil with what direction we were headed and what the role of the markets was in terms of maintaining reliability,” Popowsky said. “When he came from TVA, he came with a strong background that focused on engineering and reliability. But he also came with an openness to the kind of market solutions that PJM is famous for. He’s been able to combine that really well.

“I think he’s just added a real level of stability and openness,” he said.

A Vocal Proponent of Consensus

Boston has publicly expressed his frustration with the number of Section 206 filings — used when stakeholders fail to reach consensus — submitted to FERC last year, including the request to raise the price-based energy offer cap from $1,000 to $1,800.

“Our ability to govern ourselves in the stakeholder process depends in large part on compromise,” he told the Markets and Reliability Committee at its year-end meeting. He opened the first MRC meeting of 2015 with another plea for consensus. The year ahead will hold a number of challenges, he said, especially as the RTO faces “the fastest fuel change in industry history” from coal-fired plants to natural gas.

In announcing Boston’s plans for retirement last week, Board of Managers Chairman Howard Schneider said on behalf of the group, “Terry’s deep knowledge of the electricity industry, strong business ethics and ability to forge strong relationships with PJM’s stakeholders have been instrumental in the success of PJM.”

During Boston’s tenure, PJM increased its billings from $30.6 billion in 2007 to more than $42 billion in 2014 while the RTO’s membership grew from 500 to more than 900 companies.

In 2008, Boston implemented “perfect dispatch,” a metric denoting the lowest production cost possible while maintaining reliability, which the company uses as a baseline to analyze and improve dispatch efficiency. According to PJM, the process has saved a cumulative $842 million — three times the cost of PJM’s annual operating budget.

At TVA, Boston ran the storm center for 20 years, and while at NERC he sat on the steering committee that investigated the 2003 Northeast blackout.

“I’m proud that PJM and our members met three one-in-100-year weather events in the last four years — and the polar vortex was not one of them,” Boston said. “They were the hottest day of record in 2011, followed by the derechos and Hurricane Sandy in 2012. In addition, we’ve met back-to-back all-time winter peaks in January 2014 and February 2015.”

Who Will Take Boston’s Place?

As for who will take the top spot, PJM says a “rigorous succession process” has been underway. “Candidates to succeed Boston will be considered on demonstrated leadership abilities, industry expertise and reputation, as well as commitment to electric system reliability and fair, efficient electric markets,” it said in a press release.

Among potential in-house candidates are Executive Vice President for Operations Mike Kormos and Executive Vice President for Markets Andy Ott, who frequently represent PJM before FERC and in industry forums. With higher titles, but lower public profiles, are Chief Financial Officer Suzanne Daugherty and General Counsel Vince Duane, both of whom hold the rank of senior vice president.

During a break at FERC’s technical conference on the Environmental Protection Agency’s proposed carbon rule last week, Kormos told RTO Insider that he was “absolutely” interested in the job.

His colleagues on the executive team did not respond to requests for comment on their interest in the position.

While the Board of Managers has identified no candidates, stakeholders are firm in the type of person they’d like to see assume the role.

“Somebody similar, with not only the ability to have a vision but to also manage a diverse set of stakeholders that range from, obviously, members of PJM to state commissions and state governments and FERC,” Moeller said. “It’s a lot of relationships to manage, and so you’ve got to have the right personality as well.”

Popowsky suggested that the board choose someone ideologically open, as he said Boston has been.

“Someone who says, ‘What’s the best combination of markets and regulation to produce the paramount goal of a reliable electric system that’s affordable to the folks who depend on it?’” he said.

Boston said his successor will face a number of challenges.

“Certainly, dealing with the largest and most rapid fuel shift in history has many downstream impacts. I believe it’s manageable, but it will take a lot of work to get through it,” Boston said. “The future of demand response and renewables, the introduction of new technologies and new consumer-use patterns, grid security and the growing complexity of the business all are challenges that I expect will keep my successor and the entire PJM team very busy.”

College Classmate-Turned-Sweetheart, Family Life

Boston has served on numerous industry boards and is the immediate past president of the GO15 international association of large grid operators. Last year, he was elected to the National Academy of Engineering.

He holds a bachelor’s degree in engineering from Tennessee Technological University and a master’s degree in engineering administration from the University of Tennessee.

It was at Tennessee Tech that Boston met his wife-to-be, Brenda, when they shared an organic chemistry class. The couple have three children: Rachel, a prolific actor who most recently played Ingrid Beauchamp in the TV series “Witches of East End;” Andrew, who earned a master’s in business administration from Harvard and now is an investor with Founders Circle Capital in San Francisco; and Brian, a graduate student at the University of Hawaii, where he is earning his doctorate in geophysics.

“Andrew was a world-class rower for Harvard and Oxford,” Boston said. Andrew worked on and sold a high-tech startup to a London company before going to Harvard.

“Brian, our youngest, will be the first Ph.D. in the family when he graduates this year from the University of Hawaii in geophysics. Last year, he worked on a Japanese research ship to collect data from the deepest research hole ever drilled through two tectonic plates to better understand the Fukushima earthquake zone off the coast of Japan.

“The kids were always busy with school and sports. They learned a strong work ethic and found that hard work pays off,” Boston said.