2016-08-15T09:39:20-05:00 2015-12-31 390859910 Baker Tilly Virchow Krause LLP 777 E Wisconsin Ave 32nd Floor Milwaukee WI 53202 990 2015-01-01 742587416 Electric Reliability Council of Texas Inc ELEC 5122257000 7620 Metro Center Drive Austin TX 787441613 Michael Petterson VP and CFO 5122257000 2016-08-12 1 Troy Marine CPA P00187863 4147775500 2016-08-12 2015 2016-12-15 16:53:06Z ERCOT William Magness 7620 Metro Center Drive Austin TX 787441613 181415110 0 X www.ercot.com X 1990 TX See Schedule O 15 14 794 18 0 0 31705894 0 146311134 181011066 123107 354699 74562 49345 178214697 181415110 0 0 0 0 89400619 99246763 0 0 0 89379180 84258688 178779799 183505451 -565102 -2090341 893288740 811268123 883668051 803650754 9620689 7617369 We serve the public by ensuring a reliable grid, efficient electricity markets, open access and retail choice. 0 0 136967660 181050337 ERCOT successfully manages the flow of electricity to approximately 24 million customers in the state of texas, which includes the management of financial settlement for the competitive wholesale bulk-power market and the administration of electric provider account switching in competitive choice areas. 136967660 0 0 0 0 0 0 0 1 0 1 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 1 149 0 794 1 0 0 0 0 0 0 X 15 14 0 0 0 0 1 1 1 1 1 0 0 1 1 1 1 1 1 1 1 0 X Michael Petterson VP and CFO 5122257013 7620 Metro Center Drive Austin TX 787441613 Tonya Baer Director 10.00 0.00 X 0 0 0 Jorge A Bermudez Director 8.00 0.00 X 92600 0 0 Mark Carpenter Director 3.00 0.00 X 0 0 0 Read Comstock Director 8.00 0.00 X 0 0 0 Peter Cramton Director 5.00 0.00 X 29000 0 0 Craven Crowell Jr Director 25.00 0.00 X 99800 0 0 Jack Durland Director 5.00 0.00 X 0 0 0 Keith Emery Director 4.00 0.00 X 0 0 0 Nick Fehrenbach Director 6.00 0.00 X 0 0 0 Michehl R Gent Director 2.00 0.00 X 31105 0 0 Kevin Gresham Director 2.00 0.00 X 0 0 0 Clifton Karnei Director 4.00 0.00 X 0 0 0 Donna Nelson Director 5.00 0.00 X 0 0 0 Karl Pfirrmann Director 8.00 0.00 X 92600 0 0 Carolyn Shellman Director 1.50 0.00 X 0 0 0 Judy Walsh Director 4.00 0.00 X 94500 0 0 Kristy Ashley Segment Alternate 5.00 0.00 X 0 0 0 Mike Kezar Segment Alternate 4.00 0.00 X 0 0 0 Jean Ryall Porter Segment Alternate 5.00 0.00 X 0 0 0 Wade Smith Segment Alternate 5.00 0.00 X 0 0 0 John Werner Segment Alternate 1.00 0.00 X 0 0 0 Phil Williams Segment Alternate 1.50 0.00 X 0 0 0 HB Doggett Director; President and CEO 45.00 0.00 X X 625522 0 60653 Sallie P Day VP Governance, Risk & Compliance & COO 45.00 0.00 X 244230 0 59773 Jerome Dreyer Senior VP and CIO 45.00 0.00 X 313030 0 60285 Theresa Gage VP External Affairs & Corporate Communication 45.00 0.00 X 200026 0 36460 Bradley C Jones SVP and COO 45.00 0.00 X 244562 0 55068 Vickie Leady Asst. GC and Asst. Corp. Sec. 45.00 0.00 X 180091 0 42071 William Magness General Counsel, Senior VP of Governance Risk & Co 45.00 0.00 X 542249 0 62807 Charles B Manning COO & Executive Advisor 45.00 0.00 X 310255 0 32069 Kenneth McIntyre VP Grid Planning and Operations 45.00 0.00 X 111314 0 19117 Kenan Ogleman VP Commercial Operations 45.00 0.00 X 52355 0 8877 Michael Petterson VP and CFO 45.00 0.00 X 242322 0 56883 Dwayne Rickerson VP Grid Planning and Operations 45.00 0.00 X 193799 0 49567 Diane M Williams VP Human Resources 45.00 0.00 X 245438 0 54348 Stephen Daniels Director Application Services 45.00 0.00 X 204637 0 44704 Bryan Hanley Director Information Technology Architecture 45.00 0.00 X 191626 0 48286 Mark Ruane Director Market Credit 45.00 0.00 X 242657 0 43052 Dan Woodfin Director System Operations 45.00 0.00 X 192616 0 49390 James Brenton Principal Regional Security 45.00 0.00 X 203562 0 30100 David Forfia Director IT Architecture 45.00 0.00 X 213916 0 54555 Chad Seely Assistant General Counsel 45.00 0.00 X 216027 0 50214 Jeychander Tamby Chief of Staff 45.00 0.00 X 281839 0 64033 William Wullenjohn Director Internal Audit 45.00 0.00 X 274603 0 52205 5966281 0 1034517 406 0 1 0 Allegis Group Services Inc 7301 Parkway Drive Hanover MD 21076 Contingent Workforce 5262319 Potomac Economics Ltd 9990 Fairfax Blvd Suite 560 Fairfax VA 22030 Independent mkt monitor 3658333 Siemens Industry Inc 10900 Wayzata Blvd Minnetonka MN 55305 IT Consulting 1831402 ABB Inc 1601 Industrial Blvd Sugarland TX 774782579 IT Consulting 1674109 Alstom Grid Inc PO Box 88808 Chicago IL 606951808 It Consulting 1156118 16 Electric Reliability Program Serv 221000 148444075 148444075 Municipal Service Program Revenue 221000 32242891 32242891 Membership Dues 221000 324100 324100 181011066 39725 39271 454 314974 0 314974 314974 314974 Non-Operating Income 900099 49345 49345 49345 181415110 181050337 0 364773 5559741 2983546 2576195 66941781 56844498 10097283 9779056 8455012 1324044 10862307 8969681 1892626 6103878 5358074 745804 291966 291966 269000 269000 9245538 8633103 612435 1240485 707669 532816 3326483 3289854 36629 5461020 5461020 1164970 765956 399014 1370218 961524 408694 1807259 1807259 21916982 17314416 4602566 1947933 1947933 Hardware and Software E 19778675 19498331 280344 Reliability Organizatio 14703597 14703597 Dues and Subscriptions 1678814 1236259 442555 All other expenses 55748 1804 53944 183505451 136967660 46537791 0 527770 889457 723285159 670012393 5534224 4638209 16295860 17032368 853214360 734739634 147401842 118474726 243885 220970 893288740 811268123 12703915 12196762 4177524 3865794 352818678 356687553 71000000 67000000 442967934 363900645 883668051 803650754 X 9620689 7617369 9620689 7617369 893288740 811268123 X -2090341 87021 X 0 1 X 1 0 0 1 X 947096 947096 82397479 30706127 51691352 8171457 8151853 19604 119156789 104089142 15067647 642541539 591792512 50749027 118474726 CRRAH/QSE Security Deposits 363548754 Accr. Post Ret. Benefit Obligation 320293 Deferred Rent Costts 31598 363900645 X 181415110 0 181415110 0 181415110 183418430 0 183418430 87021 87021 183505451 Part IV, Line 2b: ERCOT IS THE CENTRAL COUNTERPARTY FOR ALL TRANSACTIONS SETTLED BY ERCOT PURSUANT TO ERCOT PROTOCOLS AND IS DEEMED TO BE THE SOLE BUYER TO EACH SELLER, AND THE SOLE SELLER TO EACH BUYER, OF ALL ENERGY, ANCILLARY SERVICES, RELIABILITY UNIT COMMITMENTS (RUCS), EMERGENCY RESPONSE SERVICE (ERS), AND OTHER PRODUCTS OR SERVICES FOR WHICH ERCOT MAY PAY OR CHARGE A MARKET PARTICIPANT, EXPECT FOR THOSE PRODUCTS OR SERVICES PROCURED THROUGH BILATERAL TRANSACTIONS BETWEEN MARKET PARTICIPANTS AND THOSE PRODUCTS OR SERVICES THAT ARE SELF-ARRANGED BY MARKET PARTICIPANTS. ERCOT PERFORMS SETTLEMENTS FOR ALL TRANSACTIONS SUBJECT TO THE FINANCIAL SETTLEMENT PROCESS IN ACCORDANCE WITH ERCOT PROTOCOLS. THE SETTLEMENT PROCESS IS USED TO RESOLVE FINANCIAL OBLIGATIONS FOR MARKET SERVICES PROCURED THROUGH ERCOT FOR REGISTERED MARKET PARTICIPANTS. ADDITIONALLY, AS REQUIRED BY ERCOT PROTOCOLS, ERCOT EXECUTES AUCTIONS FOR CONGESTION REVENUE RIGHTS MONTHLY AND ANNUALLY AND DISTRIBUTES PROCEEDS FROM THESE AUCTIONS TO MARKET PARTICIPANTS AS REQUIRED BY ERCOT PROTOCOLS. Part X, Line 2: ERCOT IS EXEMPT FROM FEDERAL INCOME TAX UNDER SECTION 501(A) OF THE INTERNAL REVENUE CODE AS AN ORGANIZATION DESCRIBED IN SECTION 501(C)(4). THE COMPANY IS ALSO EXEMPT FROM STATE INCOME TAXES. ACCORDINGLY, NO PROVISION FOR INCOME TAXES OR UNCERTAIN TAX POSITIONS HAS BEEN REFLECTED IN THE FINANCIAL STATEMENTS. Part XII, Line 4b - Other Adjustments: Deferred Pension Costs 87,021. X X X X X X 1 0 0 0 0 0 0 0 0 HB Doggett Director; President and CEO 625522 0 0 0 0 0 35800 0 24853 0 686175 0 0 0 Sallie P Day VP Governance, Risk & Compliance & C 244230 0 0 0 0 0 35844 0 23929 0 304003 0 0 0 Jerome Dreyer Senior VP and CIO 313030 0 0 0 0 0 38840 0 21445 0 373315 0 0 0 Theresa Gage VP External Affairs & Corporate Comm 200026 0 0 0 0 0 29000 0 7460 0 236486 0 0 0 Bradley C Jones SVP and COO 244562 0 0 0 0 0 36100 0 18968 0 299630 0 0 0 Vickie Leady Asst. GC and Asst. Corp. Sec. 180091 0 0 0 0 0 26524 0 15547 0 222162 0 0 0 William Magness General Counsel, Senior VP of Govern 395173 0 147076 0 0 0 37990 0 24817 0 605056 0 0 0 Charles B Manning COO & Executive Advisor 160283 0 0 0 149972 0 25451 0 6618 0 342324 0 0 0 Michael Petterson VP and CFO 242322 0 0 0 0 0 35477 0 21406 0 299205 0 0 0 Dwayne Rickerson VP Grid Planning and Operations 193799 0 0 0 0 0 28208 0 21359 0 243366 0 0 0 Diane M Williams VP Human Resources 245438 0 0 0 0 0 36018 0 18330 0 299786 0 0 0 Stephen Daniels Director Application Services 204637 0 0 0 0 0 20797 0 23907 0 249341 0 0 0 Bryan Hanley Director Information Technology Arch 191626 0 0 0 0 0 28150 0 20136 0 239912 0 0 0 Mark Ruane Director Market Credit 242657 0 0 0 0 0 35503 0 7549 0 285709 0 0 0 Dan Woodfin Director System Operations 192616 0 0 0 0 0 28016 0 21374 0 242006 0 0 0 James Brenton Principal Regional Security 203562 0 0 0 0 0 28711 0 1389 0 233662 0 0 0 David Forfia Director IT Architecture 213916 0 0 0 0 0 31599 0 22956 0 268471 0 0 0 Chad Seely Assistant General Counsel 216027 0 0 0 0 0 23171 0 27043 0 266241 0 0 0 Jeychander Tamby Chief of Staff 281839 0 0 0 0 0 39266 0 24767 0 345872 0 0 0 William Wullenjohn Director Internal Audit 193966 0 0 0 80637 0 28446 0 23759 0 326808 0 0 0 Part I, Line 4a Pursuant to an agreement with ERCOT, Charles Manning received a severance payment of $149,972, William Wullenjohn received a severance payment of $80,637, and Kenneth McIntyre received a severance payment of $24,958 in 2015. Brazos Electric Power Cooperative See Part V Below 203016569 See Part V Below 0 South Texas Electric Cooperative See Part V Below 54022817 See Part V Below 0 American Electric Power See Part V Below 244819 See Part V Below 0 Schedule L, Part IV - (1)(b) CLIFTON KARNEI WAS A 2015 BOARD MEMBER OF ERCOT (COOPERATIVE MARKET SEGMET DIRECTOR) AND ALSO AN OFFICER OF BRAZOS ELECTRIC POWER COOPERATIVE, INC. (1)(D) PAYMENT OF GOVERNMENTALLY-APPROVED TARIFF, ANCILLARY SERVICE FEES, AND MEMBERSHIP FEES. (2)(B) MIKE KEZAR WAS A 2015 BOARD MEMBER OF ERCOT (COOPERATIVE MARKET SEGMENT ALTERNATE) AND ALSO THE GENERAL MANAGER OF SOUTH TEXAS ELECTRIC COOPERATIVE, INC. (2)(D) PAYMENT OF GOVERNMENTALLY-APPROVED TARIFF, ANCILLARY FEES, AND MEMBERSHIP FEES. (3)(B) WADE SMITH WAS A 2015 BOARD MEMBER OF ERCOT (INVESTOR-OWNED UTILITY MARKET SEGMENT ALTERNATE) AND ALSO PRESIDENT AND COO OF AEP TEXAS. (3)(D) PAYMENT OF GOVERNMENTALLY-APPROVED TARIFF, ANCILLARY SERVICE FEES, AND MEMBERSHIP FEES. FORM 990, PART I, LINE 1 ELECTRIC RELIABILITY COUNCIL OF TEXAS, INC. (ERCOT) LESSENS THE BURDENS OF GOVERNMENT, SERVES THE PUBLIC INTEREST BY, AND FULFILLS ITS STATUTORY OBLIGATION BY: (I) ENSURING OPEN ACCESS TO TRANSMISSION AND DISTRIBUTION SYSTEMS; (II) MAINTAINING SYSTEM RELIABILITY AND OPERATIONS; (III) ENABLING RETAIL CHOICE; OPERATING FAIR AND COMPETITIVE WHOLESALE MARKETS; (IV) MAINTAINING THE RENEWABLE ENERGY CREDITS REGISTRY; AND (V) PROVIDING LEADERSHIP AND INDEPENDENT EXPERTISE TO IMPROVE SYSTEM RELIABILITY AND MARKET EFFICIENCY. ERCOT MANAGES THE FLOW OF ELECTRIC POWER TO 24 MILLION TEXAS CUSTOMERS - REPRESENTING ABOUT 90 PERCENT OF THE STATE'S ELECTRIC LOAD. AS THE INDEPENDENT SYSTEM OPERATOR FOR THE REGION, ERCOT SCHEDULES POWER ON AN ELECTRIC GRID THAT CONNECTS MORE THAN 43,000 MILES OF TRANSMISSION LINES AND 550 GENERATION UNITS. ERCOT ALSO PERFORMS FINANCIAL SETTLEMENT FOR THE COMPETITIVE WHOLESALE BULK-POWER MARKET AND ADMINISTERS RETAIL SWITCHING FOR 7 MILLION PREMISES IN COMPETITIVE CHOICE AREAS. Form 990, Part VI, Section A, line 1 PURSUANT TO SECTION 39.151 OF THE TEXAS PUBLIC UTILITY REGULATORY ACT, THE ERCOT BOARD OF DIRECTORS IS COMPOSED OF SIXTEEN MEMBERS. FIFTEEN OF THE MEMBERS HAVE VOTING RIGHTS; THE CHAIR OF THE PUBLIC UTILITY COMMISSION OF TEXAS IS AN EX-OFFICIO NON-VOTING MEMBER. SIX OF THE VOTING DIRECTORS REPRESENT SEGMENTS OF INDUSTRY IN THE ERCOT ELECTRICITY MARKET; EACH SUCH "MARKET SEGMENT DIRECTOR" HAS AN ELECTED ALTERNATE (SEGMENT ALTERNATE) WHO CAN ATTEND MEETINGS IN THE ABSENCE OF THE MARKET SEGMENT DIRECTOR AND VOTE ON THE ABSENT MARKET SEGMENT DIRECTOR'S BEHALF IN THE EVENT THAT SUCH MARKET SEGMENT DIRECTOR CANNOT ATTEND A BOARD MEETING. THREE OF THE OTHER VOTING DIRECTORS REPRESENT SUBSEGMENTS OF A SEVENTH SEGMENT (I.E., THE CONSUMER SEGMENT), BUT THEY DO NOT HAVE ANY RESPECTIVE SEGMENT ALTERNATES. Form 990, Part VI, Section A, line 6 AS OF DECEMBER 31, 2015, ERCOT'S MEMBERHIP INCLUDED 293 VOTING AND NON-VOTING MEMBERS. ERCOT MEMBERS MAY BE CORPORATE MEMBERS, ASSOCIATE MEMBERS, OR ADJUNCT MEMBERS. CORPORATE MEMBERS HAVE THE RIGHT TO VOTE ON ALL MATTERS SUBMITTED TO THE GENERAL MEMBERSHIP [SUCH AS ELECTION OF DIRECTORS, ELECTION OF TECHNICAL ADVISORY COMMITTEE (TAC) REPRESENTATIVES, AND AMENDMENTS TO THE ARTICLES OF INCORPORATION AND BYLAWS]. CORPORATE MEMBERS QUALIFY IN ONE OF SEVEN SEGMENTS: COOPERATIVE; INDEPENDENT GENERATOR; INDEPENDENT POWER MARKETER; INDEPENDENT RETAIL ELECTRIC PROVIDER; INVESTOR OWNED UTILITY; MUNICIPAL (I.E. A MUNICIPAL-OWNED UTILITY OR A RIVER AUTHORITY); OR CONSUMER (WHICH HAS SUBSEGMENTS INCLUDING COMMERCIAL, INDUSTRIAL, AND RESIDENTIAL). ASSOCIATE AND ADJUNCT MEMBERS DO NOT HAVE THE RIGHT TO VOTE ON ANY MATTER SUBMITTED TO THE GENERAL MEMBERSHIP, AND ADJUNCT MEMBERS DO NOT HAVE THE RIGHT TO BE ELECTED OR APPOINTED TO THE ERCOT BOARD, TAC, OR ANY SUBCOMMITTEE OF THE BOARD OR TAC. Form 990, Part VI, Section A, line 7a THIRTEEN OF THE FIFTEEN VOTING MEMBERS OF THE ERCOT BOARD OF DIRECTORS ARE ELECTED, OR APPOINTED IN LIMITED CIRCUMSTANCES, BY THE CORPORATE MEMBERS OR A PORTION OF SUCH CORPORATE MEMBERS. WITH RESPECT TO EACH OF THE SIX MARKET SEGMENT DIRECTORS WHO DO NOT REPRESENT THE CONSUMER SUBSEGMENTS, ONLY THE CORPORATE MEMBERS OF THE MEMBERSHIP SEGMENT REPRESENTED BY THE MARKET SEGMENT DIRECTOR ARE ALLOWED TO ELECT THE DIRECTOR AND THE SEGMENT ALTERNATE FOR THAT SEAT. THERE ARE THREE CONSUMER DIRECTORS, OF WHICH: (I) ONE IS THE PUBLIC COUNSEL, AN EX OFFICIO VOTING MEMBER OF THE BOARD WHO IS DESIGNATED TO REPRESENT THE RESIDENTIAL CONSUMERS AND SMALL COMMERCIAL CONSUMERS; (II) ONE IS ELECTED OR APPOINTED BY THE LARGE COMMERCIAL CONSUMER CORPORATE MEMBERS; AND (III) ONE IS ELECTED BY THE CORPORATE MEMBERS OF THE INDUSTRIAL CONSUMER SUBSEGMENT. THE MEMBERSHIP VOTES BY SEGMENT TO ELECT THE FIVE UNAFFILIATED VOTING DIRECTORS. THE REMAINING VOTING DIRECTOR IS THE CHIEF EXECUTIVE OFFICER OF ERCOT, WHO IS AN EX OFFICIO VOTING MEMBER OF THE BOARD. Form 990, Part VI, Section A, line 7b AS A MATTER OF STATE LAW OR ITS GOVERNING DOCUMENTS, CERTAIN MATERIAL MATTERS MUST BE SUBMITTED TO THE VOTING MEMBERS OF ERCOT FOR THEIR APPROVAL, INCLUDING AMENDMENTS TO THE ARTICLES OF INCORPORATION AND THE BYLAWS. DECISIONS OF THE ERCOT BOARD ARE GENERALLY APPEALABLE TO THE PUBLIC UTILITY COMMISSION OF TEXAS, AN AGENCY OF THE STATE OF TEXAS. Form 990, Part VI, Section B, line 11 THE 2015 FORM 990 WAS PREPARED INITIALLY BY THE FINANCE DEPARTMENT OF ERCOT. IT WAS REVIEWED BY ERCOT OFFICERS AS WELL AS INTERNAL LEGAL COUNSEL, AND THEN SUBMITTED FOR REVIEW BY ERCOT'S INDEPENDENT AUDITORS. THE FORM 990 WAS PROVIDED TO THE BOARD OF DIRECTORS IN ADVANCE OF, AND FOR ITS CONSIDERATION AND INPUT AT ITS MEETING ON JUNE 14, 2016. THE FINAL VERSION OF THE 2015 FORM 990, INCORPORATING THE COMMENTS OF ALL FOREGOING, WAS THEN FILED WITH THE INTERNAL REVENUE SERVICE. Form 990, Part VI, Section B, line 12c EACH DIRECTOR AND SEGMENT ALTERNATE ANNUALLY MUST EXECUTE AN ETHICS AGREEMENT FOR DIRECTORS AND SEGMENT ALTERNATES, AND EACH EMPLOYEE ANNUALLY MUST ATTEND INTERNAL TRAINING SESSIONS AND EXECUTE AN EMPLOYEE ETHICS AGREEMENT. PURSUANT TO EACH ETHICS AGREEMENT, A SIGNATORY HAS AN AFFIRMATIVE DUTY TO DISCLOSE ANY ACTUAL OR POTENTIAL CONFLICTS OF INTEREST OF THE SIGNATORY (AND HIS OR HER EMPLOYER, IN THE CASE OF DIRECTORS OR SEGMENT ALTERNATIVES), AND ALSO MUST DISCLOSE ALL PERSONAL RELATIONSHIPS WITH ERCOT VENDORS, INCLUDING BUSINESS OR DIRECT OR INDIRECT OWNERSHIP INTERESTS. ANY CONFLICT OF INTEREST ISSUE INVOLVING A DIRECTOR OR SEGMENT ALTERNATE IS REFERRED TO THE ERCOT GENERAL COUNSEL WHO, IN CONSULTATION WITH THE BOARD CHAIR AND OUTSIDE LEGAL COUNSEL, IF AND WHEN NECESSARY, MAKES A LEGAL DETERMINATION AS TO WHETHER A CONFLICT EXISTS AND, IF SO, A RECOMMENDATION AS TO HOW IT MAY BE RESOLVED. ANY CONFLICT AND ITS RESOLUTION ARE REPORTED TO BOTH THE HUMAN RESOURCE & GOVERNANCE (HR&G) COMMITTEE OF THE BOARD AND THE FULL BOARD OF DIRECTORS. ANY OBJECTION TO THE RECOMMENDATION IS RESOLVED BY THE HR&G COMMITTEE OR THE FULL BOARD. ANY ERCOT EMPLOYEE CONFLICTS ARE EVALUATED BY THE ERCOT LEGAL STAFF, AND THE LEGAL STAFF MAKES A RECOMMENDATION TO RESOLVE THE CONFLICT OF INTEREST. IF THE ERCOT LEGAL STAFF RECOMMENDS A RESOLUTION THAT IS OBJECTIONABLE TO THE MANAGER/DIRECTOR/OFFICER OF THE CONFLICTED EMPLOYEE, THE LEGAL DECISION IS REFERRED TO THE CHIEF EXECUTIVE OFFICER AND ULTIMATELY TO THE BOARD'S HR&G COMMITTEE. Form 990, Part VI, Section B, line 15 IN DETERMINING COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER, ERCOT FOLLOWS A PROCEDURE WHICH ENSURES THAT (I) COMPENSATION IS, IN ADVANCE, RECOMMENDED BY THE HR&G COMMITTEE OF THE BOARD OF DIRECTORS AND APPROVED BY THE BOARD ITSELF, (II) THE BOARD AND THE HR&G COMMITTEE OBTAINS AND RELIES UPON APPROPRIATE DATA FOR COMPARABILITY, (III) THE BOARD AND THE HR&G COMMITTEE EACH ADEQUATELY DOCUMENTS THE BASIS FOR ITS RESPECTIVE DETERMINATION, AND (IV) THE CEO COMPENSATION IS SUBJECT TO REVIEW AND APPROVAL BY THE PUBLIC UTILITY COMMISSION OF TEXAS. IN PRACTICE, THE HR&G COMMITTEE OF THE BOARD OF DIRECTORS REVIEWS PROPOSED CHANGES TO CHIEF EXECUTIVE OFFICER COMPENSATION AND SUBMITS RECOMMENDATIONS TO THE BOARD FOR ITS APPROVAL BY ALL UNINTERESTED MEMBERS OF THE BOARD OF DIRECTORS (THAT IS, ALL BOARD MEMBERS EXCEPT THE CHIEF EXECUTIVE OFFICER WHO IS REQUIRED TO ABSTAIN FROM SUCH VOTE). AS PART OF ITS REVIEW, THE HR&G COMMITTEE CAN REQUEST INFORMATION FROM INDEPENDENT COMPENSATION CONSULTANTS, AND IT RECEIVES INFORMATION ANNUALLY IN REGARDS TO THE COMPENSATION LEVELS OF SIMILAR ORGANIZATIONS FROM PUBLICLY-AVAILABLE INFORMATION CONTAINED IN FORMS 990 AND OTHER SOURCES. ADDITIONALLY, COMPENSATION SURVEYS/STUDIES ARE PERFORMED, AS NEEDED, TO PROVIDE INSIGHT INTO THE ELEMENTS OF COMPENSATION. THE HR&G COMMITTEE RECOMMENDATIONS ARE DISCUSSED WITH AND SUBMITTED TO THE BOARD OF DIRECTORS FOR ITS CONSIDERATION AND APPROVAL. A REVIEW OF THE CHIEF EXECUTIVE OFFICER'S COMPENSATION IS PERFORMED ANNUALLY EXCEPT IN THOSE LIMITED INSTANCES IN WHICH THE COMPENSATION HAS BEEN DETERMINED PURSUANT TO THE PROVISIONS OF AN EMPLOYMENT AGREEMENT FOR A TERM EXCEEDING A YEAR BETWEEN ERCOT AND THE CHIEF EXECUTIVE OFFICER, WHICH HAS BEEN APPROVED BY THE BOARD OF DIRECTORS, AND ALL DECISIONS REGARDING THE CHIEF EXECUTIVE OFFICER'S COMPENSATION ARE DOCUMENTED AND MAINTAINED. FURTHERMORE, THE PUBLIC UTILITY COMMISSION OF TEXAS SUBSTANTIVE RULES RELATED TO ERCOT GOVERNANCE REQUIRES THAT CHIEF EXECUTIVE OFFICER COMPENSATION IS SUBJECT TO THE REVIEW AND APPROVAL OF THE PUBLIC UTILITY COMMISSION OF TEXAS. 15(B) IN DETERMINING COMPENSATION FOR OFFICERS OTHER THAN THE CHIEF EXECUTIVE OFFICER, ERCOT FOLLOWS A PROCEDURE WHICH ENSURES THAT (I) COMPENSATION IS FULLY DISCLOSED IN ADVANCE TO THE HR&G COMMITTEE OF THE BOARD OF DIRECTORS, (II) THE HR&G COMMITTEE OBTAINS AND RELIES UPON APPROPRIATE DATA FOR COMPARABILITY, AND (III) THE HR&G COMMITTEE ADEQUATELY DOCUMENTS THE BASIS FOR ITS DETERMINATION. THE CHIEF EXECUTIVE OFFICER REPORTS PROPOSED OFFICER PAY AMOUNTS TO THE HR&G COMMITTEE FOR REVIEW AND COMMENT BEFORE ANY MERIT INCREASE IS FINALIZED. KEY EMPLOYEE COMPENSATION IS REVIEWED AND DETERMINED BY THEIR APPROPRIATE OFFICER. FOR REVIEW OF OFFICER AND KEY EMPLOYEE COMPENSATION, ERCOT USES MERIT RATINGS AND DATA OBTAINED RELATING TO COMPARABLE COMPENSATION OF SIMILARLY QUALIFIED PERSONS IN COMPARABLE POSITIONS AT COMPARABLE ORGANIZATIONS, INCLUDING COMPENSATION SURVEYS AND FORMS 990. THE HR&G COMMITTEE CAN REQUEST INFORMATION FROM INDEPENDENT COMPENSATION CONSULTANTS. OFFICER AND KEY EMPLOYEE COMPENSATION IS REVIEWED ANNUALLY, AND ALL DECISIONS REGARDING OFFICER AND KEY EMPLOYEE COMPENSATION ARE DOCUMENTED AND MAINTAINED. Form 990, Part VI, Section C, line 19 ERCOT's governing documents, conflict of interest policy, and audited financial statements are available to the public through the ERCOT website (www.ercot.com). Form 990, Part XI, line 9: Deferred pension costs 87,021.