Edison plans appeal of $200-million judgment
Southern California Edison said Tuesday that it would appeal an order that the utility pay $200 million in fines and lost bonuses as punishment for a seven-year fraud.
Monday’s decision by Administrative Law Judge Robert Barnett of the California Public Utilities Commission stemmed from the discovery in 2004 of widespread falsification of customer satisfaction data, manipulation of safety incident reports and other problems with data used by Edison to win customer-funded performance incentives.
The findings by Barnett “are not supported by the evidence of wrongdoing the utility uncovered and self-reported to regulators nor consistent with the fair application of regulatory penalties,” Edison said in a statement.
Rosemead-based Edison must file its appeal within 30 days of Barnett’s decision, a move that would shift the matter to the five-member commission for review. President Michael Peevey is the commissioner assigned to the case, but it was a former commissioner, Geoffrey Brown, who spent a year on the Edison issue and attended hearings on the matter in November.
In 2004, Edison publicly disclosed that employees had manipulated the results of a customer satisfaction survey to improve scores and win bonuses. The admission came a year after a whistle-blower wrote a letter to senior managers about cheating on the survey, and four months after a second anonymous letter went to Edison -- as well as to the commission and several politicians -- complaining that the company had not halted the fraud.
The utility launched a lengthy internal investigation, which uncovered evidence that some safety data had been suppressed and that certain other information was faulty. Edison fired and disciplined employees, made organizational changes and conducted training sessions for employees.
In addition, Edison offered to pay a $2.5-million fine and to return $49.4 million in performance incentives that were paid or applied for during the seven years. The company said Tuesday that the refund amount it offered the commission “more than compensates customers for any impact of the wrongdoing.”
In his decision, Barnett said the company should lose $160 million in unearned bonuses and pay a fine of $40 million. The judge said that the affair warranted a $102-million fine, but that he lowered it to reflect Edison’s “excellent cooperation after the fraud and manipulation came to light.”
In addition, Barnett said that there was “overwhelming” evidence senior managers at Southern California Edison knew about the scheme. Barnett singled out the then-senior vice president of the transmission and distribution business unit, the vice president of power delivery, the vice president of regulatory compliance, the director of planning and the manager of customer satisfaction.
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