S. 5353: No Bonuses for Utility Executives Act

This bill would place limits on bonuses paid to top executives at certain state-regulated electric utilities. It applies to utilities that sell electricity, and in some cases natural gas, to customers under state regulation.

Who would be covered

The bill would apply to “covered utilities,” meaning state-regulated electric utilities as defined under existing federal law. It would cover bonuses for “executives,” including top corporate officers such as the CEO, CFO, COO, CIO, CTO, and similar senior roles.

When bonuses would be allowed

Starting January 1, 2027, a covered utility could pay an executive bonus for a fiscal year only if the utility’s average customer rate increase for that year does not exceed the increase in the Consumer Price Index for All Urban Consumers (CPI-U) over the same 12-month period. In other words, executive bonuses would be tied to whether customer bills rose faster than inflation.

If a bonus is allowed, it could not be larger than 25% of the median annual compensation of the utility’s non-executive employees for that fiscal year.

The bill also says a utility could not pay the bonus until the Federal Energy Regulatory Commission (FERC) has made a formal determination that the bonus is allowed.

Reporting and review requirements

Within 7 days after the end of each fiscal year, covered utilities would have to report to FERC information about:

• the average percentage increase in customer rates for that year, and
• the median annual compensation of non-executive employees.

FERC would then have 30 days to decide whether the utility may pay executive bonuses for that year and to calculate the maximum allowable bonus amount.

After paying any bonus, the utility would have to notify FERC within 7 days and report the amount paid and the fiscal year it was paid for. FERC would then have 30 days to determine whether the utility complied with the law.

Penalties for violations

If a bonus is paid in violation of the bill, if the utility fails to file the required notice on time, or if the utility makes a materially false or misleading statement in its filings, the bonus would be forfeited to the United States.

To recover the forfeited amount, FERC would impose a civil penalty on the utility equal to the bonus amount. The money collected would be transferred to the Secretary of the Treasury.

The bill also says the utility could not pass that penalty cost on to customers through rates.

Refunds to customers

Money collected from forfeited bonuses would be used to make payments to the utility’s customers. The Secretary of the Treasury would issue each customer a payment equal to their share of the total collected amount, divided evenly among the utility’s customers.

Relevant Companies

None found