Attorney General Rails Against Utility Exec Compensation, DISH Network

HARTFORD — On July 20, Attorney General Richard Blumenthal called for executive compensation reform for utilities that disclosed increased salaries and benefits to top executives even as they sought unconscionable rate hikes.

Mr Blumenthal was joined by State Representative Vickie Nardello, D-Prospect, House co-chair of the Energy and Technology Committee.

 “Electric and gas consumers — many losing jobs and homes — are compelled to provide pay raises to utility executive millionaires,” Mr Blumenthal said. “These compensation disclosures should drive reform, and energize consumers who have endured rate increases over the past year. I urge legislation again to cap the expense to ratepayers for excessive executive pay.”

Mr Blumenthal successfully urged last year that the Department of Public Utility Control (DPUC) require that Connecticut’s public utility companies disclose annually — in a comprehensive, reader-friendly format — all compensation paid to their executives and officers. As part of this new requirement, the companies recently filed 2008 executive compensation disclosures, revealing sky-high pay and benefit packages, largely at the expense of ratepayers.

Mr Blumenthal, along with Consumer Counsel Mary J. Healey, also urged last year unsuccessfully a strict cap on ratepayer dollars to fund such pay. Under this proposal, ratepayers could not be charged more than $300,000 for any executive compensation — an amount equal to twice the governor’s salary.

In the fiscal year ended December 2008, Northeast Utilities Chief Executive Officer Charles W. Shivery received $8.09 million in total compensation, of which $1.3 million was paid by Connecticut ratepayers; United Illuminating (UI) Chief Executive Officer James Torgerson received $2.261 million, nearly all of which — $2.256 million — was paid by UI ratepayers; and the Chief Executive Officer of Connecticut Natural Gas (CNG) and Southern Connecticut Gas Company (SCG), Robert Allessio, received total compensation of $869,817, of which $748,480 was paid by Connecticut ratepayers.

Ratepayers paid tens of millions of dollars more in compensation to several other high-ranking company officials of these same companies.

 “Ratepayers should be spared this outrageous burden when they are tightening financial belts and budgets, and struggling to make ends meet,” Mr Blumenthal said. “Even while United Illuminating sought to increase rates and reduce service, its chief executive officer enjoyed a compensation increase of more than half a million from last year. And while Northeast Utilities failed to provide any rate relief to consumers, its chief executive officer’s total compensation increased by nearly a million.

 “These compensation packages and pay increases — in some cases coupled with rate increase requests — are both an insult and injury to consumers. As I proposed this year — and I urge again now — utility companies should be barred from forcing consumers to pay executive compensation beyond a strictly limited amount, twice the governor’s salary. Had my proposal been implemented, consumers could have been spared paying several million dollars in executive compensation this year.

 “Allowing executive pay raises that benefit only shareholders and burden only ratepayers is bad policy that demands change. I will reinvigorate my fight for this cap on consumer-funded executive compensation, and continue to battle bad rate increases as we have successfully done several times this year — even winning rate decreases for CNG and SCG consumers.”

In other consumer news, Mr Blumenthal, on July 16, announced a $5.99 million multi-state agreement with Dish Network, LLC resolving allegations that it engaged in deceptive sales practices and harassing unwanted telemarketing calls.

The agreement involves 46 states altogether and provides $125,000 to Connecticut’s General Fund. Mr Blumenthal reached the agreement in coordination with Department of Consumer (DCP) Commissioner Jerry Farrell, Jr.

Connecticut and other states received thousands of consumer complaints against Dish Network, even after the company paid $5 million under a 2003 settlement involving consumer protection violations.

The Dish Network allegedly misled consumers about the level of programming offered; its terms of service and cancellation; limitations and conditions on rebates, credits, and discounts; and unapproved automatic charges to credit and debit cards. Dish Network also allegedly made unwanted telemarketing calls, sometimes violating federal and state do-not-call lists.

Under today’s agreement, Dish Network will provide clearer and conspicuous disclosures to consumers, restitution to certain consumers with unresolved complaints, and an internal do-not-call list to avoid unwanted telemarketing calls to consumers not covered by the federal and state lists.

“This agreement stops the false claims, fine print, and frustrating phone calls,” Mr Blumenthal said. “Reforms in business practices — even more important than the money — reflect thousands of Dish Network consumer complaints about unwanted calls, unapproved charges, and unsatisfactory service. Our coalition of states revealed a pattern of poor disclosure to consumers, and disregard for do-not-call lists.

“The Dish Network has cooperated with our multi-state coalition and recognized that its own success depends on respect for consumers — restitution for unexpected charges, clear disclosures about terms of service, and efforts to avoid unwanted telemarketing calls.

“Today’s agreement enhances our 2003 settlement with Dish Network, providing a stronger promise from the company and continued scrutiny. My office will closely monitor this agreement to ensure that it is honored and consumer complaints resolved.”

Dish Network will send claim forms to consumers with unresolved complaints (filed between Jan. 1, 2004 and today’s agreement), enabling eligible consumers to seek possible restitution.

The AG’s agreement also requires that Dish Network:

*Clearly disclose on a consumer’s first statement that if the price or any portion of the statement is not what the consumer agreed to pay, then the company will honor the price the consumer agreed to or allow the consumer to cancel the agreement without any penalties or fees.

*Obtain express authorization from consumers before enrolling them in any credit or debit auto-pay program.

*Not impose unapproved automatic charges or debits for penalties or cancellation fees without notice.

*Reasonably discipline any third-party marketer that fails to comply with its policies, including this agreement.

*Maintain a database of consumer complaints, including copies of correspondences, for at least three years and appoint one or more individuals responsible for resolving consumer complaints.

*Not advertise prices post-rebate, unless it clearly discloses the qualifications or limitations for obtaining the rebate, credit, or other discount.

*Promptly replace any equipment that ceases to operate (not resulting from consumer fault).