Proposed Amendments to ERCOT Articles of Incorporation and Bylaws
ERCOT Legal is proposing amendments to the ERCOT Articles of Incorporation and Bylaws in consultation with outside corporate counsel to align with current legal requirements and maintain ERCOT's tax-exempt status. The proposed changes include updates to factual references, incorporation of statutory provisions, and identification of governing rules. Highlights of key changes are outlined, emphasizing alignment with statutory purposes and streamlining approval processes.
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Item 12: ERCOT Reports: Proposed Amendments to ERCOT Articles of Incorporation and Bylaws Chad V. Seely ERCOT Vice President, General Counsel and Corporate Secretary Vickie Leady ERCOT Assistant General Counsel and Assistant Corporate Secretary Jonathan Levine ERCOT Senior Corporate Counsel Technical Advisory Committee Meeting ERCOT Public May 18, 2018
ERCOT Governing Documents Amendments ERCOT Legal expects to propose for vote and approval amendments to the ERCOT Articles of Incorporation and Bylaws at the June 11-12, 2018 Human Resources and Governance Committee (HR&G) and Board of Directors meetings. On May 4, 2018, ERCOT Legal circulated proposed amendments to the Articles and Bylaws by email to the TAC and Others group. Since then, Member comments were received on the Bylaws, and none were received on the Articles. 2 Item 12 ERCOT Public
Proposed Amendments to ERCOT Articles of Incorporation 3 Item 12 ERCOT Public
Proposed Articles Amendments In consultation with ERCOT s outside corporate counsel, ERCOT Legal has proposed updates to the Articles To conform with current corporate and tax- exempt organization legal requirements To maintain ERCOT s tax-exempt status To update factual references To include references to applicable provisions of PURA and PUC Substantive Rules 4 Item 12 ERCOT Public
Proposed Articles Amendments contd Highlights of key substantive changes Aligns the stated corporate purpose with the statutory purpose prescribed by Public Utility Regulatory Act (PURA) Removes Membership approval step for statutory changes to take effect in relation to limitation of liability of directors now change is automatic Identifies PUCT Substantive Rule which governs distribution of assets and winding up provisions if and upon decertification of ERCOT as independent organization Identifies PURA as the source for the mandatory composition of the ERCOT Board of Directors 5 Item 12 ERCOT Public
Proposed Articles Amendments contd Clean and red-lined versions of ERCOT Legal s proposed amendments to the Articles of Incorporation will be provided as part of the May 24, 2018 TAC meeting materials. 6 Item 12 ERCOT Public
Proposed Amendments to ERCOT Bylaws 7 Item 12 ERCOT Public
Stakeholder Comments on ERCOT Bylaws In response to ERCOT Legal s most recent request (sent to TAC by email on May 4, 2018) for additional comments on the proposed Bylaws amendments, Stakeholder comments were received on: Affiliate definition Membership Segment definition 8 Item 12 ERCOT Public
Stakeholder Comments Affiliate Definition ERCOT received joint and consolidated comments on the Affiliate definition and related Section 3.3(c) in the Bylaws from: American Electric Power Service Corporation CenterPoint Energy, Inc. First Solar, Inc. Luminant Generation Company, LLC Reliant Energy Retail Services, LLC Oncor Electric Delivery Company, LLC Texas Industrial Energy Consumers The comments will be included in the May 24, 2018 TAC meeting materials. 9 Item 12 ERCOT Public
Stakeholder Comments Affiliate Definition contd The stakeholder edits primarily address presumptions of affiliation in relation to ownership of securities. After consideration of these edits, ERCOT further proposes that all presumptions of non-affiliation are rebuttable as follows: Securities Ownership Less than 20% Affiliation Status Non-affiliation Presumption Rebuttable to the ERCOT Board of Directors No affiliation, based strictly on percentage of ownership (without conditional requirements) No affiliation only if all conditions are met: (a) Securities held as an investment; (b) No representation on board; and (c) No influence on daily management decisions Affiliated if not all of three conditions [(a), (b) and (c) above] are met 20% or More Non-affiliation Affiliation Notice provision in Section 3.3(c) is also extended from 30 to 90 days. 10 Item 12 ERCOT Public
Stakeholder Comments Membership Segment Definition ERCOT received comments from Southern Cross Transmission (SCT) requesting that ERCOT and the stakeholders delay action on the Market Segment question at this time and does not believe SCT will suffer harm from the delay. These comments will be included as part of the May 24, 2018 TAC meeting materials. Given SCT s request, ERCOT does not expect to submit amendments to any Membership Segment definition to the HR&G Committee or the Board at this time. ERCOT will reinitiate stakeholder discussion of the Membership Segment definition upon further upon further certainty that the SCT Project will be interconnected to the ERCOT Transmission Grid. 11 Item 12 ERCOT Public
ERCOT Legal Other Proposed Amendments In addition to the Affiliate definition amendment, ERCOT Legal proposes other amendments to the Bylaws, as illustrated in the redlined version provided in the May 24, 2018 TAC meeting materials, including: Modification of the Officer definition Updates to legal code references Corrections to scrivener s errors No additional stakeholder comments on these proposed amendments were received. 12 Item 12 ERCOT Public
Proposed Schedule 13 Item 12 ERCOT Public
Expected Schedule Date Meeting Purpose 04.26.2018 TAC Meeting was cancelled 05.04.2018 -- ERCOT Legal circulates its additional edits to the Articles of Incorporation and the Bylaws (i.e., Affiliate and Membership definitions) 05.11.2018 -- Any additional stakeholder comments due in writing to ERCOT Legal 05.24.2018 TAC Discuss Articles of Incorporation (Articles) and Bylaws amendments proposed by ERCOT Legal and stakeholders; TAC can vote to endorse amendments if desired, but not required 06.11-12.2018 HR&G Committee/ Board of Directors Request recommendation by HR&G Committee and Board approval for amendments to Articles and Bylaws and for Board approval to call Special Meeting of Corporate Members 07.2018 Special Meeting of Corporate Members Request approval by Corporate Members subject to PUCT approval 07.2018 -- ERCOT Legal will file petition for approval of amendments with the PUCT. Absent PUCT approval, amendments cannot be effective 14 Item 12 ERCOT Public
Membership Voting If there is support to delay amendment to the Membership Segment definition in the Bylaws, ERCOT Legal will recommend that the Membership cast votes on two matters: 1. Proposed amendments to the Articles (as a whole); and 2. Proposed amendments to the Bylaws (as a whole rather than separate amendments as previously discussed). 15 Item 12 ERCOT Public
TAC Endorsement of Proposed Amendments TAC is not required to vote to endorse ERCOT Legal s proposed amendments to the Articles or Bylaws; but if TAC so desires, then it may vote to endorse either or both of the proposed sets of amendments. 16 Item 12 ERCOT Public
