STORY CONTINUES BELOW THESE SALTWIRE VIDEOSBy Tim McLaughlin and Tom Hals
California utilities, which have also been blamed for deadly wildfires, have done so, but they are alone. “It’s a principle of human nature that people and businesses follow their incentives, so if we tie executive pay at many levels of the organization, not just the CEO, to safety and wildfire safety, then the organization will work harder to meet those goals,” said consultant Alison Silverstein, a former adviser to the U.S. Federal Energy Regulatory Commission. No cause has been identified.
Hard-hit PG&E has spent $39 billion over the past five years on improvements that include wildfire mitigation; linked its CEO pay to fire preparation; and has seen its share price soar nearly 40% in the past year from a low suffered in wake of utility-caused fires in California. “Hawaiian Electric focused on different issues other than fire safety and has lost almost $3 billion in market capitalization” since the Maui fire, said Michael Underhill, chief investment officer at Capital Innovations. “If you want certain behavior from utility management you need to incentivize those behaviors and get regulators to buy-in to allow a reasonable return on those investments, which is also good corporate governance,” he said.
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