Lt. Gov. Dan Patrick calls on ERCOT to reverse 30% pay raise for board members

During the same meeting to vote on Vegas’ contract, board members also approved a raise for themselves that would result in an average annual pay of $219,375, a 30% increase from the previous average of $169,375, according to board documents. ERCOT is indirectly funded by electricity customers, who have experienced a 40% average increase on their electricity bills since 2020.

The raises, effective Oct. 1, amount to a $50,000 annual increase for each of the board’s eight selected members, who meet four times a year and whose responsibilities include setting the organization’s policies and hiring the CEO, and an additional $5,000 raise for Flores, according to a board presentation. The board’s directors already receive $160,000 in annual compensation, and Flores, a former congressman for Texas, receives an additional $35,000 each year in his role as chairman, according to the board policies and procedures. Flores now stands to earn $250,000 each year.

Board members of other nonprofit grid operators earn an average of $150,889, according to a pay study conducted by an independent compensation consulting firm hired by ERCOT.

During a Monday presentation by the board’s consulting firm, Meridian Compensation Partners LLC, consultants justified the raises as necessary to retain top board director talent while competing with other independent grid operators and the private sector. To serve on ERCOT’s board, directors cannot be affiliated with a company doing business within ERCOT and that makes it particularly difficult for the board to recruit and retain directors, the consultants said.

“If an affiliated company were to come knocking, you can’t sit on both boards,” the consultant said. “That number of affiliated companies continues to grow, so this has led to real loss in directors.”

ERCOT did not respond to a request for comment Thursday.

ERCOT operates as a nonprofit and is funded mostly by an administration fee of $0.61 per megawatt-hour, which is paid directly by retail electric providers and municipal utilities and typically passed on to their customers. ERCOT anticipates nearly $486 million in revenue in 2026, according to its 2026-2027 biennial budget.

Board members are appointed by a committee of three people selected by the governor, the lieutenant governor and the House Speaker. Politicians running in November’s elections, including Patrick, have centered much of their platforms on curbing rising prices, including energy.

The Texas Consumer Association, which advocates for lowering consumer costs, told Flores and the ERCOT board to “read the room” in a statement Thursday.

“As a quasi-public entity funded by fees ultimately paid by consumers, ERCOT must do better,” wrote TCA President Sandie Haverlah. “At a time of economic anxiety when a majority of Texans believe our state is off on the wrong track, it’s irresponsible to give six- and seven-figure raises to executives and board members.”

Tensions building since Tuesday

The controversy began late Tuesday after The Texas Tribune reported ERCOT’s board had approved a contract for the organization’s president and CEO, Pablo Vegas, that could allow him to earn up to $6.4 million next year. Patrick, responding on social media to The Tribune article, said he had called both Flores and Public Utility Commission Chairman Thomas Gleeson and directed them to reverse Vegas’ raise and contract extension, and that they had done so.

However, Vegas, in an interview with The Tribune that night, said no official vote had taken place to reverse the board approval of his contract. Rather, ERCOT and Vegas had not yet signed the new contract following the vote and Patrick’s intervention.

Patrick weighed in again Wednesday evening, writing on social media 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.”

Responding to a Houston Chronicle article about the controversy, Patrick said Flores had changed his story multiple times about the status of the contract’s approval and his previous communications with Patrick’s office about the contract, causing the lieutenant governor to lose confidence.

Previously unreported was the board’s vote on Tuesday to also increase their own pay. The vote was taken near the end of the regular meeting, before an executive session was held. Board members unanimously approved the measure, although Flores abstained from the vote, citing its direct impact on his pay.

In his phone call with Gleeson and Flores on Tuesday, Patrick also directed them to reverse the pay increase for ERCOT’s board members, the lieutenant governor said.

“On Tuesday, I was crystal clear with Chairman Gleeson of the PUC and ERCOT Board Chairman Bill Flores that neither the multi-million-dollar raise for ERCOT CEO Pablo Vegas nor the raise for the ERCOT Board members was acceptable to me,” Patrick wrote. “I told both chairs that passing either raise would erode the credibility of both the PUC and ERCOT with the public, myself, and the members of the legislature.”

Raises to retain board talent

Currently, seven of the eight selected positions on the board are filled, and a search is underway for the final member. The ERCOT CEO, two PUC commissioners and the chief executive of the Office of Public Utility Counsel serve as ex officio board members and are not receiving the raises.

The newly-increased pay comes from a $150,000 “retention award” for each of the board directors that is paid out at the completion of their three-year term, according to documents presented at ERCOT Human Resources and Governance Committee on Monday. For current board members, the award will be prorated based on how far they are into their current term, meaning a director elected in January 2025 will receive $62,500 in January 2028.