Discussion

We agree with parties that the information on employee compensation that Greenlining/LIF requests is currently available from a variety of sources: GO 77-K filings, the annual SEC 10-K filings and proxy statements, as well as from discovery in the course of Commission proceedings. We have reviewed the 10-K filing and proxy statement appended to SCE's comments, and do not find them incomprehensible, as Greenlining/LIF suggests. Also, the proxy statement appended to SCE's comments contains detailed data on stock options, which seems to be of particular concern to Greenlining/LIF. Since the information is available from other sources, it does not make sense to open a proceeding to amend GO 77-K to make the information available through that reporting mechanism.

As parties point out, GO 77-K has existed in its present form since 1986. GO 77-K requires each utility meeting a certain operating revenue threshold to file, on or before March 31 of each year, a statement showing certain information for the preceding calendar year. This information includes the names, titles and duties of all officers or employees who receive compensation at or above a specified limit, the amount of compensation received by each, the amount of the expense account or other monies directly or indirectly paid to each such officer, as well as payments to attorneys, dues, donations, subscriptions and contributions directly or indirectly paid by the public utility.

In D.96-07-052, the Commission describes in detail the purpose of GO 77-K and the reasoning behind the reporting requirements contained therein.

[T]he Commission recognizes a clear and direct relationship between the expenses claimed by a utility regulated by the Commission and the rates which are allowed to be charged for the provision of utility services. In the context of GO 77-K, amounts paid by a utility to its officers and employees is a legitimate area of inquiry in the rate-setting process in that the Commission must ascertain whether salaries and compensation paid by the utility are excessive, out of line with prevailing standards, or represent some form of cross-subsidization in which the ratepayers are burdened with costs unrelated to the services for which they are charged.⁴

According to the Commission's order cited above, GO 77-K is intended to be used in the rate-setting process. Information provided pursuant to GO 77-K allows the Commission to determine whether salaries paid by a particular utility are excessive, or if there is some sort of cross-subsidization which results in ratepayers paying costs unrelated to the services they purchase.

Greenlining/LIF's proposed rulemaking goes beyond the current reporting requirements of GO 77-K to include information on below-the-line philanthropic contributions. As shown above, the Commission's stated purpose in GO 77-K is for assist the Commission in setting utilities' rates. However, information on a company's below-the-line charitable contributions is not used to set a utility's rates so that information should not be included in the GO 77-K reporting system.

Greenlining/LIF also asks that GO 77-K reporting system include information on executive diversity. We deny this request because we prefer to look at the issue of executive diversity in a broader context than Greenlining/LIF requests. Issues relating to employee diversity have surfaced in three major energy utility proceedings, and we believe the Commission and the public would benefit from engaging in a comprehensive, cross-industry discussion of the issues. Therefore, on July 22, 2003, the Commission is conducting a day-long Full Panel Hearing to discuss ideas on how to further develop the women, minority and disabled veteran's business enterprise program and how to advance utility workforce diversity. Several panels of discussants will be asked to present their perspectives. From this exchange, the Commission will evaluate the status of utility procurement and utility employment diversity, and determine how best to address those issues.

There is agreement among all parties that the compensation levels that trigger reporting under GO 77-K for public utilities with operating revenues of $1 billion or more should be increased to $200,000. We therefore initiate a rulemaking to address this issue. There is no record in this proceeding to propose changing the reporting triggers for smaller public utilities. If parties want to propose increasing the compensation levels for the smaller utilities covered by the GO, they should participate in the rulemaking to propose new triggers. Verizon proposes that the limit should be indexed annually according to a specified inflation factor so as to reduce the need for future change to the GO. It makes sense to set up an automatic process for future changes, and we propose that annual adjustments be made pursuant to the Gross Domestic Product Price Index (GDPPI), which is readily available on the U.S. Department of Commerce website.

We also propose to make a change in the utilities covered by GO 77. The landscape of the telecommunications industry has changed dramatically since implementation of the Telecommunications Act of 1996. We now have hundreds of Competitive Local Exchange Carriers (CLECs) certificated to provide local telephone service in California, as well as NDIECs providing long distance service. Those carriers are not rate-regulated by the Commission and we do not use the GO 77 data provided by CLECs or NDIECs to determine whether there is some sort of cross-subsidization which results in ratepayers paying costs unrelated to the services they purchase, or for other regulatory purposes.

This is not the first time that we have exempted a particular class of carrier from GO 77. As Verizon points out in Comments on the Petition, in D.00-12-030 we exempted a gas storage company subject to market-based regulation rather than traditional cost-of-service regulation; in D.98-09-024 we exempted commercial mobile radio service providers due to preemption of Commission rate regulation authority; and in D.96-07-052 we exempted certain railroad companies no longer regulated by the Commission. We propose to add CLECs and NDIECs to the list of utilities no longer covered by the provisions of GO 77.

Section 1708.5(c) provides as follows:

If the Commission denies a petition, the order or resolution of the commission shall include a statement of the reasons of the Commission for that denial.

We deny most elements of Greenlining/LIF's petition for rulemaking because the petition duplicates information on employee compensation that is available from other sources, and the GO already requires utilities to disclose compensation of employees. Also, information on a company's below-the-line charitable contributions is not used to set a utility's rates so that information should not be included in the GO 77-K reporting system.

We deny Greenlining/LIF's request to amend GO 77-K to include information on executive diversity because we intend to look at the issue of employee diversity, but in a broader context than Greenlining/LIF requests.