ERCOT Board Chair, Vice Chair, Two Other Directors Submit Resignation From ERCOT Board

February 23, 2021

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Reporting by Paul Ring • ring@energychoicematters.com

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The Electric Reliability Council of Texas, Inc. (ERCOT) filed with the Texas PUC a notice of the resignation of four Unaffiliated Directors from the ERCOT Board of Directors (Board), and the withdrawal of one Unaffiliated Director candidate from consideration for approval by the Commission to fill the prior sole Unaffiliated Director vacancy on the Board.

"ERCOT hereby provides notice that all four Unaffiliated Directors currently serving on the ERCOT Board – Sally Talberg (Board Chairman), Peter Cramton (Board Vice Chairman), Terry Bulger (Finance and Audit Committee Chairman) and Raymond Hepper (Human Resources and Governance Committee Chairman) – are resigning, effective upon the adjournment of the February 24, 2021 ERCOT Urgent Board Meeting by Teleconference," ERCOT said in the PUC filing

In a joint letter, the four directors who resigned said, "We have noted recent concerns about out-of-state board leadership at ERCOT. To allow state leaders a free hand with future direction and to eliminate distractions, we are resigning from the board effective after our urgent board teleconference meeting adjourns on Wednesday, February 24, 2021."

"Before we step aside, we are beginning the process of reviewing this extreme cold weather event and resulting power crisis. With the right follow through, Texas can lead the nation in investing in infrastructure and emergency preparedness to withstand the effects of severe weather events—whether in the form of flooding, drought, extreme temperatures, or hurricanes. We want what is best for ERCOT and Texas," the four directors who resigned said

ERCOT further notified the PUC that, effective February 23, 2021, Craig S. Ivey, whose application intended to fill the sole prior Unaffiliated Director vacancy on the Board, has withdrawn as an Unaffiliated Director candidate

Consistent with PURA, Section 4.2 of the Amended and Restated Bylaws of Electric Reliability Council of Texas, Inc., approved by the Commission on July 31, 2020 (ERCOT Bylaws), mandates that the Board be composed of 16 Directors and that five of the voting members of the Board be Unaffiliated Directors. Furthermore, PURA § 39.151(g-1) requires that the presiding officer of the Board -- that is, the Board Chairman -- must be one of the Unaffiliated Directors as described in PURA § 39.151(g)(7). In addition, ERCOT Bylaws § 4.4 requires that both the Board Chair and Vice Chair be Unaffiliated Directors.

ERCOT said in a PUC filing that, "With the resignations of the four Unaffiliated Directors, beginning upon adjournment of the February 24, 2021 Urgent Board Meeting by Teleconference, no Unaffiliated Directors will be serving on the Board, and the Board Chairman, Board Vice Chairman and both Committee Chairman leadership roles will be vacant. With the withdrawal of the Unaffiliated Director candidate today, there are no Unaffiliated Director candidates immediately available who have been selected through the nomination process and vetted to meet the Unaffiliated Director eligibility criteria required by Section 4.3(b) of the ERCOT Bylaws for any of the five Unaffiliated Director vacancies on the Board."

"In addition, ERCOT Bylaws § 4.7(a) provides that except as may otherwise be provided by law, the ERCOT Certificate of Formation or the ERCOT Bylaws, at all meetings of the Board, fifty percent of the Seated Directors shall constitute a quorum for the transaction of business (abstentions do not affect calculation of a quorum). As set forth in ERCOT Bylaws Article 2, a 'Seated Director' is a current Director, or the Director’s currently-serving designated Segment Alternate when serving in the Director’s stead (if applicable), regardless of attendance at meetings; vacant positions are not considered Seated Directors. Further, Tex. Bus. Org. Code § 22.213 provides that a quorum for the transaction of business by the Board is the lesser of: (1) the majority of the number of Directors set by the Bylaws, or (2) any number, not less than three, set as a quorum by the Certificate of Formation or Bylaws. Accordingly, while fifty percent of the Seated Directors would constitute a quorum if the total number of Seated Directors were six or higher, if the total number of Seated Directors were below six but not lower than three, then the quorum would remain fixed at three. If, however, the total number of Seated Directors were lower than three, the Board would not be capable of satisfying the quorum requirement set forth in Tex. Bus. Org. Code § 22.213," ERCOT said in a PUC filing

ERCOT issued the following statement concerning the matter: "We look forward to working with the Texas Legislature, and we thank the outgoing Board Members for their service."

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