Mercury News editorial: Ratepayers should never pay PG&E bonuses
May 17th, 2012
As the old saying goes, "When your only tool is a hammer, everything looks like a nail." It is the sentiment behind PG&E CEO Tony Earley's criticism of a bill to ban utilities from using ratepayer money for executive bonuses.
Peninsula Assemblyman Jerry Hill, whose district was partially incinerated by a PG&E natural gas pipeline explosion in 2010, has advanced AB 1861, which would prohibit the utility from charging bonuses to ratepayers and allow bonuses to be taken back from bosses of utilities later fined by regulators.
Earley argued that the bill is not needed because bonuses currently are not paid from ratepayer funds.
"Not every problem needs a new law," he said.
No, not every problem needs a new law, but this one does. Not to put too fine a point on it, but PG&E's performance in the past decade has earned it zero credibility in the "Trust-us, we'd-never-do-such-a-thing" department. Besides, as Hill points out, the utility already tried to do just such a thing.
When former CEO Peter Darbee was given a $39 million golden parachute in 2011, state regulators said about one-third of it was to come from ratepayers. The public backlash forced PG&E to use shareholder profits instead, but the utility had no ethical problem sticking it to ratepayers until the deal was exposed to sunlight.
Lest we forget, Darbee presided during the San Bruno blast, the disastrous rollout of SmartMeters and the $46 million campaign for a self-interested ballot measure that voters fortunately rejected.
Still, it appears business groups will oppose Hill's bill. The Bay Area Council said it had serious concerns about any legislation that "adds to California's already unwieldy and onerous environment of government regulation and oversight."
Council President Jim Wunderman in a statement said, "California ranks among the worst in the nation for business climate, and the amount of regulation we impose on business is a big reason for that dubious distinction."
That is so true. But in this case, it is irrelevant.
PG&E is not a free-market business. It is essentially a monopoly with a guaranteed rate of return and a recent history of placing profits above safety. It has failed to live up to even minimal business standards for record keeping, yet it holds people's lives in its hands.
PG&E is a regulated utility. We experimented with free-market utilities, and it was a disaster. Nobody wants to go back there.
The irony is that the very government that business interests want off PG&E's back is the one that guarantees its profits.
That leads us to the inescapable conclusion that sometimes, the thing that looks like a nail really is a nail and needs a hammer to do its job properly. Hill's measure looks like just the right size hammer to us.