Monday, February 18, 2019

MISO Members Split on Regulator Cooling-off Period

By Amanda Durish Cook

CARMEL, Ind. — MISO’s 10 sectors are split over whether state regulators should be subjected to a one-year moratorium before they’re eligible to serve on the RTO’s Board of Directors.

The controversy surfaced in early fall with the nomination Minnesota Public Utilities Commission Chair Nancy Lange. Last month, MISO membership elected Lange to the board, though some stakeholders said she should be subject to the same one-year moratorium that the RTO requires of directors coming from member companies. (See MISO Elects Lange to Board; Keeps 2 Incumbents.) This is the first time MISO has elected a sitting commissioner from one of the states in its footprint.

The board’s Corporate Governance and Strategic Planning Committee has agreed to consider expanding the moratorium in 2019.

Lange has not yet resigned from the Minnesota PUC, though MISO’s new director orientation begins Dec. 11. MISO will hold another two-day orientation session in late January. Lange’s term ends Jan. 7 and overlap between her PUC appointment and MISO training seems inevitable. MISO officials had promised an early resignation in order to avoid overlap. Meanwhile, 14 applicants are vying for Lange’s seat in Minnesota.

Lange did not respond to RTO Insider’s calls to her Minnesota office.

During a Dec. 5 Advisory Committee meeting, MISO Senior Vice President and Board Secretary Stephen Kozey said the cooling off period was introduced in 1996 to prevent conflicts of interest by member companies offering their former executives to serve on the board. While the stay-out period was not required by FERC, the commission accepted MISO’s language.

Mark Volpe, representing the Independent Power Producers sector, pointed out that state regulators in MISO are on equal footing with dues-paying members through sector voting. He said that even though Environmental sector representatives are not dues-paying members, it would nevertheless be inappropriate for an environmental representative at the Advisory Committee to immediately transition to a director position.

Though Volpe said he had no reservations about Lange personally, he said she could have been seated at one of the four regulator seats at the Advisory Committee days before joining the MISO board.

“It’s the spirit of the rules that’s the real concern here,” Volpe said.

Mark Volpe and Beth Soholt | © RTO Insider

Chris Plante, representative of the Transmission-Dependent Utilities sector, said he agreed with Volpe’s observations.

“The sense of confidence that the membership and stakeholder body have in the MISO Board of Directors is very important to the legitimacy of the board’s guidance to management,” Kozey said. “If there’s something that can improve that legitimacy, I expect that the next incarnation of the Corporate Governance and Strategic Planning Committee will be interested in hearing that.”

Missouri Public Service Commissioner Daniel Hall, however, said regulators bring valuable experience and do not stand to benefit from MISO decisions. Hall was one of two stakeholders this year on the board’s Nominating Committee, which is charged with selecting board nominees.

“This shouldn’t be an issue at all. I don’t see how a commissioner serving on the board after their tenure is a conflict,” Hall said.

Tia Elliott (left) and Audrey Penner | © RTO Insider

Others said additional rules are unnecessary because many in MISO’s stakeholder community maintain professional licenses that instruct individuals to avoid conflicts of interest and the appearance of impropriety. Advisory Committee Chair Audrey Penner said possible revisions to the Transmission Owners Agreement might include language about board nominees recusing themselves when they face conflicts of interest.

Arkansas Public Service Commission Chairman Ted Thomas said that while commissioners could decide to sit at the Advisory Committee table, Lange has not. Lange’s colleague, Commissioner Matthew Schuerger, currently serves in the Organization of MISO States and is one of four commissioners representing the State Regulatory sector.

Thomas said regulators that have not been involved with MISO’s stakeholder process should be free to accept director appointments.

Daniel Hall (left) and Ted Thomas | © RTO Insider

“If we’re going to draw the line, let’s draw it in the right place,” he said.

Advisory Committee Vice Chair Tia Elliott agreed that regulators that are not involved in the State Regulatory sector through OMS probably have little idea about MISO’s inner workings. But she said the appearance of the situation is something members should consider. She pointed out that MISO transmission projects come before regulatory bodies in those states.

But Eligible End-Use Customers sector representative Kevin Murray said he thought the current situation is rare. “I think the odds of it happening again are extremely slim. I think we’re making a big ado about nothing,” Murray said.

Citigroup Energy’s Barry Trayers, of the Power Marketing sector, said MISO may benefit from a person with a less steep learning curve joining the board.

Thomas Rainwater | © RTO Insider

Clean Grid Alliance’s Beth Soholt asked if it’s difficult for the RTO to attract qualified candidates. “We had a very wide and very deep pool, so it’s not like we had to shake the bushes and rattle the trees to get candidates,” said Madison Gas and Electric’s Megan Wisersky, the other stakeholder who sat on this year’s Nominating Committee.

Director Thomas Rainwater, who chairs the Corporate Governance and Strategic Planning Committee, asked members to come to a consensus on whether they would prefer a one-year sit-out.

“The board very much wants to be viewed as independent,” he told stakeholders.