- Why a power rate hike was inevitable (12-28-2011)
- Residential power rates rising 10-11 percent after state OKs increase (12-21-2011)
- NV Energy has power to seek a rate hike — and blur the details (11-23-2011)
- NV Energy seeks 24 percent general rate increase (6-9-2011)
- NV Energy-backed measure gets approval in final minutes (6-7-2011)
- Bill would let NV Energy seek another rate increase for energy efficiency (5-6-2011)
- NV Energy customers may get zapped for conserving (5-4-2011)
- NV Energy reports $2.3 million in 1Q net profits (4-29-2011)
State regulators took a bold swipe at the salaries and bonuses of NV Energy executives last month, as they reviewed and ruled on the utility’s case for raising electricity rates.
It was the first time in recent memory that the Nevada Public Utilities Commission had targeted the power company’s pay scale. Repeatedly calling NV Energy raises since 2008 “excessive,” the PUC’s decision lowered by 6.9 percent the ratepayer’s obligation to pay the company’s salaries and performance bonuses. NV Energy salaries had increased since 2008 by an average of 10 percent, according to regulators.
Should the executives and employees want to continue to receive their higher pay, regulators said, they should ask their shareholders — meaning higher pay would result in lower NV Energy profits, not higher electricity bills.
Before the reduction, NV Energy’s top executive, Michael Yackira, was scheduled to receive a $900,000 salary and $900,000 bonus from ratepayers for 2011, according to a compensation analysis NV Energy submitted to the PUC. Yackira’s total cash compensation paid by rate payers has risen 29 percent, from $1.35 million in 2008, according to the company’s study.
(VEGAS INC, a sister publication of the Las Vegas Sun, estimated Yackira’s total compensation was $5.3 million in 2010, including stock options and long-term incentives paid by shareholders.)
The company also listed in its analysis the salaries and bonuses of 28 other NV Energy executives. The company planned to have customers pay $10 million a year in salaries and bonuses to the executives.
Since 2009, top executive salaries have increased 12 percent for the 21 employees who were with the utility then. That includes a total compensation package of $760,000 for Dilek Samil, the company CFO; $519,000 for Tony Sanchez, its top lobbyist; and $243,000 for Judy Stokey, another company lobbyist, according to the records. The top spokesman for NV Energy, Rob Stillwell, was slated to make $297,000 in salary and bonuses.
Those figures do not include health benefits and pension costs, which are also borne by ratepayers. In addition, in 2011, employees received investor-funded incentives, like stock options, that ranged from $81,000 up to $665,000, according to the study.
In an interview, Stillwell said salaries and bonuses should be “out of bounds” and not the subject of a news story. He limited his comments on the topic, saying that the company needed more time to review the transcript of the monthlong rate hearing in order to respond to questions.
The company, as well as other parties to the rate case, have until this week to appeal the PUC’s ruling.
NV Energy, in filings, argued that the salaries are necessary to retain qualified employees and are competitive with other utility companies. Additionally, with fewer workers, those who remain are asked to take on additional responsibilities.
Regulators disagreed. The decision, written by PUC Commissioner Rebecca Wagner, said the comparisons NV Energy used to justify its salaries “contain serious flaws and significant inconsistencies.”
“Salary and wage increases experienced by (NV Energy) executives, officers and employees since the last general rate case are excessive in relation to both the national and state economies,” Wagner said.
”Against any metric, (NV Energy’s) per-capita pay increases have well outpaced the Nevada economy. ... Per-capita payroll expenses have increased by 10.32 percent since 2008,” Wagner continued, adding that the “wide gap” between the company’s raises and “the economic realities over the past three years are excessive.”
Utilities file general rate cases about every three years with the judicial-like hearings presided over by three commissioners appointed by the governor.
The proceedings are always closely watched by industry insiders and big customers, like casinos. But with Nevada’s housing market in the tank and the state stubbornly holding its highest-in-the-nation unemployment rate, this case has drawn a higher-than-usual level of scrutiny from public watchdogs and ratepayers upset by their electric bills.
Some business recruiters have said the state has the second-highest energy rates in the West, trailing only California, and that has hurt efforts to attract new businesses.
The ruling, released in late December, raised the base general electricity rate for Southern Nevada residential customers by almost 8 percent, less than expected, but it’s accompanied by a new $2-a-month service charge, according to an analysis released by NV Energy.
The increase in consumers’ bills will largely be offset by falling natural gas prices. Customers’ bills will rise an average of $4.84 a month, a 3.5 percent net increase compared to October’s bills based on average energy use, the company said.
The PUC’s decision was the first by Gov. Brian Sandoval’s appointees to the panel. Sandoval worked as an attorney in the 1990s for a shareholder group funded by the influential monopoly. Additionally, two of Sandoval’s top political advisers are also contract lobbyists for NV Energy.
Because of those ties, some had feared regulators under a Sandoval administration would be beholden to the industry.
But consumer advocates have generally praised the ruling.
“I absolutely think this was a good decision,” said Timothy Hay, a former consumer advocate for Nevada. He called the review of salaries and bonuses “the most comprehensive analysis I’ve seen a commission do in many years in Nevada. ... I believe the disallowances the commission adopted are very justified.”
Hay hesitated to give Sandoval credit, saying prior commissions “have been so utility friendly ... it would be hard to skew it more to the company without being terribly overt.”
Dan Jacobsen, technical staff manager for the state’s Bureau of Consumer Protection, said regulators’ decision on compensation was the first time in memory that the PUC went after utility salaries.
“To give employees and officers that much of a raise at a time when most Nevadans are struggling, it felt like the company was ignoring everything that is going on in Nevada,” he said.
The company has said little about the decision, but the stock market’s response has been positive.
When the decision was released in late December, the company’s share price climbed from $15.69 on Dec. 20 to $16.42 on Dec. 29. Since then, it has come down a little, ending trading on Friday at $15.75 a share.