2022-11-09T10:31:32-06:00 2021-12-31 390859910 BAKER TILLY US LLP 777 E WISCONSIN AVE 32ND FLOOR MILWAUKEE WI 53202 990 2021-01-01 742587416 ELECTRIC RELIABILITY COUNCIL OF TEXAS INC ELEC 5122257000 8000 METROPOLIS DR BUILDING E 10 AUSTIN TX 78744 SEAN TAYLOR VP AND CFO 5122257000 2022-11-09 1 SEAN TAYLOR 999009999 TROY MARINE CPA P00187863 4147775500 2022-11-08 3 AAL1 IAL1 2021 2022-09-23 18:48:47Z X ERCOT BRAD JONES 8000 METROPOLIS DR BUILDING E 100 AUSTIN TX 78744 252635175 0 X WWW.ERCOT.COM X 1990 TX SEE SCHEDULE O 7 7 859 20 0 0 0 0 238451207 252435343 4298273 199832 0 0 242749480 252635175 0 0 0 0 119617218 123829378 0 0 0 113033717 133458860 232650935 257288238 10098545 -4653063 1930199146 3229605813 1795075572 3099131308 135123574 130474505 X WE SERVE THE PUBLIC BY ENSURING A RELIABLE GRID, EFFICIENT ELECTRICITY MARKETS, OPEN ACCESS AND RETAIL CHOICE. 1 0 188782044 249353110 ERCOT SUCCESSFULLY MANAGES THE FLOW OF ELECTRICITY TO APPROXIMATELY 26 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. 3189458 3272792 ERCOT ACTS AS THE SERVICER AND ADMINISTRATOR FOR THE SUBCHAPTER M BONDS. UNDER THE ERCOT NODAL PROTOCOLS RELATING TO THE SUBCHAPTER M DEFAULT BALANCE SECURITIZATION, ERCOT BILLS MARKET PARTICIPANTS MONTHLY IN AMOUNTS SUFFICIENT TO PROVIDE PAYMENTS OF DEBT SERVICE AND OTHER REQUIRED AMOUNTS AND REMITS THOSE FUNDS TO THE TRUSTEE. 191971502 0 0 0 0 0 0 0 1 0 1 0 0 1 1 1 0 1 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 275 0 859 1 0 0 0 0 0 0 0 0 X 7 7 0 0 0 0 1 1 1 1 1 0 0 1 1 1 1 1 1 1 1 0 X SEAN TAYLOR VP AND CFO 5122257000 8000 METROPOLIS DR BUILDING E 100 AUSTIN TX 78744 WILLIAM MAGNESS BOARD MEMBER, PRESIDENT AN 40.00 X X 375827 0 57012 SALLY TALBERG BOARD MEMBER 30.00 X 16633 0 0 PETER CRAMTON BOARD MEMBER 5.00 X 15750 0 0 TERRY BULGER BOARD MEMBER 12.00 X 15433 0 0 RAYMOND HEPPER BOARD MEMBER 4.00 X 15433 0 0 CARLOS AGUILAR BOARD MEMBER 10.00 X 7250 0 0 WILLIAM FLORES BOARD MEMBER 10.00 X 3938 0 0 ZIN SMATI BOARD MEMBER 25.00 X 3625 0 0 VANESSA ANESETTI-PARRA BOARD MEMBER 4.00 X 0 0 0 JIM BROWN BOARD MEMBER 4.00 X 0 0 0 KEVIN BUNCH BOARD MEMBER 4.00 X 0 0 0 ROB CANTRELL BOARD MEMBER 4.00 X 0 0 0 MARK CARPENTER BOARD MEMBER 4.00 X 0 0 0 LORI COBOS BOARD MEMBER 4.00 X 0 0 0 ARTHUR DANDREA BOARD MEMBER 4.00 X 0 0 0 CHRIS EKOH BOARD MEMBER 16.00 X 0 0 0 KEITH EMERY BOARD MEMBER 15.00 X 0 0 0 NICK FEHRENBACH BOARD MEMBER 4.00 X 0 0 0 ROBERT FLEXON BOARD MEMBER 1.00 X 0 0 0 PAUL FOSTER BOARD MEMBER 4.00 X 0 0 0 KEVIN GRESHAM BOARD MEMBER 4.00 X 0 0 0 TOM HANCOCK BOARD MEMBER 4.00 X 0 0 0 SAM HARPER BOARD MEMBER 8.00 X 0 0 0 BOB KAHN BOARD MEMBER 4.00 X 0 0 0 CLIFTON KARNEI BOARD MEMBER 1.00 X 0 0 0 MIKE KEZAR BOARD MEMBER 4.00 X 0 0 0 PETER LAKE BOARD MEMBER 4.00 X 0 0 0 GLEN LYONS BOARD MEMBER 4.00 X 0 0 0 SHANNON MCCLENDON BOARD MEMBER 4.00 X 0 0 0 ELAINE MENDOZA BOARD MEMBER 3.00 X 0 0 0 RANDAL MILLER BOARD MEMBER 4.00 X 0 0 0 JULIE PARSLEY BOARD MEMBER 3.50 X 0 0 0 JENNIFER RICHIE BOARD MEMBER 0.50 X 0 0 0 EDWARD ROSS BOARD MEMBER 4.00 X 0 0 0 JACQUELINE SARGENT BOARD MEMBER 4.00 X 0 0 0 STEVEN SCHLEIMER BOARD MEMBER 1.00 X 0 0 0 WADE SMITH BOARD MEMBER 4.00 X 0 0 0 JOHN SWAINSON BOARD MEMBER 3.00 X 0 0 0 JUDITH TALAVERA BOARD MEMBER 2.00 X 0 0 0 IAN TAYLOR BOARD MEMBER 2.50 X 0 0 0 DEANN WALKER BOARD MEMBER 4.00 X 0 0 0 JEYANT TAMBY SR. VP AND CAO 40.00 X 484335 0 67979 CHAD SEELY SR. VP, GENERAL COUNSEL & 40.00 X 459946 0 72023 JAYAPAL PARAKKUTH VP & CIO 40.00 X 382615 0 73523 SEAN TAYLOR VP & CFO 40.00 X 384737 0 66852 DWAYNE RICKERSON VP, GRID PLANNING & OPERAT 40.00 X 379453 0 71263 KENAN OGELMAN VP, COMMERCIAL OPERATIONS 40.00 X 381208 0 52326 MARA SPAK VP, HUMAN RESOURCES 40.00 X 376304 0 50860 SALLIE BETTY DAY VP, GOVERNANCE, RISK & COM 40.00 X 342767 0 67797 BRAD JONES BOARD MEMBER, INTERIM PRESIDENT AND CEO 40.00 X 331544 0 52568 KRISTI HOBBS VP, CORPORATE STRATEGY & PUC RELATIONS 40.00 X 273790 0 68433 THERESA GAGE VP, EXTERNAL AFFAIRS & COR 40.00 X 202893 0 34476 JONATHAN LEVINE ASST. GENERAL COUNSEL AND ASST. CORPE 40.00 X 181309 0 44423 VICKIE LEADY ASST. GENERAL COUNSEL AND ASST. CORPE 40.00 X 179152 0 43145 MARK RUANE DIRECTOR, SETTLEMENTS RETA 40.00 X 253728 0 50414 JOHN MESSER DIRECTOR, IT APPLICATION D 40.00 X 220141 0 62114 DAN WOODFIN SR. DIRECTOR, SYSTEM OPERA 40.00 X 271146 0 64721 NATHAN BIGBEE ASST. GENERAL COUNSEL, REG 40.00 X 263849 0 70720 BRYAN HANLEY DIRECTOR, IT INFRASTRUCTUR 40.00 X 258056 0 67629 JULIANA MOREHEAD ASSISTANT GENERAL COUNSEL, REGULATORY 40.00 X 242773 0 70829 AMANDA BAULD SR. DIRECTOR, PROJECT MANAGEMENT 40.00 X 237299 0 34635 6560934 0 1243742 528 0 1 0 NEXTSOURCEINC 1040 AVE OF THE AMERICAS 24TH FL NEW YORK NY 10018 CONTINGENT WORKFORCE 8827226 GRID SOLUTIONS LLC PO BOX 88808 CHICAGO IL 606951808 IT CONSULTING 3911014 POTOMAC ECONOMICS LTD 9990 FAIRFAX BLVD STE 560 FAIRFAX VA 22030 INDEPENDENT MARKET MONITOR 3710837 HITACHI ENERGY USA 901 MAIN CAMPUS DR RALEIGH NC 27606 IT CONSULTING 3373218 WINSTEAD PC 2728 N HARWOOD ST STE 500 DALLAS TX 75201 LEGAL SERVICES 2482121 43 ELECTRIC RELIABILITY PROGRAM SERV 221000 209831999 209831999 MUNICIPAL SERVICE PROGRAM REVENUE 221000 38943912 38943912 BOND SERVICING & ADMINSTRATION 221000 3272792 3272792 MEMBERSHIP DUES 221000 386640 386640 252435343 199832 190559 9273 252635175 252625902 0 9273 6223020 2337348 3885672 86179642 72838890 13340752 13141395 11304069 1837326 11063996 9240244 1823752 7221325 6076513 1144812 7291158 7291158 260438 129500 130938 19301662 15045872 4255790 931437 685150 246287 5256728 5111164 145564 4826321 689915 4136406 193667 109538 84129 392048 148204 243844 4460053 3189458 1270595 27901556 23095056 4806500 6907477 6907477 HARDWARE AND SOFTWARE E 33366743 32729294 637449 RELIABILITY ORGANIZATIO 19540966 19540966 DUES AND SUBSCRIPTIONS 2753438 2331386 422052 ALL OTHER EXPENSES 75168 2424 72744 257288238 191971502 65316736 0 5347037 36722171 1752513438 2198505584 7630031 28106188 26787903 25381963 1017642394 861800948 136878555 155841446 1042182 785048461 1930199146 3229605813 16345558 26699467 5844857 6533540 1066430329 1075478021 46826906 840945331 659627922 1149474949 1795075572 3099131308 X 135123574 130474505 135123574 130474505 1930199146 3229605813 X -4653063 3994 X X 0 1 X 1 0 0 1 X 947096 947096 100327667 47139623 53188044 8171457 8171457 0 122613335 116360405 6252930 785582839 690129463 95453376 155841446 SECURITIZATION CHARGES RECEIVABLE, NON-CURRENT 784181275 OPERATING LEASE ROU ASSET, NON-CURRENT 867186 785048461 CRRAH/QSE SECURITY DEPOSITS 1135961236 ACCR. POST RET. BENEFIT OBLIGATION 324991 OPERATING LEASE LIABILITY 547139 FINANCE LEASE LIABILITY 12641583 1149474949 X 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 EXCEPT FOR 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 X, LINE 1, ROWS 3 AND 4: AFTER ADOPTING ASU NO. 2016-02, LESSEES ARE REQUIRED TO RECOGNIZE THE RIGHTS AND OBLIGATIONS RESULTING FROM LEASES AS ASSETS AND LIABILITIES. ERCOT'S NON-CANCELABLE OPERATING LEASES ARE FOR OFFICE FACILITIES AND OFFICE AND TELECOMMUNICATION EQUIPMENT. 1 X X X X X X 0 0 0 0 0 0 0 1 0 JEYANT TAMBY SR. VP AND CAO 450093 0 34242 0 0 0 42050 0 25929 0 552314 0 0 0 CHAD SEELY SR. VP, GENERAL COUNSEL & 426608 0 33338 0 0 0 40977 0 31046 0 531969 0 0 0 JAYAPAL PARAKKUTH VP & CIO 354615 0 28000 0 0 0 39647 0 33876 0 456138 0 0 0 SEAN TAYLOR VP & CFO 356737 0 28000 0 0 0 42050 0 24802 0 451589 0 0 0 DWAYNE RICKERSON VP, GRID PLANNING & OPERAT 352048 0 27405 0 0 0 41480 0 29783 0 450716 0 0 0 KENAN OGELMAN VP, COMMERCIAL OPERATIONS 353970 0 27238 0 0 0 41777 0 10549 0 433534 0 0 0 WILLIAM MAGNESS BOARD MEMBER, PRESIDENT AN 375827 0 0 0 0 0 39327 0 17685 0 432839 0 0 0 MARA SPAK VP, HUMAN RESOURCES 349104 0 27200 0 0 0 38500 0 12360 0 427164 0 0 0 SALLIE BETTY DAY VP, GOVERNANCE, RISK & COM 317730 0 25012 0 25 0 42050 0 25747 0 410564 0 0 0 BRAD JONES BOARD MEMBER, INTERIM PRESIDENT AND 331544 0 0 0 0 0 35094 0 17474 0 384112 0 0 0 KRISTI HOBBS VP, CORPORATE STRATEGY & PUC RELATIO 273790 0 0 0 0 0 38500 0 29933 0 342223 0 0 0 DAN WOODFIN SR. DIRECTOR, SYSTEM OPERA 271146 0 0 0 0 0 38500 0 26221 0 335867 0 0 0 NATHAN BIGBEE ASST. GENERAL COUNSEL, REG 260535 0 3314 0 0 0 38500 0 32220 0 334569 0 0 0 BRYAN HANLEY DIRECTOR, IT INFRASTRUCTUR 258056 0 0 0 0 0 37711 0 29918 0 325685 0 0 0 JULIANA MOREHEAD ASSISTANT GENERAL COUNSEL, REGULATOR 241377 0 1396 0 0 0 36144 0 34685 0 313602 0 0 0 MARK RUANE DIRECTOR, SETTLEMENTS RETA 253728 0 0 0 0 0 36981 0 13433 0 304142 0 0 0 JOHN MESSER DIRECTOR, IT APPLICATION D 220141 0 0 0 0 0 32232 0 29882 0 282255 0 0 0 AMANDA BAULD SR. DIRECTOR, PROJECT MANAGEMENT 237299 0 0 0 0 0 34300 0 335 0 271934 0 0 0 THERESA GAGE VP, EXTERNAL AFFAIRS & COR 175677 0 27216 0 0 0 29340 0 5136 0 237369 0 0 0 JONATHAN LEVINE ASST. GENERAL COUNSEL AND ASST. CORP 181309 0 0 0 0 0 26391 0 18032 0 225732 0 0 0 VICKIE LEADY ASST. GENERAL COUNSEL AND ASST. CORP 179152 0 0 0 0 0 26437 0 16708 0 222297 0 0 0 PART I, LINE 7: THE EXECUTIVE INCENTIVE ACHIEVEMENT PAYOUT IS CALCULATED AS A PERCENTAGE OF THE EXECUTIVE'S ANNUAL SALARY. INDIVIDUAL ACHIEVEMENT IS BASED ON PERFORMANCE OF CORPORATE OKR AND INITIATIVES, DIVISION GOALS, AND INDIVIDUAL DELIVERABLES AS COMMUNICATED BY THE ERCOT CEO. IN 2021, THE EXECUTIVE TARGET WAS 10%. THE ERCOT CEO DISCUSSES HIS/HER RECOMMENDATIONS OF THE EXECUTIVES' INCENTIVE ACHIEVEMENT WITH THE BOARD OF DIRECTORS. BELOW ARE THE INCENTIVE WEIGHTINGS. 40% OF THE INCENTIVE IS EARNED ACCORDING TO THE EXECUTION OF CORPORATE OKRS AND GOALS. THIS WEIGHTING CREATED GREATER COLLABORATION ACROSS THE EXECUTIVE LEADERSHIP AT ERCOT TO WORK TOWARDS IMPORTANT CORPORATE EFFORTS. 30% OF THE INCENTIVE IS EARNED ACCORDING TO THE PERFORMANCE OF THE EXECUTIVE'S DIVISION DURING THE CALENDAR YEAR. 30% OF THE INCENTIVE IS EARNED ACCORDING TO THE ACHIEVEMENT OF PERSONAL GOALS. THIS COMPONENT CAN INCLUDE DEVELOPMENT GOALS, SPECIAL PROJECTS, OR OTHER DUTIES ASSIGNED BY THE ERCOT CEO. 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; (IV) OPERATING FAIR AND COMPETITIVE WHOLESALE MARKETS; (V) MAINTAINING THE RENEWABLE ENERGY CREDITS REGISTRY; AND (VI) PROVIDING LEADERSHIP AND INDEPENDENT EXPERTISE TO IMPROVE SYSTEM RELIABILITY AND MARKET EFFICIENCY. ERCOT MANAGES THE FLOW OF ELECTRIC POWER TO MORE THAN 26 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 46,500 MILES OF TRANSMISSION LINES AND 710+ GENERATION UNITS. ERCOT ALSO PERFORMS FINANCIAL SETTLEMENT FOR THE COMPETITIVE WHOLESALE BULK-POWER MARKET AND ADMINISTERS RETAIL SWITCHING FOR NEARLY 8 MILLION PREMISES IN COMPETITIVE CHOICE AREAS. FORM 990, PART III, LINE 2 AS A RESULT OF THE FEBRUARY 2021 EXTREME WEATHER EVENT, EXTRAORDINARY PRICES IN THE WHOLSALE ELECTRICITY MARKET CAUSED SOME WHOLESALE MARKET PARTICIPANTS TO DEFAULT ON THEIR PAYMENT OBLIGATIONS FOR POWER UNDER THE ERCOT NODAL PROTOCOLS. AS A RESULT OF THESE PAYMENT DEFAULTS, ERCOT WAS UNABLE TO FULLY SETTLE OBLIGATIONS TO CERTAIN WHOLESALE MARKET PARTICIPANTS WHO WERE DUE PAYMENTS FROM ERCOT FOR POWER THEY PRODUCED DURING THE STORM. TO ADDRESS THESE PROBLEMS, THE TEXAS LEGISLATURE DURING THE 87TH LEGISLATIVE SESSION ENACTED 2 BILLS THAT AUTHORIZED FINANCING MECHANISMS TO PROVIDE FUNDS TO PAY MARKET PARTICIPANTS WHO WERE PREVIOUSLY SHORTPAID AND PROVIDE LIQUIDITY TO MARKET PARTICIPANTS. ONE OF THESE BILLS, HOUSE BILL 4492, ADDED SUBCHARPERS M AND N TO CHAPTER 39 OF THE PUBLIC UTILITY REGULATORY ACT (PURA) AND EACH PROVIDED AUTHORITY FOR A FINANCING MECHANISM TO ADDRESS DIFFERENT ASPECTS OF THE EXTRAORDINARY COSTS INCURRED DUE TO THE FEBRUARY 2021 EXTREME WINTER WEATHER EVENT, WITH SUBCHAPTER M AUTHORIZING UP TO $800,000,000 AND SUBCHAPTER N AUTHORIZING UP TO $2,100,000,000, PLUS REASONABLE COSTS. ON OCTOBER 14, 2021, THE PUBLIC UTILITY COMMISSION OF TEXAS (PUCT) APPROVED ERCOT'S APPLICATION FOR A DEBT OBLIGATION ORDER UNDER PUPA 39.603 (SUBCHAPTER M). IN THAT DEBT OBLIGATION ORDER, THE PUCT, INTER ALIA, APPROVED THE DEFAULT BALANCE IN AN AGGREGATE AMOUNT OF UP TO $800,000,000; APPROVED THE ASSESSMENT OF DEFAULT CHARGES TO ALL WHOLESALE MARKET PARTICIPANTS EXCEPT THOSE EXPRESSLY EXEMPTED BY PURA, IN AN AMOUNT SUFFICIENT TO ENSURE RECOVERY OF AMOUNTS EXPECTED TO BE NECESSARY TO TIMELY PROVIDE ALL PAYMENTS OF DEBT SERVICE AND OTHER REQUIRED AMOUNTS AND CHARGES IN CONNECTION WITH THE ISSUANCE OF DEBT OBLIGATIONS; AUTHORIZED THE ISSUANCE OF TEXAS STABILIZATION M BONDS THROUGH A BANKRUPTCY REMOTE SPECIAL PURPOSE ENTITY IN AN AGGREGATE AMOUNT OF UP TO $800,000,000 FOR THE PAYMENT OF THE DEFAULT BALANCE; AND APPROVED THE FINANCING OR SECURITIZATION OF DEFAULT CHARGES AND THE CREATION OF DEFAULT PROPERTY. THE SUBCHAPTER M DEFAULT BALANCE SECURITIZATION FINANCING CLOSED IN NOVEMBER 2021. ON OCTOBER 13, 2021, THE PUCT APPROVED ERCOT'S APPLICATION FOR A SEPARATE DEBT OBLIGATION ORDER UNDER PURA 39.603 (SUBCHAPTER N). IN THAT DEBT OBLIGATION ORDER, THE PUCT, INTER ALIA, APPROVED THE UPLIFT BALANCE IN AN AGGREGATE AMOUNT OF UP TO $2,100,000,000, PLUS REASONABLE COSTS; APPROVED THE ASSESSMENT OF UPLIFT CHARGES TO LOAD SERVING ENTITIES EXCEPT THOSE EXPRESSLY EXEMPTED BY PURA, IN AN AMOUNT SUFFICIENT TO ENSURE THE RECOVERY OF AMOUNTS EXPECTED TO BE NECESSARY TO TIMELY PROVIDE ALL PAYMENTS OF DEBT SERVICE AND OTHER REQUIRED AMOUNTS AND CHARGES IN CONNECTION WITH THE ISSUANCE OF DEBT OBLIGATIONS; AUTHORIZED THE ISSUANCE OF TEXAS STABILIZATION N BONDS THROUGH A BANKRUPTCY-REMOTE SPECIAL PURPOSE ENTITY; AND APPROVED THE SECURITIZATION OF UPLIFT CHARGES AND THE CREATION OF UPLIFT PROPERTY. THE SUBCHAPTER N UPLIFT BALANCE SECURITIZATION FINANCING CLOSED IN JUNE 2022. ERCOT IS THE SERVICER AND ADMINISTRATOR FOR THE SUBCHAPTER M AND N BONDS, AND AS SUCH, RECEIVES REVENUE FOR PERFORMING THOSE SERVICES. FORM 990, PART VI, SECTION A, LINE 1A IN 2021, THE PORTION OF SECTION 39.151 OF THE TEXAS PUBLIC UTILITY REGULATORY ACT (SEPTEMBER 1, 2021) (PURA) GOVERNING THE COMPOSITION OF THE ERCOT BOARD OF DIRECTORS WAS AMENDED BY TEXAS SENATE BILL 2. PRIOR TO IMPLEMENTATION OF SENATE BILL 2 ON OCTOBER 12, 2021, THE ERCOT BOARD OF DIRECTORS WAS COMPOSED OF SIXTEEN MEMBERS. FIFTEEN OF THE MEMBERS HAD VOTING RIGHTS; THE CHAIR OF THE PUBLIC UTILITY COMMISSION OF TEXAS WAS AN EX OFFICIO NON-VOTING MEMBER. EIGHT OF THE VOTING DIRECTORS REPRESENTED SEVEN SEGMENTS OF INDUSTRY IN THE ERCOT ELECTRICITY MARKET (AS THE CONSUMER SEGMENT IS FURTHER DIVIDED INTO SUBSEGMENTS); EACH SUCH MARKET SEGMENT DIRECTOR HAD AN ELECTED ALTERNATE (SEGMENT ALTERNATE) WHO COULD 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 COULD NOT ATTEND A BOARD MEETING. TWO OTHER VOTING DIRECTORS WERE ALSO EX OFFICIO DIRECTORS ONE REPRESENTED A SUBSEGMENT OF THE CONSUMER SEGMENT AS PUBLIC COUNSEL AND THE OTHER WAS THE CHIEF EXECUTIVE OFFICER OF ERCOT AND NEITHER HAD A SEGMENT ALTERNATE. THE OTHER FIVE VOTING DIRECTORS WERE UNAFFILIATED WITH RESPECT TO ANY MARKET SEGMENT AND DID NOT HAVE ANY SEGMENT ALTERNATES. BEGINNING WITH IMPLEMENTATION OF SENATE BILL 2 ON OCTOBER 12, 2021, THE BOARD OF DIRECTORS IS NOW COMPOSED OF ELEVEN DIRECTORS (NINE VOTING AND TWO NON-VOTING). EIGHT OF THE VOTING DIRECTORS ARE INDEPENDENT DIRECTORS. THE REMAINING VOTING DIRECTOR IS THE EX OFFICIO PUBLIC COUNSEL DIRECTOR WHO REPRESENTS RESIDENTIAL AND SMALL COMMERCIAL CONSUMERS. THE TWO NON-VOTING DIRECTORS ARE ALSO EX OFFICIO DIRECTORS, THAT IS, CHAIR OF THE PUBLIC UTILITY COMMISSION OF TEXAS AND ERCOT'S CHIEF EXECUTIVE OFFICER (WHICH WAS PREVIOUSLY A VOTING DIRECTOR POSITION BUT IS NOW NON-VOTING). TWO OF THE 9 VOTING DIRECTOR SEATS WERE NOT FILLED AT YEAR END DECEMBER 31, 2021. FORM 990, PART VI, SECTION A, LINE 6 AS OF DECEMBER 31, 2021, ERCOT'S MEMBERSHIP INCLUDED 257 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 THE ELECTION OF DIRECTORS, ELECTION OF TECHNICAL ADVISORY COMMITTEE (TAC) REPRESENTATIVES, AND AMENDMENTS TO THE CERTIFICATE OF FORMATION 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 PRIOR TO IMPLEMENTATION OF SENATE BILL 2 ON OCTOBER 12, 2021, THIRTEEN OF THE FIFTEEN VOTING MEMBERS OF THE ERCOT BOARD OF DIRECTORS WERE 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 WERE ALLOWED TO ELECT THE DIRECTOR AND THE SEGMENT ALTERNATE FOR THAT SEAT. THERE WERE THREE CONSUMER DIRECTORS, OF WHICH: (I) ONE WAS THE PUBLIC COUNSEL, AN EX-OFFICIO VOTING MEMBER OF THE BOARD DESIGNATED TO REPRESENT RESIDENTIAL CONSUMERS AND SMALL COMMERCIAL CONSUMERS; (II) ONE WAS ELECTED OR APPOINTED BY THE LARGE COMMERCIAL CONSUMER CORPORATE MEMBERS; AND (III) ONE WAS ELECTED BY THE CORPORATE MEMBERS OF THE INDUSTRIAL CONSUMER SUBSEGMENT. THE FULL CORPORATE MEMBERSHIP VOTED BY SEGMENT TO ELECT THE FIVE UNAFFILIATED VOTING DIRECTORS. THE REMAINING VOTING DIRECTOR WAS THE CHIEF EXECUTIVE OFFICER OF ERCOT, WHO IS AN EX OFFICIO VOTING MEMBER OF THE BOARD. AFTER IMPLEMETATION OF SENATE BILL 2, EIGHT OF THE ELEVEN DIRECTORS ARE APPOINTED BY THE ERCOT BOARD SELECTION COMMITTEE. THE ERCOT BOARD SELECTION COMMITTEE IS COMPRISED OF ONE MEMBER APPOINTED BY THE TEXAS GOVERNOR, ONE MEMBER APPOINTED BY THE TEXAS LIEUTENANT GOVERNOR, AND ONE MEMBER APPOINTED BY THE TEXAS SPEAKER OF THE HOUSE OF REPRESENTATIVES. THESE DIRECTORS MUST HAVE EXECUTIVE LEVEL EXPERIENCE IN ANY OF THE FOLLOWING PROFESSIONS: FINANCE, BUSINESS, ENGINEERING (INCLUDING ELECTRICAL ENGINEERING), TRADING, RISK MANAGEMENT, LAW, OR ELECTRIC MARKET DESIGN. THE REMAINING VOTING DIRECTOR IS THE EX OFFICIO PUBLIC COUNSEL DIRECTOR. THE TWO NON-VOTING DIRECTORS ARE ALSO EX OFFICIO DIRECTORS, THAT IS, CHAIR OF THE PUBLIC UTILITY COMMISSION OF TEXAS AND ERCOT'S CHIEF EXECUTIVE OFFICER (WHICH WAS PREVIOUSLY A VOTING DIRECTOR POSITION BUT IS NOW NON-VOTING). ALL ELEVEN DIRECTORS MUST BE RESIDENTS OF TEXAS. 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. 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 11B THE 2021 FORM 990 WAS PREPARED INITIALLY BY THE FINANCE DEPARTMENT OF ERCOT. IT WAS REVIEWED BY ERCOT OFFICERS AS WELL AS INTERNAL LEGAL COUNSEL, AND 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 AUGUST 16, 2022. THE FINAL VERSION OF THE 2021 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 ANNUALLY MUST EXECUTE AN ETHICS AGREEMENT FOR DIRECTORS, 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 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 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 THE FULL BOARD OF DIRECTORS AND TO THE HUMAN RESOURCES AND GOVERNANCE (HR&G) COMMITTEE OF THE BOARD, AS NEEDED. 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 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 APPROVED IN ADVANCE BY THE HR&G COMMITTEE OF THE BOARD OF DIRECTORS AND 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 PUBLIC UTILITY COMMISSION OF TEXAS REVIEWS ANY COMPENSATION TO BE PAID TO THE CHIEF EXECUTIVE OFFICER. 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 THE DIRECTORS (THAT IS, ALL BOARD MEMBERS EXCEPT THE CHIEF EXECUTIVE OFFICER, WHO IS REQUIRED TO ABSTAIN FROM SUCH VOTE). IN ITS REVIEW, THE HR&G COMMITTEE CAN REQUEST INFORMATION FROM INDEPENDENT COMPENSATION CONSULTANTS, AND THE COMMITTEE RECEIVES INFORMATION ANNUALLY IN REGARD TO THE COMPENSATION LEVELS OF SIMILAR ORGANIZATIONS FROM FORMS 990 AND OTHER SOURCES. ADDITIONALLY, COMPENSATION SURVEYS/STUDIES ARE PERFORMED, AS NEEDED, TO PROVIDE INSIGHT INTO THE ELEMENTS OF COMPENSATION. THE COMPENSATION-RELATED INFORMATION AND HR&G COMMITTEE RECOMMENDATIONS ARE 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 REQUIRE THAT ALL COMPENSATION TO BE PAID TO THE CHIEF EXECUTIVE OFFICER IS SUBJECT TO REVIEW AND APPROVAL BY THE PUBLIC UTILITY COMMISSION OF TEXAS. 15(B) IN DETERMINING COMPENSATION FOR OFFICERS WHO ARE THE DIRECT REPORTS OF 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. FOR DIRECT REPORTS, THE CHIEF EXECUTIVE OFFICER INFORMS THE HR&G COMMITTEE OF PROPOSED OFFICER PAY AMOUNTS. FOR OFFICERS WHO ARE NOT THE DIRECT REPORTS OF THE CEO OR KEY EMPLOYEES, COMPENSATION IS REVIEWED AND DETERMINED BY THEIR APPROPRIATE OFFICER. FOR REVIEW OF ALL OFFICER AND KEY EMPLOYEE COMPENSATION, ERCOT USES PERFORMANCE 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, CODE OF CONDUCT, 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 3,994. FORM 990, PART XII, LINE 2C: NO CHANGE FROM PRIOR YEAR. TEXAS ELECTRIC MARKET STABILIZATION FUNDING M LLC 8000 METROPOLIS DR BUILDING E SUITE AUSTIN TX 78744 742587416 SECURITIZATION BOND SERVICING DE 3272792 867682125 ERCOT TEXAS ELECTRIC MARKET STABILIZATION FUNDING N LLC 8000 METROPOLIS DR BUILDING E SUITE AUSTIN TX 78744 742587416 SECURITIZATION BOND SERVICING DE 0 0 ERCOT