2018-07-16T09:14:19-05:00 2017-12-31 390859910 BAKER TILLY VIRCHOW KRAUSE LLP 777 E WISCONSIN AVE 32ND FLOOR MILWAUKEE WI 53202 990 2017-01-01 742587416 ELECTRIC RELIABILITY COUNCIL OF TEXAS INC ELEC 5122257000 7620 METRO CENTER DRIVE AUSTIN TX 787441613 MICHAEL PETTERSON VP AND CFO 5122257000 2018-07-15 1 TROY MARINE CPA P00187863 4147775500 2018-07-10 2017 2022-09-23 18:48:47Z ERCOT WILLIAM MAGNESS 7620 METRO CENTER DRIVE AUSTIN TX 787441613 222267134 0 X WWW.ERCOT.COM X 1990 TX SEE SCHEDULE O 14 13 814 18 0 0 0 0 215081125 219326865 671361 2935183 18023 5086 215770509 222267134 0 0 0 0 97671298 104301709 0 0 0 88940992 100177036 186612290 204478745 29158219 17788389 848357144 1223782330 811618789 1169249541 36738355 54532789 WE SERVE THE PUBLIC BY ENSURING A RELIABLE GRID, EFFICIENT ELECTRICITY MARKETS, OPEN ACCESS AND RETAIL CHOICE. 0 0 155699592 222240365 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. 155699592 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 1 275 0 814 1 0 0 0 0 0 0 X 14 13 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 BOARD MEMBER 15.00 X 0 0 0 PETER CRAMTON BOARD MEMBER 5.00 X 87000 0 0 CRAVEN CROWELL BOARD MEMBER 20.00 X 99800 0 0 JACK DURLAND BOARD MEMBER 5.00 X 0 0 0 KEITH EMERY BOARD MEMBER 4.00 X 0 0 0 NICK FEHRENBACH BOARD MEMBER 6.00 X 0 0 0 RANDY JONES BOARD MEMBER 4.00 X 0 0 0 CLIFTON KARNEI BOARD MEMBER 4.00 X 0 0 0 WILLIAM MAGNESS BOARD MEMBER; PRESIDENT & 40.00 X X 683402 0 65775 DONNA NELSON BOARD MEMBER 4.00 X 0 0 0 KARL PFIRRMANN BOARD MEMBER 10.00 X 92600 0 0 CAROLYN SHELLMAN BOARD MEMBER 4.00 X 0 0 0 WADE SMITH BOARD MEMBER 4.00 X 0 0 0 DEANN WALKER BOARD MEMBER 10.00 X 0 0 0 JUDY WALSH BOARD MEMBER 5.00 X 100100 0 0 JOHN WERNER BOARD MEMBER 4.00 X 0 0 0 RICK BLUNTZER SEGMENT ALTERNATE 2.00 X 0 0 0 SETH COCHRAN SEGMENT ALTERNATE 2.00 X 0 0 0 KEVIN GRESHAM SEGMENT ALTERNATE 5.00 X 0 0 0 SAM HARPER SEGMENT ALTERNATE 5.00 X 0 0 0 MIKE KEZAR SEGMENT ALTERNATE 4.00 X 0 0 0 KENNY MERCADO SEGMENT ALTERNATE 5.00 X 0 0 0 JENNIFER RICHIE SEGMENT ALTERNATE 1.00 X 0 0 0 JACKIE SARGENT SEGMENT ALTERNATE 4.00 X 0 0 0 PHIL WILLIAMS SEGMENT ALTERNATE 4.00 X 0 0 0 SALLIE BETTY DAY VP, GOVERNANCE, RISK & COMP 40.00 X 252548 0 66960 STEVE DANIELS VP, DIGITAL SERVICES 40.00 X 229597 0 53271 JERRY DREYER SVP, & CIO 40.00 X 507461 0 66549 THERESA GAGE VP, EXTERNAL AFFAIRS & CORP 40.00 X 274576 0 47498 VICKIE LEADY ASST. GC AND ASST. CORP. S 40.00 X 192497 0 49417 CHERYL MELE SVP & COO 40.00 X 406405 0 61107 KENAN OGLEMAN VP, COMMERCIAL OPERATIONS 40.00 X 237894 0 44474 MICHAEL PETTERSON VP AND CFO 40.00 X 293821 0 72022 DWAYNE RICKERSON VP, GRID PLANNING & OPERATIONS 40.00 X 237238 0 61625 CHAD SEELY VP, GENERAL COUNSEL & CORP 40.00 X 330027 0 70790 DIANE M WILLIAMS VP, HUMAN RESOURCES 40.00 X 307009 0 57081 BRYAN HANLEY DIRECTOR IT INFRASTRUCTURE 40.00 X 217787 0 59091 MARK RUANE DIRECTOR SETTLEMENTS RETAIL & CR 40.00 X 239618 0 47427 DAN WOODFIN SR. DIRECTOR SYSTEM OPERATIONS 40.00 X 226070 0 50289 DAVID FORFIA DIRECTOR IT ARCHITECTURE 40.00 X 221999 0 60638 WARREN LASHER SENIOR DIRECTOR, SYSTEM PLANNING 40.00 X 213829 0 47692 MATTHEW MERENESS DIRECTOR STANDARDS & PROTOCOLS 40.00 X 195808 0 55617 JOEL MICKEY SR. DIRECTOR WHOLESALE MARKET 40.00 X 223958 0 62877 KENNETH RAGSDALE PRINCIPAL, MARKET DESIGN & 40.00 X 194789 0 45978 6065833 0 1146178 447 0 1 0 ALLEGIS GROUP SERVICES INC 14155 COLLECTION CTR DR CHICAGO IL 60693 CONTINGENT WORKFORCE 9727689 POTOMAC ECONOMICS LTD 9990 FAIRFAX BLVD SUITE 560 FAIRFAX VA 22030 INDEPENDENT MKT MONITOR 3875001 ABB INC PO BOX 88868 CHICAGO IL 606951868 IT CONSULTING 3273654 SIEMENS INDUSTRY INC DEPT CH 14381 PALATINE IL 600554381 IT CONSULTING 1230023 PERSISTENT SYSTEMS INC 2055 LAURELWOOD RD STE 210 SANTA CLARA IL 75054 IT CONSULTING 592512 23 ELECTRIC RELIABILITY PROGRAM SERV 221000 182356166 182356166 MUNICIPAL SERVICE PROGRAM REVENUE 221000 36608249 36608249 MEMBERSHIP DUES 221000 362450 362450 219326865 2932562 2913500 19062 2621 0 2621 2621 2621 NON-OPERATING INCOME 900099 5086 5086 5086 222267134 222240365 0 26769 5888827 3065412 2823415 71218439 59664518 11553921 10631183 9152672 1478511 10466136 8693240 1772896 6097124 5168039 929085 812229 812229 233000 233000 10724384 9505692 1218692 1422997 801772 621225 3389551 3358965 30586 5076183 5076183 1295299 888798 406501 1934591 1298306 636285 1581500 1581500 27147771 22954250 4193521 1958633 1958633 HARDWARE AND SOFTWARE E 28746544 27980301 766243 RELIABILITY ORGANIZATIO 14344749 14344749 DUES AND SUBSCRIPTIONS 1493568 1207215 286353 ALL OTHER EXPENSES 16037 1779 14258 204478745 155699592 48779153 0 1417405 1155656 692858964 1055853919 7563100 9158647 21635107 26364563 895394106 764144561 124882568 131249545 848357144 1223782330 14200532 14848954 4202587 4638873 342868746 534562318 62786850 58802951 387560074 556396445 811618789 1169249541 X 36738355 54532789 36738355 54532789 848357144 1223782330 X 17788389 6045 X 0 1 X 1 0 0 1 X 947096 947096 83750591 35824917 47925674 8171456 8163055 8401 117661670 101771868 15889802 684863293 618384721 66478572 131249545 CRRAH/QSE SECURITY DEPOSITS 556008161 ACCR. POST RET. BENEFIT OBLIGATION 368723 DEFERRED RENT COSTS 19561 556396445 X 222267134 0 222267134 0 222267134 204472700 0 204472700 6045 6045 204478745 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 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: CHANGE IN DEFERRED PENSION COSTS 6,045. 1 X X X X X X 0 0 0 0 0 0 0 0 0 WILLIAM MAGNESS BOARD MEMBER; PRESIDENT & 683402 0 0 0 0 0 36000 0 29775 0 749177 0 0 0 SALLIE BETTY DAY VP, GOVERNANCE, RISK & COMP 252548 0 0 0 0 0 37288 0 29672 0 319508 0 0 0 STEVE DANIELS VP, DIGITAL SERVICES 229597 0 0 0 0 0 23345 0 29926 0 282868 0 0 0 JERRY DREYER SVP, & CIO 507461 0 0 0 0 0 39150 0 27399 0 574010 0 0 0 THERESA GAGE VP, EXTERNAL AFFAIRS & CORP 274576 0 0 0 0 0 38128 0 9370 0 322074 0 0 0 VICKIE LEADY ASST. GC AND ASST. CORP. S 192497 0 0 0 0 0 28611 0 20806 0 241914 0 0 0 CHERYL MELE SVP & COO 406405 0 0 0 0 0 39155 0 21952 0 467512 0 0 0 KENAN OGLEMAN VP, COMMERCIAL OPERATIONS 237894 0 0 0 0 0 34517 0 9957 0 282368 0 0 0 MICHAEL PETTERSON VP AND CFO 293821 0 0 0 0 0 40135 0 31887 0 365843 0 0 0 DWAYNE RICKERSON VP, GRID PLANNING & OPERATIONS 237238 0 0 0 0 0 34517 0 27108 0 298863 0 0 0 CHAD SEELY VP, GENERAL COUNSEL & CORP 330027 0 0 0 0 0 38052 0 32738 0 400817 0 0 0 DIANE M WILLIAMS VP, HUMAN RESOURCES 307009 0 0 0 0 0 36000 0 21081 0 364090 0 0 0 BRYAN HANLEY DIRECTOR IT INFRASTRUCTURE 217787 0 0 0 0 0 31782 0 27309 0 276878 0 0 0 MARK RUANE DIRECTOR SETTLEMENTS RETAIL & CR 239618 0 0 0 0 0 35011 0 12416 0 287045 0 0 0 DAN WOODFIN SR. DIRECTOR SYSTEM OPERATIONS 224755 0 1315 0 0 0 32803 0 17486 0 276359 0 0 0 DAVID FORFIA DIRECTOR IT ARCHITECTURE 221999 0 0 0 0 0 32474 0 28164 0 282637 0 0 0 WARREN LASHER SENIOR DIRECTOR, SYSTEM PLANNING 213829 0 0 0 0 0 31059 0 16633 0 261521 0 0 0 MATTHEW MERENESS DIRECTOR STANDARDS & PROTOCOLS 194376 0 1432 0 0 0 28528 0 27089 0 251425 0 0 0 JOEL MICKEY SR. DIRECTOR WHOLESALE MARKET 223623 0 335 0 0 0 32954 0 29923 0 286835 0 0 0 KENNETH RAGSDALE PRINCIPAL, MARKET DESIGN & 194789 0 0 0 0 0 28294 0 17684 0 240767 0 0 0 BRAZOS ELECTRIC POWER COOPERATIVE SEE PART V BELOW 476288860 SEE PART V BELOW 0 TENASKA POWER SERVICES SEE PART V BELOW 122103756 SEE PART V BELOW 0 SOUTH TEXAS ELECTRIC COOPERATIVE SEE PART V BELOW 109555423 SEE PART V BELOW 0 SOURCE POWER & GAS SEE PART V BELOW 32343664 SEE PART V BELOW 0 AMERICAN ELECTRIC POWER - TEXAS SEE PART V BELOW 198185 SEE PART V BELOW 0 SCHEDULE L, PART IV - (1)(B): CLIFTON KARNEI WAS A 2017 BOARD MEMBER OF ERCOT (COOPERATIVE MARKET SEGMENT DIRECTOR) AND ALSO EXECUTIVE VICE PRESIDENT AND GENERAL MANAGER OF BRAZOS ELECTRIC POWER COOPERATIVE, INC. SCHEDULE L, PART IV - (1)(D): PAYMENT OF GOVERNMENTALLY-APPROVED TARIFF, ANCILLARY SERVICE FEES, AND MEMBERSHIP DUES. SCHEDULE L, PART IV - (2)(B): KEITH EMERY WAS A 2017 BOARD MEMBER OF ERCOT (INDEPENDENT POWER MARKETER MARKET SEGMENT DIRECTOR) AND ALSO VICE PRESIDENT OF TENASKA POWER SERVICES CORP. SCHEDULE L, PART IV - (2)(D): PAYMENT OF GOVERNMENTALLY-APPROVED TARIFF, ANCILLARY SERVICE FEES, AND MEMBERSHIP DUES. SCHEDULE L, PART IV - (3)(B): MIKE KEZAR WAS A 2017 BOARD MEMBER OF ERCOT (COOPERATIVE MARKET SEGMENT ALTERNATE) AND ALSO THE GENERAL MANAGER OF SOUTH TEXAS ELECTRIC COOPERATIVE, INC. SCHEDULE L, PART IV - (3)(D): PAYMENT OF GOVERNMENTALLY-APPROVED TARIFF, ANCILLARY SERVICE FEES, AND MEMBERSHIP DUES. SCHEDULE L, PART IV - (4)(B): JOHN WERNER WAS A 2017 BOARD MEMBER OF ERCOT (INDEPENDENT RETAIL ELECTRIC PROVIDER MARKET SEGMENT ALTERNATE) AND ALSO PRESIDENT OF SOURCE POWER & GAS. SCHEDULE L, PART IV - (4)(D): PAYMENT OF GOVERNMENTALLY-APPROVED TARIFF, ANCILLARY SERVICE FEES, AND MEMBERSHIP DUES. SCHEDULE L, PART IV - (5)(B): WADE SMITH WAS A 2017 BOARD MEMBER OF ERCOT (INVESTOR-OWNED UTILITY MARKET SEGMENT ALTERNATE) AND ALSO PRESIDENT AND COO OF AMERICAN ELECTRIC POWER - TEXAS. SCHEDULE L, PART IV - (5)(D): PAYMENT OF GOVERNMENTALLY-APPROVED TARIFF, ANCILLARY SERVICE FEES, AND MEMBERSHIP DUES. 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 46,500 MILES OF TRANSMISSION LINES AND 570+ 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. EIGHT OF THE VOTING DIRECTORS REPRESENT SEVEN SEGMENTS OF INDUSTRY IN THE ERCOT ELECTRICITY MARKET (AS THE CONSUMER SEGMENT IS FURTHER DIVIDED INTO SUBSEGMENTS); 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. TWO OTHER VOTING DIRECTORS, BOTH EX-OFFICIO DIRECTORS, RESPECTIVELY REPRESENT A SUBSEGMENT OF THE CONSUMER SEGMENT. ONE IS THE CHIEF EXECUTIVE OFFICER OF ERCOT. ONE IS THE CHAIR OF THE PUBLIC UTILITY COMMISSION OF TEXAS, AND NEITHER HAVE ANY RESPECTIVE SEGMENT ALTERNATES. FIVE OF THE OTHER VOTING DIRECTORS ARE UNAFFILIATED WITH RESPECT TO ANY MARKET SEGMENT AND DO NOT HAVE ANY SEGMENT ALTERNATES. FORM 990, PART VI, SECTION A, LINE 6 AS OF DECEMBER 31, 2017, ERCOT'S MEMBERSHIP INCLUDED 303 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 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 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 11B THE 2017 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 JUNE 12, 2018. THE FINAL VERSION OF THE 2017 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 ALTERNATES), 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 THE FULL BOARD OF DIRECTORS AND TO THE HUMAN RESOURCE & 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 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 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 THEY RECEIVE INFORMATION ANNUALLY IN REGARDS 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 HIS 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 6,045.