CPS Energy employees earn bonus pay

By on April 15, 2013

For the second year in a row, CPS Energy employees have earned bonus pay.

CPS Energy has had an incentive program in place for 13 years now, to encourage top performance for safety, budget management, low bills, customer satisfaction and care for the environment.

Instead of giving higher base salaries, CPS Energy prefers to have lower base salaries, then encourage strong performance with the opportunity to earn more by meeting company-wide goals.

That’s what has happened the last two years.

Because employees met the goals laid out at the beginning of the year – goals that get progressively more difficult every year – they earned the incentive. This year, bonuses totaled $16.2 million, or 6 percent of CPS Energy’s total labor budget.

It is reasonable for the community to debate whether those bonuses are fair, said Lisa Lewis, vice president of corporate communications, and she noted that there are different ways to structure compensation.

Some utilities simply guarantee a salary, for example, while others only offer incentive pay to top executives.

“CPS Energy has looked for a way that gets the maximum value for our customers, by incenting our employees to work together to achieve common goals, and by putting part of employees pay at risk, rather than guaranteeing a higher salary. In 2011 and 2012, CPS Energy employees have shown that it can work.”

Those bonuses don’t boost salaries beyond the market rate, however.

CPS Energy employees’ salaries are regularly compared to salaries for similar utilities across the region and nation.

A recent study found that including bonuses and benefits, top executives are paid somewhat less than the industry standard for similarly-sized energy companies, while most employees are paid within range of competitive market rates.

This year, like last year, employees met the goals set out for them.

CPS Energy’s electric reliability is within the top tier of the industry, its employees have increased safety to a record high for the second year in a row, and customer satisfaction remains among the highest in the industry.

Meanwhile, capital costs decreased from fiscal year 2012, while operations and maintenance holds steady for the next two fiscal years. Because of that, the budget for 2013 did not include a rate increase.

Employees have not always met their annual goals. In fiscal year 2009, employees only met and were paid for the meeting the company’s performance goal on safety that year. Executives did not receive incentive pay at all.

This year, executives earned a 32 percent bonus; more of their pay is at risk, said Lewis, because they have the most responsibility for meeting annual performance goals.

Most employees have at risk between 25 percent and 7 percent of their salary. One group of hourly employees has chosen, as part of their working agreement with CPS Energy, to have just one percent of their pay at risk.

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