2015 General Rate Case

Transcription

1 Application No.: Exhibit No.: Witnesses: A.--00 SCE-0, Vol. 0, Pt. 1 M. Bennett G. Henry J. Trapp R. Worden (U -E) 01 General Rate Case ERRATA Human Resources (HR) Volume, Part 1 Benefits and Other Compensation Before the Public Utilities Commission of the State of California Rosemead, California November 0

2 SCE-0: Human Resources Volume 0, Part 1 Benefits and Other Compensation Table Of Contents Section Page Witness I. OVERVIEW OF TOTAL COMPENSATION...1 M. Bennett C. D. E. F. Introduction...1 Base Pay...1 Short Term Incentive Compensation...1 Long Term Incentive Compensation...1 Recognition Programs... Pension and Benefits... II. SUMMARY OF THE TOTAL COMPENSATION STUDY... Background on Total Compensation Study Total Compensation Workshop Total Compensation Study... Reasonableness of Compensation Paid by SCE... III. COST-OF-SERVICE RATEMAKING, INCENTIVE COMPENSATION AND BENEFITS... R. Worden C. General Principles of Cost-of-Service Ratemaking... Cost-of-Service Ratemaking Principles Applied to Incentive Compensation and Benefits... Other States Allow for Recovery of Incentive Compensation Costs Where Total Compensation Studies Show Compensation Is At Market.... IV. SHORT-TERM INCENTIVES - RESULTS SHARING...1 M. Bennett C. Summary of Test Year Request...1 Program Description and Scope... Ratemaking Policy...0 R. Worden -i-

3 SCE-0: Human Resources Volume 0, Part 1 Benefits and Other Compensation Table Of Contents (Continued) Section Page Witness D. E. Results Sharing Goals Benefit Ratepayers...1 M. Bennett Test Year 01 Request for Results Sharing (FERC Accounts 00,, 0, and 0/1) Description of Accounts...1 Analysis of Recorded Data... Test Year 01 Forecast for Results Sharing... V. LONG-TERM INCENTIVES... J. Trapp C. D. E. F. Summary of Test Year Request... Program Description and Scope... LTI is a Vital Part of the Market-Competitive Total Compensation Package for SCE s Executives... SCE s LTI Program is Necessary for Long-Term Retention of High Performing SCE Executives Which Benefits Ratepayers... Recovery for LTI in Rates is Consistent with Cost-of- Service Ratemaking Principles... Test Year 01 Request for Long Term Incentives (FERC Account 0) Description of Account... Analysis of Recorded Data... Test Year 01 Forecast for Long Term Incentives FERC Account 0... VI. RECOGNITION PROGRAMS... M. Bennett Policies Underlying Cash Awards... Policies Underlying Non-Cash Awards...0 VII. PENSION AND BENEFITS PROGRAMS...1 -ii-

4 B. Program Description and Scope Results Sharing is the annual variable pay program that provides employees an opportunity to earn a cash bonus based on achieving Company and Operating Unit (OU) goals. The design of the Results Sharing program is established each calendar year by SCE s senior executive management team. Results Sharing helps employees to focus on activities that have an impact both direct and indirect on the Company's success. Results Sharing provides variable pay based on achievement of goals related to customer service, system reliability, public and workplace safety, cost control, and productivity that employees help create. The program highlights what is important for employees to do to contribute to the Company s successful operations and provides a financial stake for employees to achieve Company and OU goals that align with ratepayer interests. Through 0, the design of the Results Sharing program was focused on the achievement of: (1) Company goals, () the Company operations and maintenance (O&M) budget, () OU goals, and () OU O&M budget. It was a combination of the achievement of Company goals, Company O&M budget revenue requirement performance, and the budget authorized by the 0 GRC that determined the available pool of dollars allocated to each OU. Fifty percent of the award was subject to adjustment based on the achievement of OU goals and O&M budget. The remaining 0 percent was not adjusted based on performance against OU goals and O&M budget. For MIP and EIC participants, the entire award amount was further adjusted based on individual performance. Table IV- below depicts Company Goals included in the Results Sharing program for 0:

5 Figure VII- PBOP Costs Recorded and Adjusted 00-0/Forecast 0-01 FERC Account (Non-Labor Constant 0 $000; Other Nominal $000) 1. Summary of Description of Post-Retirement Benefits Other than Pensions (PBOP) SCE offers other post-retirement benefits in addition to pension benefits. These benefits include post-retirement medical, dental, vision, Medicare Part B premium reimbursement, Employee Assistance Program (EAP), and term life insurance. According to ASC 1-0 (formerly FAS ), SCE is required to accrue a liability for the costs of these retiree benefits. SCE offers these benefits as an important part of its program to attract and retain a qualified work force. In general, retirees 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 1, 10, and PriceCare coverage for those retired before then. a) Flex Retirees "PrimeCare" Flex retirees are employees who retire(d) after December 1, 10. 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. 1

6 than Future retirees (after 00) who are not grandfathered pay still more for coverage if they retire before age 0 and/or with less 1 years of service. For retirees not meeting this age and service requirement, 0 percent retiree contributions are applicable instead of the 1 percent contributions that all other Flex retirees pay (and are similarly applicable, instead of the 0 percent contributions they pay for dependent coverage). As noted earlier in this Chapter, in Section C, Medical Programs, new medical options were implemented for the employee population effective January 1, 0. These same medical options were made available to the Flex retirees who were not eligible for Medicare coverage. For Flex retirees and their spouses covered by Medicare, medical options designed specifically to work with Medicare coverage were included. Once retirees or their spouses become Medicare eligible, their primary source of medical benefits is through their Medicare coverage. The benefits from the SCE sponsored medical plans are secondary to Medicare s benefits. To provide a range of medical benefit options with a variety of both plan designs and contribution levels, the following medical options were offered: a Medicare-Coordinated Preferred Provider Organization, Medicare-Coordinated Exclusive Provider Organization, Medicare Advantage Health Maintenance Organization, and two Medicare Supplement Plans. The latter two plans require a comparatively smaller contribution from the retiree. They are designed to provide benefits when the patient utilizes medical providers who accept Medicare, a situation which results in much smaller amounts due after Medicare s payments. b) PrimeCare PrimeCare is available only to employees who retired before January 1, 11, and their dependents. The number of subscribers (retirees or surviving spouses) as of December 0 was, with percent in the age cohort of 0. Medicare coverage is the primary source of benefits for this retiree group. As the secondary coverage, the PrimeCare plan design requires no deductible and pays 0 percent of covered expenses when care is received through contracted network providers. When the patient accesses out-of-network providers, the benefit is 0 percent of the fee, subject to the reasonable and customary limitation. The changes for Flex retirees described above do not apply to PrimeCare retirees. c) Medicare Part B Premiums Employees who retired before January 1, 1, receive full Medicare Part B premium reimbursement. Employees who retired on or after January 1, 1, and before January 1,

7 b) Awards to Celebrate Excellence (ACE) Awards to Celebrate Excellence (ACE) is a non-cash recognition program that uses points to award employees who participate in one of the company approved safety programs. 1 ACE awards are given to full-time or part-time, non-executive employees by managers. In D , the Commission directed SCE to explain why it records amounts for Awards to Celebrate Excellence under Miscellaneous Benefit Programs in FERC Account. 10 According to the Code of Federal Regulations, FERC Account Employee Pensions and Benefits includes pensions, annuities, and health benefits. The regulation also states: Include, also, expenses incurred in medical, educational or recreational activities for the benefit for employees and administrative expenses in connection with employee pensions and benefits. 11 SCE records costs associated with the ACE program under Miscellaneous non-labor Benefits Programs in FERC Account as well as in various labor accounts across all exhibits, based on its interpretation of the FERC regulations. HR does not record and forecast total ACE program costs and is not requesting recovery of those costs in this volume. Individual OUs record costs associated with the ACE program in their respective labor costs. c) Commuter Programs non-labor SCE historically has offered several commuter programs that encourage employees to use public transit or high-occupancy commuting vans. Participation in the commuter programs is voluntary. The commuting program primary tool has been a transit voucher option that provides a $0 tax-free voucher each month. This has been available to employees who travel to and from work by public transit (rail, train, or bus) or are members of a qualified vanpool route. After an in-depth review of the transit voucher option and the available taxfavored alternatives, a new approach, the Commuter Benefit program, was implemented effective September 1, 0. The new program allows employees to elect to pay for public transit (bus or rail) or their portion of the vanpool lease on a pre-tax basis, as authorized by Section (f) of the Internal Revenue Code. By making this election, employees may use the full dollar value of their pay to cover 1 Prior to 0, the ACE program included awards for other exemplary efforts, including productivity, operational improvements, customer service, and superior team or project results. 10 D.0-0-0, p.. 1

8 SOUTHERN CALIFORNIA EDISON COMPANY QUALIFICATIONS AND PREPARED TESTIMONY OF RUSSELL G. WORDEN Q. Please state your name and business address for the record. A. My name is Russell G. Worden, and my business address is Walnut Grove Avenue, Rosemead, California 0. Q. Briefly describe your present responsibilities at the Southern California Edison Company. A. I am presently a Director of Regulatory Affairs in Edison s External Relations Department and the case manager for SCE in the current CPUC investigation of the outages at the San Onofre Nuclear Generating Station (SONGS), investigation (I.) --0. My responsibilities have previously included management of SCE s 00, 00, 00 and 0 general rate cases. Q. Briefly describe your educational and professional background. A. I received an Associate of Arts degree from Cabrillo College, in Aptos, California in 1. I graduated from San Francisco State University in 1 with a Bachelor of Arts degree in Political Science, cum laude. After college, I joined the Washington, D.C. staff of U.S. Senator Richard Stone (D-FL) where I served as a Legislative Aide until December 10. From January 11 until March 1, I served as a Legislative Assistant to then Congressman Ron Wyden (D- OR). In March 1, I joined the Washington, D.C. office of Southern California Edison as a Governmental Affairs Assistant, and in May 1, I transferred to Edison s Revenue Requirements Department. I transferred to my current position in August 0. Q. What is the purpose of your testimony in this proceeding? A. The purpose of my testimony in this proceeding is to sponsor the portions of Exhibit SCE-0, Volume, Part 1, entitled Human Resources - Benefits And Other Compensation, as identified in I am also sponsoring portions of Exhibit SCE-, Vol., Revision the Table of Contents thereto. 1, as identified in the Errata to SCE-, Vol., Revision1. Q. Was this material prepared by you or under your supervision? A. Yes, it was. Q. Insofar as this material is factual in nature, do you believe it to be correct? A. Yes, I do. Q. Insofar as this material is in the nature of opinion or judgment, does it represent your best judgment? A. Yes, it does. A-