NV Energy customers, not shareholders, on the hook for employee bonuses

Public Utilities Commissioner Randy Brown suggested NV Energy would cease paying employees a full bonus in the future if the utility was unable to pass the costs on to customers. 

BY: DANA GENTRY, Nevada Current

If Southern Nevadans expect better customer service from NV Energy, they’ll have to pay for it. That’s the message from Public Utilities Commissioner Randy Brown, who led the charge to have ratepayers, rather than shareholders, foot the bill for the utility’s employee bonuses.

Brown, the only new member of the PUC appointed by Gov. Joe Lombardo, departed from the Commission’s precedent of requiring ratepayers and NV Energy to share in the cost of company bonuses, and instead placed the entire burden on customers, even though NV Energy’s own evaluation determined employee performance fell short of the company’s goals.

Commission chairwoman Hayley Williamson voted Tuesday with Brown, while Commissioner Tammy Cordova dissented. Cordova supported two motions for reconsideration of the PUC’s December ruling allowing NV Energy to recoup the $5.7 million cost of the bonuses from customers.

Brown said denying NV Energy the opportunity to pass the cost on to ratepayers amounts to “what I believe to be mixed messaging to the regulated utility by disallowing approximately 50% of the short term incentive pay or STIP (short-term incentive plan) while also criticizing the utility for providing poor customer service during a time with an extremely difficult labor market.”

Last year, the Current reported on an investigation into complaints of the utility’s lack of customer protections, including one filed by a customer who NV Energy says failed to submit all the paperwork required to be exempt from disconnection for medical reasons, and was transported to the hospital for lack of oxygen supply when their power was shut off.

“The undisputed facts in the evidentiary record indicate employees of the regulated utility are under-compensated when compared to industry benchmarks, and that fact is under the existing compensation structure,” Brown said Tuesday during the PUC meeting. “Further reducing the compensation has the potential to exacerbate poor customer service results rather than enhancing them.”

The average compensation among NV Energy employees is $130,812, which is 1.3% less than the national benchmark of $132,509, according to testimony submitted to the PUC last year as part of the utility’s general rate case.

Brown suggested NV Energy, which he says is plagued with high turnover, would cease paying the full bonus in the future if the utility was unable to pass the costs on to customers.

On Tuesday, Cordova noted that in December, she accepted Brown’s proposal because she shares his “concern that NV energy has the tools it needs to attract and retain a competent workforce.”

Upon reconsideration, Cordova says she determined that the unearned bonus “should not be included in rates,” and that customers “should not be responsible for costs beyond those that the employees have earned.”

Cordova added she believes awarding employees a bonus beyond their achievement “is not necessarily a valuable tool for employee retention.”

NV Energy is a subsidiary of Berkshire Hathaway Energy, which reported $2.87 billion in net income for the first nine months of 2023.

This story was originally published by Nevada Current and has been republished under a Creative Commons license.