Parties' Comments

PG&E, SDG&E/SCG, Verizon, and SCE all assert that the additional reporting requirements are unnecessary and unjustified and, therefore, the Petition should be denied. The parties assert that the executive compensation Greenlining/LIF is seeking is already made public through other sources. The parties assert that GO 77-K already requires utilities to disclose compensation of employees, including all executive officers, earning in excess of $75,000 per year. Also, the information Greenlining/LIF seeks is included in the 10-K report filed annually with the Securities and Exchange Commission (SEC) as well as their annual proxy statements submitted to the SEC.² According to SCE, the proxy statement covers all aspects of the executive compensation of the five highest paid officers of the utility and the five highest paid officers of the holding company. And PG&E adds that proxy statements are publicly and readily available on the SEC's website.

While Greenlining/LIF contends that the SEC 10-K filings are "indecipherable," SCE asserts that they follow all the requirements for SEC filings. The disclosure requirements set forth in Regulation SK, Item 402 and promulgated under the Securities Act of 1933 ensure that the information is filed in a consistent and comprehensive manner and is understandable to shareholders and investors. SCE adds that Item 402 describes in detail not only the executive compensation information that is required to be disclosed, but also the form in which that information is to be presented in SEC filings by companies throughout the United States. PG&E describes the executive compensation information reported in PG&E's proxy statements as clear and detailed. The proxy statements include the salary, bonus, other annual compensation, restricted stock awards, stock options (including number of shares granted and exercised, value realized, and value unexercised), and long-term incentive awards for each of the named executives for the current and past two years. It is unclear to PG&E how Greenlining/LIF would propose to improve the presentation of the data.

Similarly, Greenlining/LIF argues that GO 77-K should be revised to include "the total compensation of each employee who received total compensation valued at $200,000 or more in the prior year." Under GO 77-K as currently drafted, PG&E states that it already reports the salary, bonuses, stock options and other forms of compensation for all employees with base salaries of $75,000 or more. It is not clear to PG&E what additional information the utilities would be required to document in their GO 77-K reports under Greenlining/LIF's proposal.

SDG&E claims that the relief requested is beyond the Commission's jurisdiction, since Sempra Energy's holding company and unregulated subsidiaries are outside the CPUC's purview. SDG&E suggests that Greenlining/LIF address its request for additional information regarding such entities to state and federal regulatory agencies including the SEC and the Federal Energy Regulatory Commission (FERC), not the CPUC. SCE adds that under Public Utilities Code Section 314, holding company information must be disclosed only when it involves a transaction between a utility and a holding company. Greenlining/LIF's proposal does not involve a transaction between the utility and the holding company, and therefore, petitioners, have not provided an adequate basis for disclosure of holding company executive compensation.

According to SDG&E, Greenlining/LIF's concern that companies can hide large amounts of compensation under the guise of stock options is completely unfounded. Greenlining/LIF can review Form 10-K to ascertain the number of shares a company awards its employees, and other details concerning stock option activity for the reporting year.

Various parties also point to the Commission's stated purpose for GO 77-K, which is to provide the Commission with information useful in setting utilities' rates. The parties contend that much of the information requested by Greenlining/LIF pertains to the diversity of the utilities' workforce and their below-the-line charitable contributions, issues that have no bearing on the Commission's establishment of just and reasonable utility rates. PG&E adds that to the extent Greenlining/LIF believes this type of information is relevant to the establishment of utility rates, however, it has the opportunity to intervene in each utility's general rate case (GRC) to obtain such information as part of the discovery process.

SCE notes that as part of each utility's regular GRC proceeding, the Office of Ratepayer Advocates and the utilities jointly sponsor a thorough compensation study whose data are part of the record of the GRC. Also, in its current rate case, SCE provided Greenlining/LIF with its total cash philanthropic contributions to low-income, minority, ethnic and inner-city groups for the years 1999, 2000 and 2001. Similarly, SCE provided information regarding diversity of its top 1,000 employees.³ SCE states that Greenlining/LIF has not explained why the information SCE provided is insufficient or inadequate. Also, SCE asserts that philanthropic contributions and diversity of the workforce have no relevance to ratesetting, since philanthropic contributions made by a utility are not recovered in customers' rates, but rather are paid with shareholder equity.

PG&E states that Greenlining/LIF's requests are vaguely worded and confusing. For example, Greenlining/LIF uses the term "stock options" in its description of total compensation. But the term "stock options' is susceptible to several interpretations, including the "Black-Scholes" value of the stock options (which is currently reported in PG&E's annual proxy statements) and the value of stock options actually exercised during the year in question (which is currently reported in PG&E's GO 77-K reports).

Similarly, Greenlining/LIF refers to the "top ten executive officers" of the utility. However, PG&E's executives include its president and CEO, five senior vice presidents, 18 vice presidents, and a corporate secretary. It is unclear which of these executives would constitute the "top ten" for Greenlining/LIF's purposes.

PG&E also states that the information about philanthropic donations that Greenlining/LIF requests could be misconstrued. Greenlining/LIF requests that utilities disclose "total cash philanthropic contributions in California which the utility contends was specifically directed to low-income, minority, ethnic or inner city groups or services." PG&E points out that it provides grants to a variety of nonprofit organizations and governments in the communities it serves, but to provide an accurate picture of PG&E's corporate contributions to low-income, minority, ethnic or inner city groups or services, PG&E would have to go through each of its grants and research the demographic make-up of the clients served by the various grantees, and in many cases, there is overlap among categories.

SDG&E/SCG adds that a company's decisions about the organizations it chooses to support with contributions of shareholder money are not subject to Commission oversight. SDG&E/SCG finds unworkable Greenlining/LIF's request that certain contributions be identified as benefiting one minority, ethnic or inner city group. Frequently a community organization with a specific ethnic focus will sponsor programs that benefit more than one minority group. For example, Sempra gives money to the Urban League-a historically African American organization-in support of a program benefiting predominately Latino students in southeast San Diego. Sempra questions how that grant should be classified.

SBC points out that employee salary levels have not formed the basis for increases in SBC's rates since price cap regulation was adopted in 1989. According to Verizon, the Petition does not justify amending a general order applicable to virtually all types and sizes of utilities in order to obtain the information, especially since the information Greenlining/LIF seeks is available from a variety of other sources.

SBC points out that GO 77-K already requires utilities to annually report dues, donations, subscriptions and contributions. And SCE adds that it provided voluntarily information regarding its diversity and philanthropic contributions in its currently ongoing GRC. PG&E disagrees with Greenlining/LIF's underlying claim that philanthropy and diversity constitute part of the "service" that utilities offer and that the Commission regulates. PG&E is in the business of providing natural gas and electric utility service to its customers, and it is this service that the Commission regulates. Contrary to Greenlining/LIF's claim, PG&E is not in the business of providing philanthropic or community development services, nor is the Commission authorized to regulate PG&E's provision of such services.

The parties all agree with Greenlining/LIF that GO 77-K could be improved by increasing the threshold reporting level from $75,000 to $200,000. And Verizon suggests that the limit should be indexed annually according to a specified inflation factor so as to reduce the need for future changes to the General Order.