Should your electric bill include big bonuses for overpaid executives?
As anti-SmartMeter protesters wailed outside PG&E’s annual shareholder meeting Monday in San Francisco, a Peninsula lawmaker announced legislation he hopes will make utility executives focus more on safety.
Assemblyman Jerry Hill’s proposed AB 861 would prohibit utilities from using ratepayer money for executive bonuses based on company earnings and would allow the state to take back bonuses from the bosses of utilities fined by regulators.
But Pacific Gas & Electric CEO Tony Earley, during a news briefing Monday, said the company already uses shareholder money to make “incentive payments” to executives.
“Not every problem needs a new law,” Earley said. “This is solving a problem that doesn’t exist. We’re not charging our ratepayers for our incentive plan.”
Earley also said costs related to San Bruno, including lawsuits and fines, could reach $2 billion. He added that the company has settled a “number of the major lawsuits with the most severely injured victims.” The company anticipates at least $200 million in fines from regulators as a result of the blast.
The issue of executive bonuses has become one of several sources of controversy since the Sept. 9, 2010, rupture of a PG&E natural gas line in San Bruno that killed eight people. Despite the San Bruno blast, a troubled rollout of new wireless-connected electricity and gas meters, called SmartMeters, as well as a failed ballot measure bankrolled by the company,
former CEO Peter Darbee left with a $39 million “golden parachute,” said Hill, D-San Mateo.
About a third of that money was to come from ratepayers, state regulators said after Darbee’s departure in 2011. However, after a public outcry over the matter PG&E said the money would come from shareholders.
“For shareholders that’s 5 percent of 2011 earnings,” added the assemblyman during a news briefing in front of PG&E’s headquarters. “This legislation will put some checks and balances into place to ensure that PG&E executives stay focused on great service in the years ahead.”
Hill’s proposed law likely will meet opposition in the legislature. In fact, just hours after Hill’s announcement, the Bay Area Council, a business advocacy group, sent out a statement questioning such bills.
“We have serious concerns about any legislation that adds to California’s already unwieldy and onerous environment of government regulation and oversight,” according to a news release from the group.
“California ranks among the worst in the nation for business climate, and the amount of regulation we impose on business is a big reason for that dubious distinction,” Council President Jim Wunderman said in a statement.
But utility watchdogs welcomed the legislation as a means to keep utilities in check.
“Currently, there’s nothing stopping PG&E from using ratepayer money for these bonuses,” said Mindy Spatt, spokeswoman for The Utility Reform Network. “Pardon us if we don’t trust PG&E to do the right thing without a regulator or a law.”