Southern California Edison and other utilities were shielded from liability for wildfires caused by their equipment under state law. But there was a twist – if the safety record of the company declined, top executives would face a pay cut. And guess what? Edison’s safety record did indeed decline last year. The number of fires sparked by its equipment skyrocketed to 178, up from 90 the previous year, which was a whopping 39% above the five-year average. Injuries to employees also increased by 56%, and tragically, five contractors working on its electric system lost their lives.
Pay cuts were indeed implemented for executives at Edison International, the parent company of Southern California Edison. However, despite the safety failures, cash bonuses for four of the top five executives actually went up, with increases as high as 17%. It seems like safety wasn’t the only factor influencing their compensation. The only executive whose cash bonus decreased was Pedro Pizarro, the CEO of Edison International, whose total compensation including salary amounted to $13.8 million.
Consumer advocates are questioning the effectiveness of AB 1054, the 2019 law that aimed to reduce the liability of for-profit utility companies for wildfire damages. The law required executive bonus plans to prioritize safety and ensure public safety and utility financial stability. However, the fact that bonuses increased despite safety issues is raising concerns about the accountability measures in place. Mark Toney, the executive director of a consumer advocacy group, expressed skepticism, stating that if executives don’t experience significant reductions in salary when safety incidents increase, then the incentive for safety is lost.
The utility is currently seeking approval to raise customer electric rates by over 10% this year. In its annual safety performance report, Edison disclosed that its executives faced deductions in bonuses due to safety failures. However, the actual impact of these deductions on executive compensation remains unclear, frustrating consumer advocates who are trying to ensure compliance with AB 1054. Despite safety being a significant factor in cash bonuses, the majority of executive compensation at Edison is tied to profit and stock price appreciation, rather than safety performance.
The process of reviewing compensation plans and ensuring wildfire safety has been criticized for being biased in favor of utilities. The energy safety office, which has the authority to approve these plans, has faced scrutiny for its lack of transparency compared to the Public Utilities Commission. Consumer advocates like TURN have raised concerns about the discretion given to committees in setting safety goals and determining their achievement. The struggle for accountability and transparency in executive compensation and safety measures continues, with the hope of prioritizing public safety over financial gains.
