Stakeholders Question Independence of Sitting Regulators
By Amanda Durish Cook
MISO members uneasy about the nomination of Minnesota Public Utilities Commission Chair Nancy Lange to the RTO’s Board of Directors raised concerns last week about a sitting commissioner being appointed to the oversight body.
MISO’s Principles of Corporate Governance require new directors to observe a one-year moratorium between their involvement with member companies and their election to the post. The bylaws state that a “director shall not be, and shall not have been at any time within one year prior to their election to the board either a director, officer or employee of a member, user or an affiliate of a member or user.”
While stakeholders say that Lange’s appointment would not explicitly violate the RTO’s bylaws, they pointed out during an Oct. 24 Advisory Committee conference call that Lange would have made decisions about the grid on behalf of Minnesota customers and utilities up until her election.
While a sitting commissioner is not considered either a member or a user, some sector representatives contend that Lange’s role as a regulator in a state within the MISO footprint warrants further discussion.
Lange’s term on the Minnesota PUC expires Jan. 7. MISO Senior Vice President of Compliance Services Stephen Kozey said that upon her election to the the RTO’s board, Lange would immediately resign her PUC position to avoid overlap between positions.
Members have been quick to point out that nominating a sitting member of a MISO state regulatory commission does not explicitly violate the RTO’s independence guidelines. Several also stress they are not concerned about Lange in particular.
But they do say that the situation falls into a gray area and that MISO should consider subjecting regulators to the same downtime requirement as industry officials. Multiple sector representatives, including the Independent Power Producers, Transmission-Dependent Utilities, Transmission Owners, Power Marketers and the non-voting Environmental sector voiced apprehension during the call.
Independent Power Producers sector representative Mark Volpe told RTO Insider that Lange has been “influencing and voting and making decisions” on behalf of MISO members and users in her state. He said although the nomination doesn’t breach the RTO’s bylaws, it “sends up a flare” about “the spirit of the rules and what it means to be independent.” He said the concern was “flagged by a number of IPP sector companies.”
Voting on Lange’s appointment is already underway, with polls open until Nov. 2. Incumbent board members Phyllis Currie and Mark Johnson are also on the ballot. MISO’s Nominating Committee last month decided the slate of candidates. (See MISO Board of Directors Briefs: Sept. 20, 2018.)
MISO rules require board candidates to capture a simple majority of a quorum of voting members, which currently stands at 35.
Board candidates are rarely rejected, the last instance being in the early 2000s when two incumbents were voted out. Although MISO has had former state commissioners on its board (Judy Walsh of Texas and the late Paul Hanaway of Rhode Island), the RTO has never appointed either a sitting commissioner or one from a MISO state.
MISO’s rotating Nominating Committee this year consists of board members Thomas Rainwater, Baljit Dail and Barbara Krumsiek, and RTO member representatives Megan Wisersky of Madison Gas and Electric and Commissioner Daniel Hall of the Missouri Public Service Commission.
Wisersky acknowledged the concerns in a statement to RTO Insider.
“Although the Nominating Committee followed the process correctly, many members of the Advisory Committee expressed concerns with the board nominating process itself,” she said. “They have specific concerns with the lack of a ‘cooling-off period’ for commissioners from states in the MISO footprint. Other potential board candidates, if they work for an organization that is a MISO member, do business with an organization that is a MISO member, or do business with MISO itself, must have a one-year separation from those businesses before they are eligible to run for a seat on the MISO board. State commissioners have no such requirement. These MISO stakeholders think this is inappropriate and would like to explore potential changes to the nominating rules.”
By the Book
MISO says the nomination process for the current election followed all current governance procedures.
“MISO leadership and its Board of Directors have received feedback from members that they were surprised to see a currently sitting commissioner within the MISO footprint nominated for a seat on the board. There is a waiting period of one year for potential candidates from within the industry, but that time restriction does not apply to members of state regulatory bodies,” MISO Senior Director of Stakeholder Affairs and Communications Shawna Lake said in an email. “Several parties have asked that the Corporate Governance & Strategic Planning Committee review and discuss candidate eligibility requirements.
“The questions and concerns to date have been about candidate eligibility generally, not about Commissioner Lange or her qualifications as a potential director,” Lake added.
Lange’s appointment to the board would fill a seat reserved for members with corporate leadership experience. MISO requires that six directors have corporate leadership experience in either board governance, finance, accounting, engineering or utility laws and regulation; another should have transmission system operation experience; another, transmission planning experience; and the final, experience in commercial markets and trading.
The Advisory Committee will take up the issue during its Dec. 6 meeting scheduled as part of MISO Board Week. Some stakeholders are asking that the item be discussed in the committee’s morning session, when the full board is present, as opposed to the afternoon session, when board members usually adjourn to other meetings. Committee leaders said the rotating team of members that determine agendas will decide on the timing of the discussion. In any case, the discussion will come weeks after the Nov. 15 publication of election results at MISO’s Informational Forum. Lake said Kozey will be on hand at the forum to answer clarifying questions about the election process.
Because the Advisory Committee functions strictly in an advisory role to MISO leadership, stakeholders cannot halt or alter the voting process. Multiple stakeholders declined to venture a guess as to the election outcome.
Lake said MISO has in the past adopted multiple Advisory Committee board process recommendations, including expanding the number of board member seats, adopting term limits for directors and adding stakeholder seats on the Nominating Committee.
“The AC has always been a key voice in governance processes. It has been highly effective in the past to offer stakeholder views and advice to the board via the Advisory Committee, transmission owners and Organization of MISO States chairs’ reports to the full board,” Lake said.