Edison Says 36 Involved in Fraud
Southern California Edison said a scheme to hide poor service and win bonuses by rigging customer surveys involved 36 employees and tainted less than a third of $48 million in rewards, according to a report the utility gave to regulators Friday.
The Rosemead company, which went public with the fraud in mid-March, concluded that misconduct was widespread in its service planning department, where employees erased or changed the phone numbers of unhappy customers to make sure they couldn’t be reached for customer satisfaction surveys. In some cases, employees substituted their own phone numbers or those of friends or relatives to ensure high ratings.
Edison, a subsidiary of Edison International, attributed the cheating to “an overstated emphasis on achieving positive survey findings within an organization that was severely stressed due to workload, attrition and limited job experience,” the 173-page report said.
“The whole episode was a horribly embarrassing failure on the part of our company,” said Senior Vice President Stephen Pickett. However, Edison said the misconduct was limited.
The Times reported in May that the survey cheating stretched from 1997 to 2003 and involved much of the company’s planning staff. The deception became so pervasive that in one five-month period, 79% of one group’s customer phone numbers were invalid or otherwise not usable.
One former planner suggested that if Edison fired all the people involved, it could lose 60% of the department’s staff. The utility’s service planning department, with about 280 employees, helps design electrical connections for commercial and residential customers.
In its report, Edison said it granted immunity to four employees in return for information and fired nine people, including five supervisors. Edison said it disciplined 23 other employees, including two high-level managers who were demoted.
The surveys, conducted by outside firms, are a crucial part of a state Public Utilities Commission program to reward utilities with bonuses for good service and punish them with fines for poor service.
Edison said it believed it should refund or forgo $14.4 million of the $48 million in received and pending performance bonuses through 2003, a figure it said covered all the customer service payments that stemmed from its service planning and meter reading groups. The company added the meter-reading payments into the total -- an extra $2.4 million -- because it determined there was no way to verify the customer satisfaction data from that group.
The final verdict on the matter will come from the PUC, which is expected to launch its own investigation.
“I’m sure Edison was conservative in its determination of how much damage had been done,” said Robert Cagen, a PUC attorney. “All the people who were fired probably did these things, but they were also operating under the tacit agreement of management and probably the actual agreement of management.”
Edison acknowledged that the cheating stemmed from management failures. But Pickett said the company’s report showed that it “rooted this problem out and identified its full scope.”
