The president and CEO of the Electric Reliability Council of Texas secured approval for a contract Tuesday that documents suggested could pay up to $6.4 million next year. But after Lt. Gov. Dan Patrick publicly criticized the move, Pablo Vegas told The Texas Tribune that the contract won't be executed and he'll remain under his current employment agreement.
Both ERCOT's board of directors and the Public Utility Commission, which regulates the grid, advanced a six-year contract extension for Pablo Vegas on Tuesday during ERCOT's regular board meeting. But Patrick said on social media that he told the chairs of both agencies to "immediately reverse their action" and that they complied.
"During a time of increasing utility costs, this is not the time to give the CEO of ERCOT a multi-million-dollar pay raise on the backs of ratepayers," Patrick said.
Patrick's post came after The Texas Tribune published an earlier version of this story about the contract approval. A PUC spokesperson confirmed the vote to grant Vegas the new contract, but did not mention any reversed decisions.
Vegas said the boards of directors did not vote Tuesday to rescind their approval of the contract, but decided not to sign it. He said he did not know when Patrick called ERCOT board chair Bill Flores and PUC chair Thomas Gleason.
Vegas said that immediately after the meeting's closed-door executive session, Flores publicly brought back up the approved contract and said the board would not finalize it Tuesday but did not give a reason why.
ERCOT operates as a nonprofit and is funded mostly by an administration fee of $0.61 per megawatt-hour, which is paid directly by retail electric providers and municipal utilities and typically passed on to their customers. ERCOT reduced its administration fee from $0.63 per MWh at the start of the year.
Statewide, electric rates have risen about 40% on average since 2020, up from an average residential rate of 11.50¢ per kWh in 2020 to 16.11¢ per kWh in 2026, according to data from independent electricity marketplace ElectricChoice. ERCOT anticipates nearly $486 million in revenue in 2026, according to its 2026-2027 biennial budget.
Vegas' 2024 pay in ERCOT's most recent 990 form filed in late 2025 was $3.6 million. Vegas' pay would be $4 million in 2026, if performance targets are met, according to a document shared by ERCOT Tuesday.
Vegas said late Tuesday that concern over the increase in his pay stems from a misunderstanding over the way his contract is structured and that the board presentation was "confusing to anyone who looked at it." He said that confusion stemmed from a bonus that is earned compensation, not paid compensation.
"Earned compensation includes financial payments that could be paid in future years as well, not in the current year," he said.
A publicly available board presentation on the contract details more than $6.4 million in "potential earned compensation" in 2027 for Vegas. That includes $1.1 million in base compensation and another $1.1 million for a short-term bonus. It also included a long-term incentive of more than $2 million.
According to a document ERCOT shared with The Tribune late Tuesday that had previously not been made public, Vegas' maximum pay in 2027 under the proposed contract would be $4.1 million. It lists the long-term bonus payment as $420,000, which is one-fifth of the total incentive of more than $2 million. The document also excludes $587,007 for a deferred compensation plan that was included in the publicly available presentation.
The second document details money that can be "paid" to Vegas in 2027, Vegas said, while the public board presentation includes money that can be "earned" in 2027 but not paid until 2030, if he meets the targets for the bonus.
Vegas said he was not given a reason why the contract was not executed following its approval, but that the conversations around his pay Tuesday evening make it clear "there's a significant opportunity" to provide more public clarity about the proposal.
"Before the story came out, it's possible there may have been feedback to be more clear on the report and what is in the contract," Vegas added.
The proposed contract came as ERCOT grapples with challenges surrounding the influx of data centers connecting to the state grid and accompanying political backlash. The organization has also faced controversial efforts to address transmission congestion in West Texas and the Houston area and rising energy bills for customers across the state driven by natural disasters, transmission congestion and increasing demand.
Vegas said he still expects for a contract extension to be finalized in the future. Vegas is currently under contract with ERCOT through 2027.
"The actions taken today by the board show the support for eventually getting this contract finalized," Vegas said. "They chose not to finalize it today. Clearly there's an opportunity to clear up what was meant by this contract, and everyone would be well served understanding that better."
The $1.4 million make-whole payment was negotiated under Vegas' 2022 contract to make up for foregone bonuses from Vegas' previous employer. That payment totals $6,684,000 spread across six years, the last of which will be paid in the first quarter of 2027, according to the contract presentation.
Vegas was hired after ERCOT's last CEO, Bill Magness, was fired in the aftermath of the February 2021 power grid disaster, when the grid became overwhelmed during a strong winter storm that left millions of Texans without power. Hundreds of people died from the storm.
Vegas was the executive vice president of NiSource Inc. and group president of the Indiana-based company's utilities prior to joining ERCOT in 2022. Vegas has long worked for energy companies and nonprofits, serving as president and chief operating officer for transmission company AEP Texas from 2008 to 2010. Vegas held a variety of other senior executive roles at AEP in addition to his two-year stint at the company's Texas branch.
This article first appeared on The Texas Tribune.
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