Wider Scale of Faked Data Seen at Edison

California regulators said the falsification of customer service and other data uncovered at Southern California Edison Co. in 2004 was so pervasive that the utility should pay more than $100 million in refunds and penalties.

The preliminary report by California Public Utilities Commission staff more than doubles the potential financial hit for Edison and marks the launch of a formal investigation into widespread manipulation of the company’s performance surveys and reports.

Edison used the rigged data to win ratepayer-funded rewards -- and avoid penalties -- for its customer service and employee safety record from 1997 to 2003 as part of a state incentive program to promote good service, according to the report.

The commission’s Consumer Protection and Safety Division said its informal investigation suggested “a wider scale of misconduct” at Edison than what previously had been disclosed. The staff cited “evidence that SCE’s management expected its employees to accomplish high customer satisfaction ... scores by any means necessary.”

Rosemead-based Edison had hoped to avoid a protracted state probe by conducting an internal investigation and then offering to return or forgo more than $49 million in reward payments. The company, a subsidiary of Edison International, admitted that the bonuses were based on under-reported employee injuries and customer surveys that were completed by employees and their relatives.

“We are cooperating fully with the CPUC’s investigation into the incidents of employee misconduct we previously investigated and reported to the CPUC and the public,” Edison said Wednesday in a statement. “As we have informed the commission, our response has included disciplinary action where appropriate, organizational changes and employee training initiatives.” The utility said it would file a response by July 7.

The commission staff opted to conduct its own probe, which included interviews under oath with current and former employees, supervisors and managers. The group also reviewed investigative material provided by Edison. The results are contained in a June 15 report that hasn’t been made public yet to allow Edison time to edit out sensitive information.

However, some of the inquiry’s findings were included in a document that stressed the need for a formal commission investigation, a process that would include hearings, witnesses and a public airing of evidence. Such an investigation is required before ordering penalties and ratepayer refunds. Commissioners approved the new probe in closed session June 15 and the decision was posted on the agency’s website June 19.

“We found many more kinds of data manipulation than Edison brought forth in their report,” said Robert Cagen, a commission attorney and an investigator on the case. “That kind of data manipulation changes survey results, and really changes rates as well.”

The commission staff found evidence that utility employees were pressured to suppress or downplay on-the-job injuries to avoid hurting the company’s ratings -- findings similar to those in Edison’s own investigation.

The new inquiry will examine the extent of management involvement. It also will widen the investigation to Edison reward programs covering system reliability and other facets of customer service, Cagen said.

The investigation determined that “reasons and opportunities for manipulation” are still present, he said.

The case involves a commission incentive program that rewards -- or fines -- utilities based on customer satisfaction, employee safety, system reliability and financial results. Companies measured their performance using internal records and customer surveys conducted by outside firms, then submitted the results to the commission.

Edison also awarded company bonuses to managers whose employees met certain customer survey goals. The satisfaction surveys asked recent customers to rate the utility’s service on a scale of 1 to 5-plus.

Current and former employees at Edison said in 2004 that supervisors were so obsessed with winning the bonuses that some hung banners that read, “5+ is a must.”

To eliminate potentially bad results, employees tampered with the database of phone numbers that surveyors tapped to interview customers about service. In some cases, workers and supervisors erased or changed customer phone numbers. To boost the chances of positive ratings, they substituted their own phone numbers or the numbers of friends and relatives.

Edison’s initial investigation was spurred by a letter from an anonymous whistle-blower who threatened to notify state regulators. It made the customer service scam public almost a year later, in March 2004.