Discussion

The purpose of GO 77 is to provide the Commission with data to be used in the rate-setting process to determine if salaries and other compensation received by utility officers and employees are excessive or out of line with prevailing standards. The data contained in the current GO 77-L and in the SEC documents filed by all Tier 1 utilities is sufficient for the purposes of ratemaking. GO 77-L requires all Tier 1 utilities to file annual compensation data on all executives and employees with an annual income of at least $125,000. The SEC Proxy Statements, for example, include complete annual compensation data of the five highest paid officers of the utility and the five highest paid of the holding company, including salary, bonuses, stock options, pension plans and severance packages.

Both Tier 1 telecommunication utilities operating in the state, Verizon and SBC, operate under the NRF for setting their rates. NRF utilities primarily use price-cap data to set rates and not executive compensation.

Commission general orders establish general requirements that apply to all utilities defined in the order. The issues of concern in the recent PG&E cases are specific to PG&E's emergence from bankruptcy and executive retention bonuses it paid in 2003-2004. Though we do not anticipate a similar set of circumstances to occur, these types of issues can be better and more fully addressed in case-specific directives similar to those in D.04-05-055, and not made as an overly burdensome requirement for all Tier 1 utilities. Considering the above, we will not further amend GO 77-L.

We will, however, require that all Tier 1 utilities include in future GO 77 reports an internet site-link to all documents filed with the SEC relating to executive compensation, specifically the Proxy Statements. This is consistent with D.04-05-055 and adopts the recommendation of PG&E and Greenlining regarding internet availability. We may choose to post these documents on the Commission's web-site ( www.cpuc.ca.gov) in the future.