Quid pro quo?
Greenlining Institute drops appeal of PG&E bonuses after utility's funding promise.

By Lisa Weinzimer

THE GREENLINING INSTITUTE has acknowledged that it withdrew its motion asking the California Public Utilities Commission to investigate allegations that Pacific Gas and Electric Co. paid for hefty executive bonuses with ratepayer money. Greenlining dropped the motion in exchange for the utility's pledge to boost charitable donations, although PG&E spokesperson John Nelson denied there was a quid pro quo.

Greenlining, a San Francisco-based minority advocacy group, agreed to withdraw its Jan. 15 motion in part because of PG&E's promise to make a "low-income commitment," said Itzel Berrio, deputy general counsel for the group. Playing down this arrangement, Berrio stressed that the utility has also agreed to make future filings more transparent. The attorney said she was "not at liberty" to provide further details of the deal beyond saying that PG&E will likely announce its charitable intentions in a few weeks.

"Greenlining believes, particularly with the strong support of PG&E, that the public will be better served by future corporate transparency ... rather than dwelling on past history," said the group in its filing to withdraw its motion.

There is some precedent for companies settling disputes by offering charitable donations, according to Marcus Owens, a tax attorney with Washington, D.C.-based Caplin and Drysdale. Owens served in the Internal Revenue Service division that oversees tax-exempt groups, including nonprofits and charities, for 25 years.

Basing a regulatory dispute on the need for more transparency and then "saying 'never mind' at the end of the day seems opportunistic," Owens said. Another tactic that may be at play, he added, is that the utility thinks it can get more mileage out of a donation than a business expense, since generous gestures can burnish a company's image.

In a written response to the CPUC, PG&E flatly denied that ratepayers funded the $84.5 million senior-executive retention program through ratepayer revenues. PG&E asserts the payouts came out of utility parent PG&E Corp.'s "cash on hand."

The utility said it hasn't sought, and doesn't intend to seek, recovery of costs for bonuses through revenue requirements. Though the payout program was set up in 2001 to keep valued executives, PG&E defended its practice of continuing the payouts even after some of the top brass left the utility. Each of the executives stayed with PG&E during a critical period of restructuring, and when they had completed their tasks, "the services of these officers was no longer needed," according to PG&E filings. Having "fulfilled their obligations, it was determined that a full payout was warranted." PG&E Corp. paid all 17 officers covered by the programs.

But questions about the timing of the payouts remain. James Weil, attorney for the Aglet Consumer Alliance, which formally opposed the PG&E bankruptcy settlement, said one reason the CPUC didn't review the bonuses was because the perks matured at the end of last year and were paid out this year. The utility's general rate case – from which the allegations first sprang – focused on 2003. Weil said PG&E could claim that bonuses count toward rate case costs in 2004 and, thus, there is no reason to look at costs for last year.