November 16, 2010

Statement of Charlie Higley, Executive Director

The Citizens Utility Board calls on the commissioners of the Public Service Commission to make sure that consumers don't pay for millions of dollars of bonuses, stock options, and other "incentive compensation" lavished on utility executives.

PSC Chairperson Eric Callisto and Commissioners Mark Meyer and Lauren Azar are considering making changes to administrative rules known as the "fuel rules," which lay out a process by which utilities can change electricity rates when prices for coal, natural gas, or other fuels for making electricity unexpectedly change in price.

We urge the commissioners to include a provision that would prevent the utilities from manipulating the fuel rules in ways that would force utility customers to pay for millions of dollars of bonuses and other incentive compensation given to utility executives.

Combined, the incentive compensation given to the five highest paid executives at Alliant Energy, Madison Gas & Electric, We Energies, and Wisconsin Public Service Corp. in 2009 was $44 million, on top of salaries of $10 million. The incentive compensation paid to these 20 utility executives was much larger than the entire 2009 budget of $28 million for the Public Service Commission, a state agency with about 150 staff.

Utilities should not be able to use administrative rules to force rate payers to pay for these outrageous bonuses, especially since the PSC routinely and rightly prohibits utilities from charging customers for incentive compensation in rates.

With many people out of work, and stagnant or declining wages for those with jobs, it would be worse than heartless for the PSC to initiate rules, or for the Legislature to approve them, that would build in a loop-hole allowing utilities to rob rate payers of millions of dollars to pay for executive bonuses.

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The Citizens Utility Board of Wisconsin is a member-supported, nonprofit organization that advocates for reliable and affordable utility service. CUB represents the interests of residential, farm, and small business customers of electric, natural gas, and telecommunication utilities before the Legislature, regulatory agencies, and the courts.