California utility gave out bonuses hours before bankruptcy filing
Sunday, April 8th 2001, 12:00 am
By: News On 6
SAN FRANCISCO (AP) _ The parent company of a California utility awarded about 6,000 bonuses and raises to midlevel managers and other employees hours before the utility filed for bankruptcy, a newspaper has reported.
PG&E Corp. Chairman Robert Glynn issued an internal memo late Thursday announcing the bonuses and raises for eligible employees of Pacific Gas and Electric Co., the San Francisco Chronicle reported Saturday.
The payments were made in time for many of the bonuses to be deposited into workers' bank accounts before the utility filed for Chapter 11 bankruptcy Friday morning, according to the Chronicle, which obtained a copy of the memo.
Gov. Gray Davis issued a brief statement Saturday in response to the report, saying, ``PG&E's management is suffering from two afflictions: denial and greed.''
The bonuses and raises were earned as part of the company's incentive program. PG&E spokesman Ron Low said Saturday that the money for the payments came from a combination of a $1.1 billion tax return, paying power generators only what the company receives in rates, and cost-saving measures such as halting the installation of underground transmission lines.
The raises and bonuses were given to midlevel managers, secretarial staff and other support staff. No money was distributed to rank-and-file union members who already received a wage increase earlier this year as part of their contract, Low said.
Los Angeles lawyer David Huard of Manatt, Phelps & Phillips said the practice of compensating employees before filing Chapter 11 is not uncommon. In addition, the U.S. bankruptcy court in San Francisco granted approval for PG&E to make outstanding compensation payments to employees and to maintain related bank accounts.
But state Assembly Republican Leader Dave Cox said it's disgraceful to the state's ratepayers.
``Declaring bankruptcy and at the same time providing increases and bonuses for employees would just be in your face to the consumers of the state of California,'' he said.
California utilities, including PG&E, are struggling with massive debts related to the state's power crisis. Utilities have been crippled by skyrocketing wholesale energy prices, which they haven't been able to pass along to consumers under the rules of a recent deregulation of the state's power market.