2018 General Rate Case

Transcription

1 Application No.: A.-0- Exhibit No.: SCE-0, Vol. A Witnesses: M. Bennett G. Henry C. Hernandez J. Trapp R. Worden (U -E) 0 General Rate Case ERRATA Human Resources (HR) Volume Benefits And Other Compensation Before the Public Utilities Commission of the State of California Rosemead, California September, 0

2 0 0 I. OVERVIEW OF TOTAL COMPENSATION A. Introduction SCE s total compensation programs comprise base pay, short-term incentives, long-term incentives, recognition awards, and benefits. Our compensation programs target the market median and reward employees for individual, Operating Unit and Company performance. To attract and retain the workforce essential to the Company s operations, SCE offers a market-competitive compensation package. B. Base Pay Base pay represents the foundation of cash compensation, the fixed component of annual pay. Base pay compensates ongoing performance, skills, and knowledge of job responsibilities. The Company s base pay programs establish and maintain performance-based pay levels that are marketcompetitive and internally equitable, and allow for differentiation based on individual performance. C. Short Term Incentive Compensation The success of any company relies upon the collective contribution of its workforce. The Shortterm Incentive Plan (STIP) and Executive Incentive Compensation Plan (EIC) are short-term incentive programs that attract, retain, and reward employees and executives by providing a market-competitive bonus opportunity that varies based on performance. The STIP and EIC programs recognize and reward employees and executives for performance in areas such as safety, customer service, reliability, cost V control, and efficiency. These programs give employees a financial stake in achieving utility objectives and, as discussed in Chapter IV below, focus employee efforts on SCE s operational goals that benefit customers. Customers also benefit from the variable pay elements of SCE s total compensation package, since these bonuses are not paid unless those goals are achieved. Further, these variable pay programs do not add to other employee costs such as pensions and benefits. D. Long Term Incentive Compensation Executives are eligible for long-term incentive compensation in the form of stock options, restricted stock units, and performance shares. These incentives are essential to SCE s efforts to attract and retain highly valued leaders. Nearly all other employers against whom SCE competes for executive talent also offer long-term incentive compensation. As discussed in Chapter VII below, long-term

3 analysis and similar studies. Through regular reviews, SCE determines how its total compensation mix compares to market practices and what changes are necessary to keep that mix in alignment. In 0, the Company began the Compensation Design Project to redefine its compensation structure as part of a larger review of SCE s compensation and benefits plans. This effort supports the Company s objective of balancing the mix of benefits and compensation to align with the market. H. O&M Request and History $. This exhibit presents the facts supporting the $. million of expenses we project in Test Year 0 for SCE s Benefits and Other Compensation. Estimated expenses in Test Year 0 are depicted in Table I-below. Table I- Benefits and Other Compensation Combined Summary of 0 Forecast (Constant 0 $000 and Nominal $000)) Account Activity 0 Short-term Incentive Program Short-term Incentive Program $, 0/, 0, 00, 0/ Long-term Incentives $, Pension Costs $, 0(k) Savings Plan $,0 Medical Programs $0, Dental Plans $,0 Vision Service Plan $, PBOP Costs $, Group Life Insurance $, Miscellaneous Benefit Programs $, Executive Benefits $,0 Third Party Billing & Non-Utility $0 Affiliates P&B Credits Total O&M Expenses $, Activity forecasts are presented in nominal $000 dollars. All other activity forecasts are presented in constant 0 $000 dollars. --

4 0 0 B. Program Description and Scope STIP is the annual variable pay program that provides employees an opportunity to earn a cash bonus based on achieving Company goals. Exempt employees participating in STIP have their award amounts further adjusted based on individual performance. The design of STIP is established each calendar year by SCE s senior executive management team. STIP fosters employee focus on activities that have an impact both direct and indirect on the Company s success in delivering services to its customers. STIP provides a variable pay opportunity subject to the achievement of goals related to public and workplace safety, customer service, system reliability, cost control, and productivity. The program highlights what employees can do to contribute to the Company s successful operations and provides a financial stake for them to achieve Company goals aligned with customer interests. The process for establishing Company goals and determining results under STIP is as follows. In or around the middle of each calendar year, the Company identifies the business priorities for the following calendar year and develops corporate goals accordingly. Progress towards Company goals is reviewed during the year. In January and February of the following calendar year, goal achievements for the previous year are reviewed and final performance is determined. OU leaders must approve the performance results being reported by their respective departments before the results can be forwarded onto the Board of Directors for final review. Through 0, STIP funding focused on the achievement of: () Company goals, () the Company s operations and maintenance (O&M) budget, () OU goals, and () the OU s O&M budget. In 0, the basis for STIP funding was changed to three sets of goals: () O&M budget, () Safety goal (detailed below), and () OU goals. The combination of the achievement of these goals and the funding authorized by the 0 GRC determined the pool of dollars allocated to each OU. For 0, the separate company-wide safety goal was based upon a Days Away, Restrictions and Transfers (DART) injury rate target, with a no fatalities requirement and affected 0 percent of 0 STIP funding. For exempt STIP and EIC participants, the entire award amount was subject to further adjustment based on individual performance. Typically, the individual performance standard or metric is developed for each goal to monitor progress and to determine final results at the end of the calendar year. Refer to WP SCE-0, Vol. 0 Chapter III VIII, pp.. -e --

5 In 0, the STIP was revised again to remove the OU goal component from the payout calculation, aligning the STIP and the EIC with the same set of measurable and challenging Company performance goals approved by the Board of Directors. The Company goals for 0 are set forth in Table V- below: Refer to WP SCE-0, Vol. 0 Chapter III-VIII, pp. -. -c --

6 F. Retiree Health Care and Life Insurance (Post-Retirement Benefits Other Than Pensions). Summary of PBOP Costs [FERC Account ] For the Test Year 0, SCE forecasts $. million for Post-Retirement Benefits Other Than Pensions (PBOP) costs, which covers all forecast PBOP trust contributions, tax deductible net PBOP claims payments for certain retirees, and actuarial fees. Figure IX-0 0 below shows recorded PBOP costs for the years 0 through 0 and our forecast costs for the years 0, 0 and Test Year 0. 0 Figure IX-0 PBOP Costs Recorded and Adjusted 0-0/Forecast 0-0 FERC Account (Non-Labor Constant 0 $000; Other Nominal $000) IX 0 Refer to WP SCE-0, Vol. 0 Chapter IV Book A, pp Post-June, 0, service-related San Onofre Nuclear Generating Station (SONGS) costs have been removed from all recorded (0 0) and forecast costs. --

7 0 0. Summary Description of Post-Retirement Benefits Other than Pensions (PBOP) SCE offers other post-retirement benefits besides pension benefits. These benefits include post-retirement medical, dental, vision, Medicare Part B premium reimbursement, and term life insurance. 0 According to ASC -0 (formerly FAS 0), SCE must accrue a liability for the costs of these retiree benefits. SCE has offered these benefits as an important part of its employee benefits package to attract and retain a qualified work force, and to facilitate an orderly transition from the work force. Retirees and their dependents who are not Medicare-eligible participate in the same medical, dental, vision, and EAP programs as active employees, although some plan features differ. The differences in the benefits provided retirees are highlighted below. SCE offers two classes of retiree coverage: Flex coverage for employees who retired after December, 0, and PrimeCare coverage for those retired before then. a) Flex Retirees Flex retirees are employees who retired after December, 0. If they are not Medicare-eligible, they and their dependents choose from the same general health plans and features as active employees. Employees must retire at age or older with at least ten years of service to be eligible. To address the continuing cost escalation in the health care arena, significant changes to the SCE retiree medical program have been made. Employees who had shorter careers with SCE now pay a much greater portion of their retiree medical plan costs. For those who did not meet certain criteria by the end of 00, the Company s contribution toward their retiree medical plan costs is subject to an overall limit or cap, established based upon the costs of the medical plans in 00 and adjusted by factors tied to the rate of general (not medical) inflation. On December, 0, SCE will take another step in reducing its retiree medical program cost structure when it discontinues offering its retiree healthcare plan to employees hired on or after that date. Instead, SCE will provide eligible employees who do not receive retiree healthcare with access to a reduced cost Health Reimbursement IX 0 Refer to WP SCE-0, Vol. 0 Chapter IV Book A, pp.. SCE also offers Employee Assistance Program (EAP) benefits to its retirees. See Section IX.C.., above, for more information. --