Comments on Expanded Scope

As directed by an Administrative Law Judge (ALJ) ruling, comments relative to the expanded scope (adding holding company officers and bonuses awarded but not paid as reporting requirements) were due September 20, 2004 and replies September 30, 2004. All six Tier 1 utilities and Greenlining filed comments. The same parties, except PG&E, filed replies. Greenlining and PG&E support the proposed amendments to GO 77-L. The five other Tier 1 utilities oppose the amendments.

Greenlining/PG&E

The Greenlining/PG&E position in this proceeding is based on concerns related to other recent Commission proceedings (Application 02-11-017, et al) involving PG&E. In January 2004, PG&E awarded $84 million in retention bonuses to its senior executives (including those of its holding company). PG&E awarded these bonuses shortly after a formal settlement was announced in its emergence from bankruptcy (D.03-12-035) and within the same time frame of its 2003 general rate case. In light of the bankruptcy, the retention bonuses seemed excessive. In light of the rate case, it was not clear if the retention bonuses were paid by ratepayers or shareholders.

D.04-05-055 addressed these issues. It found that the retention bonuses were the sole responsibility of the shareholders and directed that additional accounting and reporting measures be put in place to ensure these bonuses will not be charged to ratepayers in the future. Ordering Paragraph 12 of D.04-05-055 directs PG&E to file a separate tab in its GO 77 reports to include:

· compensation of holding company executives listed its proxy statement.

· executive compensation awarded in the past year, but not yet received.

· written verification by an independent auditor that these items are fully disclosed.

· an internet site-link to all documents filed with the SEC relating to executive compensation.

The decision also encouraged PG&E executives to return any excess bonus payments. Considering the concerns raised in the PG&E cases, Greenlining/PG&E support making these same directives permanent requirements of GO 77 and applicable to all Tier 1 utilities.

Other Tier 1 Utilities

The other five Tier 1 utilities; Southern California Edison Company (Edison), San Diego Gas and Electric Company (SDG&E), Southern California Gas Company (SoCalGas), Pacific Bell Telephone Company dba SBC California (SBC) and Verizon California, Inc. (Verizon); all oppose adding additional filing requirements to GO 77-L, stating that:

· holding company compensation data is not relevant to ratemaking and frequently involves information applicable to other states.

· information from the SEC proxy statements includes data on holding company executives and is easily available from other sources.

· information from the SEC proxy statements includes data on holding company executives and is easily available from other sources.

· if needed, the Commission can obtain case-specific information, in special cases similar to PG&E, without making additional burdensome requirements for all utilities.

Edison makes its SEC 10-K reports (Proxy Statements) available on its website and cites the subject rulemaking stating that, since the Proxy Statements are available from other sources, "it does not make sense" (Rulemaking 03-08-019, p.11) to require it in GO 77 reports.

SDG&E and SoCalGas also make their Proxy Statements available on their websites and further state (filing jointly) that no legal or factual basis is shown and no rate-setting nexus exists to support including holding company data or information on bonuses awarded but not yet paid, in GO 77 reports.

Verizon and SBC both state that telecommunication utilities like themselves, operating under the New Regulatory Framework (NRF), have a further separation between executive compensation rate-setting data in that price-cap information is used to set rates, not current levels of executive compensation.