From the Board Chair and President and CEO

Dear Members and Stakeholders:

MRO’s annual member and board meetings last week kept with tradition, providing attendees the opportunity to reflect on the challenges and accomplishments of 2023, consider work that remains to be done, and discuss priorities that will lead us into the future. We are pleased to report—despite headwinds—that staff met or exceeded the aggressive targets set for the organization in 2023, accomplishing all the target goals and all but one stretch goal. What we accomplished demonstrates a commitment to the important work we do; credit for which is owed to many, including staff, board members, industry stakeholders, and colleagues across the ERO Enterprise.

The annual meetings commenced with a closed risk session hosted by the board’s Organizational Group Oversight Committee (OGOC) to assess, and develop plans to reduce, the greatest regional reliability and security risks. This exercise is a key component of MRO’s strategic planning process to identify trends and areas of focus for both short- and long-term horizons. Among the top issues discussed were:

• The rapid transition to renewable resources and the impact on energy availability and essential reliability services that support the grid
• Adequate performance and modeling of newer grid resources
• Anticipated implications of electrification policies on electricity demand
• Reliability challenges associated with increased frequency and duration of severe weather events
• Adequate supply chains for critical equipment
• Greater coordination and sophistication of cyber and physical threats to the grid

Jim Robb, North American Electric Reliability Corporation (NERC) President and CEO, joined the open board meeting to talk about the challenges facing NERC, the ERO Enterprise, and industry. He voiced his concerns over the final sobering report from the joint Federal Energy Regulatory Commission (FERC) and NERC inquiry into winter storm Elliot, adding that much work remains to be done to safeguard reliable power during extreme cold weather. NERC’s 2023-24 Winter Reliability Assessment and the recently released Long-Term Reliability Assessment underscore this point by signaling a trend in elevated or high risk of energy shortfalls that include MRO’s region, a concern also emphasized in MRO’s recently published 2023 Regional Winter Assessment. Robb explained this is primarily due to the widening reliability gap between reduced energy availability and anticipated demand. He encouraged industry to pay attention to the important recommendations in these reports. To help reduce risk, NERC’s 2024 priorities include mitigating cold weather vulnerabilities, addressing issues surrounding inverter-based resources, and timely completion of the congressionally mandated Interregional Transfer Capability Study. Robb also shared that he is working with the ERO Enterprise Executive Committee to assess improvements to compliance monitoring and enforcement activities and continued enhancements to the ERO Enterprise leadership and collaboration model.

FERC and MRO staff that participated in the joint Elliot inquiry echoed Robb’s concerns about the findings, providing additional information on the seriousness of the event. Heather Polzin, Reliability Enforcement Counsel for FERC’s Office of Enforcement, revealed that winter storm Elliot was the largest controlled firm load shed event in Eastern Interconnection history. The event resulted in unprecedented unplanned electric generation outages of 90,500 MW, with 18 percent of the U.S. portion of anticipated resources (in the Eastern Interconnection) unavailable during the worst part of the storm. Several Balancing Authorities in the eastern U.S. declared Energy Emergencies, and some in the southeastern U.S. ordered firm load shed to maintain electric grid reliability. Polzin expressed a sense of urgency to act on the report’s findings to prevent similar occurrences in the future.

There was discussion throughout the meetings on the risks and opportunities presented by artificial intelligence (AI). The board invited Roy Snell, retired co-founder of the Society of Corporate Compliance and Ethics and advisor to Osprey ESG Software, to share his insights on AI, specifically Chat GPT. He provided a brief history on OpenAI—the company that developed and deployed ChatGPT—and contemplated the social issues surrounding the revolutionary technology. He cautioned through a series of historical examples the dangers of overreacting to new technology, advising instead that companies create a plan to manage AI within their respective organizations. He also emphasized that AI developers need to go beyond ethics and compliance and equip AI with integrity.

Actions taken by the board during the meeting include:

• Approval of a resolution regarding MRO’s 457b benefit plan
• Review and approval of revisions to board committee charters and policies and procedures
• A resolution recognizing the dedication, commitment and leadership of long-standing board member and current chair, Brad Cox
• A resolution recognizing outgoing board members
• A resolution recognizing the contributions of long term outgoing organizational group members: John Stephens, City Utilities of Springfield, and Ron Gunderson, Nebraska Public Power District

The board also recognized Brett Lawler from Xcel Energy as the recipient of MRO’s annual HERO Award. Lawler was selected from several qualified candidates that were nominated for this year’s award because of his dedicated efforts and contributions in support of MRO’s vision and mission.

The board met immediately following the annual meeting to elect its 2024 chair and vice chair, make 2024 board committee appointments, and approve 2024 and 2025 meeting dates. Independent director Dr. Dana Born was appointed as board chair and J.P. Brummond from Alliant Energy was appointed to the position of vice chair.

The following incoming board members will be seated on the board in January:

• Michael Desselle, SPP (Transmission System Operator Sector)
• Paul Crist, LES (Municipal Utility Sector)
• Fred Meyer, Algonquin (Generator Power Marketer Sector)
• Sandra Johnson, Xcel (Investor-Owned Utility Sector)

Finally, we thanked the following outgoing board members for their dedication and service:

• Brad Cox, Tenaska Power Services Co.
• Charles Marshall, ITC Holdings Corporation
• Michael Lamb, Xcel Energy
• Scott Nickels, Rochester Public Utilities

The approved 2024 and 2025 board meeting dates will be added to MRO’s meeting calendar soon. You can read more about the discussions and actions taken at the fourth quarter board meetings in the full meeting minutes, which will be available on MRO’s website calendar.

In whatever way you celebrate the holiday season, on behalf of everyone here at MRO, we wish you the very best.

– Brad Cox, Board Chair and Sara Patrick, President and CEO