Governor Abbott welcomes resignations from ERCOT board members - none live in Texas

An emergency meeting has been called today for the Electric Reliability Council of Texas (ERCOT). Yesterday four board members and one director announced their resignations from the board, effective after the meeting. Governor Abbott responded to the news by saying he welcomes the resignations.

ERCOT is the state power grid manager. The Public Utility Commission (PUC) oversees the grid manager. In the wake of catastrophic failures of all energy sources due to the inability to meet the demands brought on by a historic winter storm, ERCOT is under fire. PUC filed a notice of the resignations Tuesday. The board consists of sixteen members. None of those resigning live in Texas, a fact that has raised questions in the storm’s aftermath. The board’s chair, vice-chair, two other members, and one director all live out of state.

Chair Sally Talberg, vice-chair Peter Cramton, and board members Raymond Hepper, Terry Bulger and Vanessa Anesetti-Parra will step down after an emergency meeting Wednesday, according to the Public Utility Commission, which oversees the grid manager.

Among the 15 ERCOT board members, Bulger oversees the finance and audit committee and Hepper chairs the human resources and governance committee. Craig S. Ivey, who was set to fill the open 16th seat on ERCOT’s board is withdrawing his candidacy, the PUC said.

“We look forward to working with the Texas Legislature, and we thank the outgoing Board Members for their service,” ERCOT said in a statement released Tuesday afternoon.

I admit, like most people, ERCOT wasn’t exactly on my radar as the winter storm approached. I’ve learned more about the agency than I ever imagined learning. It was a surprise, however, when I learned that these board members don’t even live in Texas. They live in Michigan, California, Illinois, Maine, and Canada.

Talberg lives in Michigan and joined ERCOT’s board in January 2020 and was a former Michigan utility regulator. Before her seven years on the Michigan Public Service Commission, Talberg was a senior consultant at Public Sector Consultants and an advisor to the PUC. She has a master’s degree in public affairs from the University of Texas, according to ERCOT’s website.

Cramton, of Del Mar, Calif., joined ERCOT’s board in October 2015. He is an economics professor at the University of Maryland and the University of Cologne. He studied electricity market design and serves as an economist and advisor to startups in finance, insurance and communications.

Bulger, who lives in the Chicago suburb of Wheaton, according to ERCOT, has more than 35 years of experience in banking. Abbott promised a state investigation of ERCOT to “ensure that the disastrous events of last week are never repeated.”

Hepper, who lives in Lewiston, Maine, according to his LinkedIn profile, was the former general counsel for ISO New England, which operates the electric grid and wholesale markets across six states in the Northeast.

Anesetti-Parra, who lives in Ontario, Canada, is vice president of regulatory and compliance for Canada-based Just Energy. She has more than 19 years of experience in retail energy, according to her LinkedIn profile.

So, how can this be? Well, as it turns out, residence in Texas is preferred but not required of board members. Talberg, Cramton, Bulger, and Hepper say in the resignation letter that they “want what is best for ERCOT and Texas.” Board members are described as unaffiliated and nominated by a committee that uses an executive search firm. Experience requirements include “one or more of the following: corporate leadership, regulations of utilities, risk management, information technology, and in professional disciplines of finance, accounting, engineering, or law.” They serve three-year terms and are approved by the PUC. PUC commissioners are appointed by the governor. It’s a bit of a bureaucratic mess if you ask me.

ERCOT isn’t a state entity but it does receive policy direction and guidance from the PUC and the Legislature. The board members represent electricity consumers, generators, retail power providers, utility companies, and municipal utilities. So to say that the agency failed its mission statement – “Ensuring a reliable grid”- would be a gross understatement after last week’s catastrophe. ERCOT assured state officials that it would be able to handle the demands of the winter storm before it reached the state.

Governor welcomed the resignations.

“When Texans were in desperate need of electricity, ERCOT failed to do its job and Texans were left shivering in their homes without power,” Abbott said. “ERCOT leadership made assurances that Texas’ power infrastructure was prepared for the winter storm, but those assurances proved to be devastatingly false. The lack of preparedness and transparency at ERCOT is unacceptable, and I welcome these resignations.”

The board members’ resignations will be effective after the teleconference meeting today. They note the concerns raised over their out-of-state residencies and want the resignations to “allow state leaders a free hand with future direction and to eliminate distractions.” However, not everyone has such concerns. Some say out-of-state members bring a diversity of opinions to the board.

“Any good chairman of a corporate board will find outsiders, will seek outsiders to join their boards that don’t see things in quite the same way as people within the company. There’s been a conscious effort over the decades to bring outsiders onto the board,” said Tom “Smitty” Smith, a former director of the nonprofit group Public Citizen Texas.

This story is far from over. Lawsuits are being filed, PUC has questions to answer for their part in the failures, as that agency oversees ERCOT, and millions of Texans are recovering from the damages brought about by a lack of power, heat, and water for multiple days. The state legislature is in session and the winter storm energy fiasco has been added as an emergency item by Governor Abbott.