AB 1266, as introduced, Gonzalez. Electrical and gas corporations: excess compensation.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations and gas corporations. Existing law authorizes the commission to fix the rates and charges for every public utility, and requires that those rates and charges be just and reasonable. Existing law requires that any expense resulting from a bonus paid to an executive officer, as defined, of a public utility that has ceased to pay its debts in the ordinary course of business, be borne by the shareholders of the public utility and prohibits any expense from being recovered in rates.
This bill would prohibit an electrical corporation or gas corporation from recovering from ratepayers expenses for excess compensation, as defined, paid to an officer of the utility following a triggering event, as defined, unless the utility obtains the approval of the commission. Following a triggering event and prior to paying or seeking recovery of excess compensation, the electrical corporation or gas corporation would be required to file a Tier 3 advice letter with the commission containing specified information and the commission would be required to open a proceeding or expand the scope of an existing proceeding to evaluate the advice letter and, following a duly notice public hearing in the proceeding, to issue a written decision determining whether, and if so, how much, of each officers’ compensation shall be recoverable from ratepayers.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because the provisions of this bill would be a part of the act and because a violation of an order or decision of the commission implementing its requirements would be a crime, the bill would impose a state-mandated local program by creating a new crime.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.
The people of the State of California do enact as follows:
Section 706 is added to the Public Utilities Code,
(a) For purposes of this section, the following terms have
4the following meanings:
5(1) “Excess compensation” means any salary, bonus, benefits,
6stock options, or other consideration of any value, paid to an officer
7of an electrical corporation or gas corporation that is in excess of
810 times the average compensation paid by the utility to the utility’s
10(2) A “triggering event” occurs if, after January 1, 2013, an
11electrical corporation or gas corporation violates a federal or state
12safety regulation with respect to the plant and facility of the utility
13and, as a proximate cause of that violation, ratepayers incur a
14financial responsibility in excess of five million dollars
16(b) No electrical corporation or gas corporation shall recover
17expenses for excess compensation from ratepayers following a
18triggering event unless the utility complies with the requirements
19of this section and obtains the approval of the commission pursuant
20to this section.
P3 1(c) Following a triggering event and prior to paying or seeking
2recovery of excess compensation, an electrical corporation or gas
3corporation shall file a Tier 3 advice letter with the commission
4that, with respect to any officer paid excess compensation, includes
5all of the following:
6(1) The compensation history for the officer.
7(2) The proposed compensation to be paid to the officer,
8including the compensation recovered from ratepayers and that
9paid solely by shareholders of the utility.
10(3) Any justification for the proposed compensation.
11(4) Any additional information required by the commission.
12(d) The commission shall open a hearing, or expand the scope
13of an existing proceeding, to evaluate the advice letter. As part of
14the proceeding, the commission shall consider the costs to
15ratepayers of the triggering event. The commission shall hold not
16less than one duly noticed public hearing in the proceeding. The
17commission shall issue a written decision determining whether,
18and if so, how much, of each officers’ compensation shall be
19recoverable from ratepayers.
No reimbursement is required by this act pursuant to
21Section 6 of Article XIII B of the California Constitution because
22the only costs that may be incurred by a local agency or school
23district will be incurred because this act creates a new crime or
24infraction, eliminates a crime or infraction, or changes the penalty
25for a crime or infraction, within the meaning of Section 17556 of
26the Government Code, or changes the definition of a crime within
27the meaning of Section 6 of Article XIII B of the California