In 2008, the recession took with it about a fifth of all assets in American retirement plans. But utility employees not only enjoy the gains of good years, but in bad ones, ratepayers cover the losses for them.
PG&E employees' pensions are currently immune to losses, even when financial markets plummet. That's because utilities have their customers pick up the cost of pensions, and that also means making up for losses. This year, Southern California Edison is asking the CPUC to approve a 7.5 percent rate increase for 2012, partly to cover its pension fund losses. PG&E says it hasn't asked for an increase to cover pension costs since 2006.
"I don't think we want to begrudge the utility workers their pension plans first of all. These are people that have worked long and hard for it," Los Angeles Times business columnist David Lazarus said.
Lazarus suggests going forward and considering 401ks instead. It is a move the state Legislature is already considering for public sector employees.
"I think the simple fact is that for any enterprise that becomes too big, during a slowdown you are going to find that pension funds are unsustainable. That's just simply a fact," said.
"I think all the utilities have to begin to understand ratepayers are not a cash cow that they can constantly go to cover any shortfalls they see," St. Sen. Leland Yee, D-San Francisco, said.
Edison's employees are vested for pensions after three years, and get a 25 percent discount on their power bills. At PG&E, it is five years and they get the same discount.
Gov. Jerry Brown will be appointing up two or possibly three new CPUC commissioners, and he has the power to replace the president, which could be a significant step toward revising the existing pension system.
"The current head of the PUC is a former Edison executive, but the odds are he's not going to continue as president of the PUC and probably when Gov. Jerry Brown makes his appointments, more consumer-friendly faces will be showing up," Lazarus said.
PG&E was unable to give us numbers on rate increases and how much of those increases have gone to cover pension fund losses in the past, and no one at the CPUC was available for an interview.
