Increasing Transparency in Corporate America

Even the Wall Street Journal , a leading supporter of business autonomy, believes that there is something wrong with excessive executive compensation and its impact on shareholders, business vitality and consumers.

Thanks to an unprecedented order by the California Public Utilities Commission (“CPUC”), California consumers can now make informed decisions about proposed utility rate increases. Last December, the CPUC imposed the nation's most comprehensive requirements for executive compensation transparency, stronger than even those of the Securities and Exchange Commission (SEC). Ratepayers can now know the full amount of compensation received by a utility company's CEO and officers, and compare that compensation to that of other California utilities of similar size. Ratepayers can also compare the executives' compensation to the total amount of philanthropy their companies provide to the poor.

The Big Three Utilities in California

There are three major investor-owned utilities in California : Pacific Gas and Electric (PG&E), Southern California Edison, and Sempra Energy (which owns Southern California Gas (SoCal Gas) and San Diego Gas and Electric (SDG&E)). Unlike the vast majority of other Fortune 500 companies, these utilities' profits are guaranteed, as there will always be ratepayers in need of energy. The CPUC-regulated utilities provide electricity for 10.48 million people and natural gas for 10.7 million people. The latest rate increase requests would generate an additional $750 million in revenues for these utilities in 2007 alone, all paid for by their ratepayers.

CEO Compensation Among the Big Three Utilities, 2006:

• Southern California Edison CEO John E. Bryson received $8.5 million in compensation.
• Pacific Gas & Electric CEO Peter A. Darbee received $9.2 million in compensation.
• Sempra Energy CEO Donald Felsinger received $12.4 million in compensation.
  
• In 2006, Per Capita Personal Income (PCPI) in California was $38,956. That means that Sempra's CEO made over three hundred times more than the average California worker made.
• Not only that, but all management salaries rise as the CEO's salary rises. These salary increases are generally paid for by ratepayers. Notably, both in terms of the CEO's salary and officers' salaries, Sempra Energy's top officers make significantly more than their counterparts at similarly sized utilities.

What You Can Do:

The most effective action you can take is to write the California Public Utilities Commission's President, Michael Peevey, and thank him and the Commission for creating the transparency needed for ratepayers to assess and influence a proposed rate increase. The address of the Commission is:

505 Van Ness Avenue
San Francisco , CA 94102
415-703-2782

Or email him at: mailto:mp1@cpuc.ca.gov

Another effective action to take is to write to the CEO of your utility company and express your opinions. While emails are good, letters are far better. CEOs rarely get letters from ratepayers.

Donald Felsinger
Sempra Energy
101 Ash Street
San Diego , CA 92101

John Bryson
Southern California Edison
2244 Walnut Grove Avenue
PO Box 800
Rosemead , CA 91770

Peter A. Darbee
Pacific Gas & Electric Corp.
One Market, Spear Tower
Suite 2400
San Francisco, CA 94105-1126

Calculated by the Bureau of Economic Analysis, http://www.bea.gov/. Accessed on July 23, 2007.

Geraldine Fabrikant, “Executives in Europe Seek Pay A la US” International Herald Tribune, June 15, 2006. Accessed online on July 25, 2007: http://www.iht.com/articles/2006/06/15/business/pay.php