Power grid officials reverse plan to give ERCOT CEO $6.4 million compensation package, Dan Patrick says

The president and CEO of the Electric Reliability Council of Texas secured approval for a contract Tuesday that could pay up to $6.5 million next year, which would have made him one of the highest paid executives of an independent system electric grid operator in the country. 

But board members of the entities that respectively operate and regulate the state’s main power grid reversed their decision, according to Lt. Gov. Dan Patrick. 

Both ERCOT 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. Patrick, though, said on social media that he told the chairs of both agencies to “immediately reverse their action” and that they complied.

“I am against the increase, and I think the legislature will agree that the amount is shocking,” Patrick said. 

Patrick’s post came after The Texas Tribune originally published a story about the initial contract approval. A ERCOT spokesperson could not immediately comment after Patrick’s post. A PUC spokesperson had previously confirmed the initial vote to grant Vegas the new contract, but did not mention any reversed decisions.

It was unclear late Tuesday how the decision was reversed. 

Under the contract in question, Vegas would make the salary in 2027. The potential $6.5 million  includes a final $1.4 million “make-whole” payment negotiated under the terms of Vegas’ first contract approved in 2022, the year he assumed the top role at the nonprofit, according to a board presentation of the terms of the contract. 

Vegas’ 2027 pay under the proposed contract would represent a more than 80% increase in his compensation from 2024, which was $3.6 million, according to ERCOT’s most recent 990 form filed in late 2025. ERCOT did not respond to requests for comment on why Vegas’ salary is increasing. 

The previous highest earning CEO of a nonprofit grid operator was John Bear, the head of Midcontinent Independent System Operator, who earned $3.7 million in 2024, according to the organization’s most recent 990 form filed in late 2025. 

There are seven organizations in the continental U.S. that control and monitor the operation of an electric power grid, including ERCOT. 

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. 

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 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. 

ERCOT anticipates nearly $486 million in revenue in 2026, according to its 2026-2027 biennial budget. 

Vegas’ base salary would be $1,162,716 under the proposed contract, but he could earn significantly more through short and long term incentives negotiated under the contract. Those incentives — 100% of Vegas’ base salary for the short term incentive and 180% of the base salary for the long term incentive — would total about $3.3 million annually in additional pay, according to the contract presentation. The remaining amount of Vegas’ compensation under the proposed contract would be made up by a deferred compensation arrangement, known as a 457(f) plan, and benefits. 

Without the make-whole payment, Vegas’ compensation in 2027 would be $5,085,398, according to the contract presentation. 

The 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.