The Electric Reliability Council of Texas, or ERCOT, approved a 30% pay bump for its own board members during the same Sept. 15 meeting where it nearly doubled CEO Pablo Vegas' compensation.
The move came as Texans' average electricity bills sit about 40% higher than they were in 2020, and Lt. Gov. Dan Patrick is now urging the board to unwind both moves.
Here's what to know
According to newly released board records cited by The Texas Tribune, ERCOT's selected directors approved compensation changes that will lift average annual board pay from $169,375 to $219,375.
Under the plan, each selected director on the eight-member board would get $50,000 more per year. Those directors oversee policy and are responsible for hiring the CEO. Bill Flores, the board chair, did not vote, saying the decision would affect his own pay.
That vote happened during the same meeting in which the board approved a contract that could pay Vegas as much as $6.4 million. After already denouncing the CEO package, Patrick — who plays a role in appointing ERCOT board members — said, "My suggestion to them is to reverse their own increase."
The dispute is not limited to executive and board compensation. ERCOT relies mainly on a $0.61-per-megawatt-hour administrative fee assessed on retail electric providers and municipal utilities, a cost that is typically passed along to customers.
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More background
At a Sept. 14 presentation, consultants from Meridian Compensation Partners LLC told the board the higher pay was necessary to help keep qualified directors in those roles.
One consultant said the candidate pool is narrower because board members cannot have ties to companies that participate in ERCOT's market.
"If an affiliated company were to come knocking, you can't sit on both boards," the consultant explained.
Board materials indicate Flores' yearly compensation would increase from $195,000 to $250,000. Those same records also cited a separate pay study showing directors at comparable nonprofit grid operators earn an average of $150,889.
Committee chairs would keep $25,000 retainers, and the vice chair would remain at $15,000.
Board director Julie England noted, "It's all prorated going forward," referring to the new $150,000 retention award that is paid out after a three-year term. So directors already serving would receive only partial increases based on how much time is left in their current term.
What's being done?
Patrick said he had already urged both Flores and Public Utility Commission chairman Thomas Gleeson to roll back the Vegas compensation deal as well as the board's pay raise.
On Sept. 16, Patrick wrote that he had "lost total confidence and trust in ERCOT Board Chair Flores to look out for Texas ratepayers and to be the Chair of the ERCOT board."
Questions also remained around the CEO package. Patrick said the raise and contract extension had been reversed, but Vegas told The Tribune there had been no formal board vote to rescind them. Instead, after Patrick stepped in, ERCOT and Vegas did not sign the contract.
Consumer advocates are also pressing ERCOT on the issue, while state leaders retain influence over who serves on the board.
In a statement, Texas Consumer Association President Sandie Haverlah said, "As a quasi-public entity funded by fees ultimately paid by consumers, ERCOT must do better."
The governor, lieutenant governor, and House speaker appoint a three-person committee that selects ERCOT directors, and one of the eight board seats remains vacant.
Patrick's message was direct: "If they do not want to serve, I am sure there are plenty of public-service minded Texans who are willing to take their place."
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