This week, the Electric Reliability Council of Texas (ERCOT) announced the addition of Sigmund Cornelius and Alejandro Hernandez to its board of directors. Both individuals have extensive backgrounds in the energy sector in the Houston area.
Hernandez and Cornelius, who were selected by the board selection committee for ERCOT, which runs the state’s electricity grid, started their new jobs on Monday. Paul Foster and Robert Felxon, who both declared their intention to leave the board last year, are being replaced by the two. There are twelve members on the ERCOT board of directors.
According to Ed Hirs, an energy fellow at the University of Houston, ERCOT primarily serves to accomplish the objectives established by the Texas Legislature, which means the board of directors has little authority.
“It’s kind of a fiction that it’s operated by a board of directors or an independent board of directors,” he stated. The guidelines established by the legislators actually determine the course of the Texas grid.
According to ERCOT, Hernandez is the former CEO and founder of Cumulus Data, a hyper-scale data center that is directly linked to nuclear power. Additionally, according to Reuters, he was the director and CEO of Talen Energy, a power firm based in Houston that filed for bankruptcy in 2022.Following a restructuring, the business emerged from bankruptcy in 2023.
Cornelius most recently held the position of president of Freeport LNG Development, a liquified natural gas exporter that operates along the Gulf Coast south of Houston, according to ERCOT. He worked at Houston-based ConocoPhillips from 1980 to 2010, rising to the positions of senior vice president and CFO before retiring to run Freeport LNG.
The Public Utility Regulator Act was passed by Texas politicians in the wake of the 2021 winter storm that killed over 200 people statewide and left millions of Texans without electricity.
According to the law, each of the three members of ERCOT’s board selection committee must have been selected by a separate state authority. Each of the three positions—governor, lieutenant governor, and speaker of the house—has one appointment. Additionally, the statute mandated that all members of the selection committee must be Texas residents.
The remaining eight members of the board of directors, each of whom has a three-year term, are chosen by the selection committee. According to ERCOT, the eight other members are also chosen with the help of a hired outside consulting firm.
According to Hirs, the board’s management has not changed all that much as a result of these new regulations.
Every day, ERCOT is the sole purchaser of power from the wholesale market throughout its grid. Additionally, it’s the only seller,” he stated. “The Public Utility Commission (of Texas) is the body to which ERCOT reports. The governor appoints the Public Utility Commission’s members. Thus, the connection is essentially direct.
Hirs added that ERCOT has not implemented the necessary adjustments to fix the mistakes that caused the rolling blackouts during the winter storm in 2021.
“The ERCOT market’s primary characteristic is that of being electricity only,” he stated. Therefore, the wholesale market only pays generators who are truly generating electricity. If the Astros were paid that way, only the players who were on the field during a game would receive compensation, which is the equivalent, if you will.
According to Hirs, this implies that energy producers have little motivation to construct new power facilities.
“Peak demand during the winter and peak demand during the summer requires all hands on deck,” he stated. But we don’t require that additional operating capacity for the most of the year. We have a situation where the state’s economic growth has surpassed any rise in the supply of power since we don’t pay for that to exist.”
