Lombardo appointee doubles down on ratepayer-funded bonuses for NV Energy employees

The Nevada Public Utilities Commission is scheduled Tuesday to reconsider its decision in December to stick ratepayers with a $5.75 million bill for bonuses NV Energy paid its Southern Nevada employees last year. 

Commissioner Randy Brown, appointed by Gov. Joe Lombardo to the PUC in September last year, is standing firm on his order requiring that customers, rather than shareholders, pay for the bonuses, despite a request from the state’s Consumer Advocate that the PUC reconsider the order, and a rare motion for reconsideration from PUC staff.   

Brown, Lombardo’s only new appointee to the PUC, amended a draft order in December from Commissioner Tammy Cordova that would have split the  cost of the bonuses between ratepayers and the utility. 

Cordova capitulated in December and joined Brown and Commissioner Hayley Williamson in a unanimous vote to have ratepayers foot the bill for the entire amount of the short-term incentive pay (STIP). 

Now, in response to the motions for reconsideration, Cordova is once again calling on NV Energy to pay half of the cost, based on NV Energy’s own corporate assessment that employees achieved about half of their goals.  

Cordova did not respond to requests for comment on why she voted with her colleagues in December. Her term on the PUC expires in September. Lombardo’s spokeswoman did not respond when asked whether the governor intends to reappoint Cordova.   

Brown’s order in the utility’s favor said allowing NV Energy to recover the cost of the bonuses from ratepayers “reflects evidence” the utility has “a high rate of voluntary turnover and that NPC’s STIP-eligible employees are under-compensated compared to industry benchmarks… making it reasonable for the Commission to allow recovery of the cost of modest compensation enhancements for the positions identified in the order, especially when not doing so may exacerbate staffing concerns and result in poor customer service.” 

Cordova notes NV Energy has the prerogative to pay bonuses “above what was achieved on the corporate scorecard, however, it appears that NPC (Nevada Power Co., NV Energy’s southern subsidiary) has created an employee expectation that the STIP will be funded at or near 100%, regardless of the corporate scorecard achievement. The Commission agrees with Staff that this negates the STIP’s proposed purpose” as incentive pay, adding ratepayers are being asked to pay costs that don’t benefit customers. 

“Allowing a full STIP payout at 95% even though only 56.94% was achieved is akin to a college student getting an A for attendance despite the fact that the same student’s performance on his classwork and testing merited an F,” Senior Deputy Attorney General Whitney Digesti wrote in the BCP’s petition for reconsideration. 

Brown, in his order, “rejects the notion” the bonuses were unearned, and argues the company bases the bonus pay on individual performance in addition to company-wide achievement. He asserts the bonus pay is necessary to attract and retain employees. 

NV Energy has already paid employees the 96% bonus, the BCP notes, adding the commission’s order only causes the utility to charge “…customers for this unearned bonus pay – further showing that the allowance will in no way assist with retention.”

But Brown suggests NV Energy is unlikely to grant bonus pay at the full rate in the future if the PUC rejects its bid to fully recoup the cost from customers. 

“The issue in this case is whether ratepayers or shareholders should bear the financial burden for the 95% STIP (short-term incentive pay) amounts that have already been paid out to Nevada Power employees for 2022,” says the petition filed by PUC staff.

NV Energy’s statewide net income for the first three quarters of 2023 was $392 million.