Tuesday, April 26, 2011

PG&E rate payers will not pay CEO retirement

except for $46,000 we already paid, which may be reimbursed.

Payout to retiring CEO Peter Darbee is $35 million.  This is a 6 year retirement package, but this time the bill will be paid by STOCKHOLDERS.    

pge logo1 139x150 Top 10 Largest Chapter 11 FilingsMercury News 4/25/11.  "Less than 72 hours after Gov. Jerry Brown said he didn't want PG&E ratepayers to pay any of the costs for the $35 million retirement package for outgoing PG&E CEO Peter Darbee, the company's board announced Monday that its shareholders -- rather than the public -- will bear all the costs. "Renewing public faith is critical to our future," said Lee Cox, a PG&E board member who will become interim CEO, president and chairman May 1. "Today's decision is another opportunity to show customers, regulators and others that PG&E is listening closely and taking action to earn back their confidence." But exactly how or when the 6.1 million California customers who pay monthly PG&E gas and electric bills will be made whole remained unclear Monday. On Friday, Terrie Prosper, a spokeswoman for the California Public Utilities Commission, the state agency that regulates PG&E, said ratepayers would be asked to pay $9.6 million of Darbee's $35 million retirement package. The $9.6 million is Darbee's pension, and was approved by the PUC as part of a wider pension program in 2009, she said. Most of the rest of Darbee's retirement will come in the form of company stock. But on Monday, in the wake of PG&E's announcement, Prosper said in an email that the PUC will direct PG&E "to credit $9.6 million to ratepayers in its accounts immediately, provide an audited accounting of the credit, and return that amount to ratepayers." 

Specifics unclear. Neither Prosper nor PUC Executive Director Paul Clanon returned calls Monday, however, to explain whether the money would come in the form of a credit on ratepayers' bills, or some other method, such as a slight reduction in the profit the PUC allows PG&E to earn in a future year. PG&E last year reported a $1.1 billion profit. PUC President Michael Peevey, a former president of Southern California Edison, also did not return calls to clarify the issue. "I am hopeful that this is the first step in a series of pro-consumer actions that will signal a new chapter for PG&E as it works to rebuild trust and confidence with its customers and the general public," Peevey said in a statement.

Confusion reigned Monday over the specifics, however. Brian Hertzog, a PG&E spokesman, said PG&E's customers so far have paid only about $46,000 into a trust fund that covers one portion of Darbee's pension. If the company credits customers for that amount, the difference the average person would see on their utility bill would be "minuscule," he said. The company will seek to have the pension costs eliminated from customers' bills in two or three years when the PUC again deliberates what rates PG&E can charge, he said. Meanwhile, consumer groups and political leaders who blasted PG&E for awarding what they called a lavish send-off package for Darbee said it is a promising step that PG&E will apparently pick up the whole tab. "PG&E didn't anticipate the problems that were created by this, and they should have," said Assemblyman Jerry Hill, D-San Mateo. "They have enough PR staff and a crisis management team that they should watch this stuff. I want them to build credibility. I want to have faith in them again." Added Mindy Spatt, a spokeswoman for the consumer group The Utility Reform Network: "The PUC should move quickly to assure customers these costs have indeed been covered by the shareholders and that any money already paid to PG&E to cover Darbee's pension will be returned."

A series of setbacks. Darbee, 58, announced his retirement Thursday. During his past year at the helm, PG&E has been rocked by a series of major setbacks and failures, including spending $46 million to bankroll Proposition 16, a defeated June ballot measure that would have reduced competition from green-energy providers; bungling the rollout of millions of its wireless SmartMeters; and having one of its major gas transmission lines explode in San Bruno on Sept. 9, killing eight people and destroying 38 homes. Darbee, a former Goldman Sachs vice president, was given $8.4 million last year in compensation from PG&E. In addition to his $35 million retirement package, he also will receive a $4.25 million grant of stock-based awards that will vest in the next three to five years. PG&E's board made that award to Darbee in March as part of a long-term performance incentive program, but he will still be able to keep it despite leaving the company.

Dave Ashuckian, deputy director for energy at the division of ratepayer advocates, a branch of the PUC that lobbies on behalf of consumers, said he'd like to see the commission offer rebates to customers for Darbee's pension costs -- even though they might be only for a few dollars each. "In general we like to see rebates done in a lump sum all at once and preferably in the summer months when bills are highest," he said. "We're happy that they're not going to charge ratepayers. We certainly think that $35 million in retirement for six years on the job is a pretty hefty payout, especially given the dismal."

Reference:  Peter Darbee education background and business biography information:   Bloomberg businessweek, and Forbes people.

Posted by Kathy Meeh

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