Limitation on bonuses for executives of certain electric utilities

(a)

Definitions

In this section:(1)

Commission

The term Commission means the Federal Energy Regulatory Commission.(2)

Covered utility

The term covered utility has the meaning given the term State regulated electric utility in section 3 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602).(3)

Customer rates

The term customer rates means the rates and charges made, demanded, or received by a covered utility for or in connection with the sale of electric energy and, if applicable, natural gas.(4)

Executive

The term executive means a C-suite executive, including a chief executive officer, chief operating officer, chief financial officer, chief information officer, chief technology officer, chief marketing officer, chief human resources officer, chief people officer, and any person that the Commission determines holds a title substantially similar to any such title.(5)

Fiscal year

The term fiscal year, with respect to a covered utility, means the fiscal year of that covered utility.(6)

Secretary

The term Secretary means the Secretary of the Treasury, acting through the Bureau of the Fiscal Service.(b)

Authorized bonuses

(1)

In general

Beginning January 1, 2027, a covered utility may, subject to paragraph (2), pay a bonus to an executive of the covered utility for a fiscal year only if the average percentage increase in customer rates of the covered utility for that fiscal year does not exceed any percentage increase in the Consumer Price Index for All Urban Consumers (CPI–U) published by the Bureau of Labor Statistics of the Department of Labor for the 12-month period ending on the last day of that fiscal year.(2)

Limitation

A bonus paid pursuant to paragraph (1) may not exceed an amount equal to 25 percent of the median annual compensation, for the applicable fiscal year, of employees of the covered utility who are not executives.(3)

Prohibition

A covered utility may not pay a bonus to an executive of the covered utility for a fiscal year before the Commission has made a determination under subsection (c)(2) with respect to that covered utility for that fiscal year.(c)

Determination of bonuses allowed

(1)

Notification

Not later than 7 days after the last day of a fiscal year, a covered utility shall provide to the Commission information on—(A)the average percentage increase in customer rates of the covered utility for that fiscal year; and(B)the median annual compensation, for that fiscal year, of employees of the covered utility who are not executives.(2)

Determination

Not later than 30 days after the last day of a fiscal year for which the Commission receives information from a covered utility under paragraph (1), the Commission shall determine—(A)whether the covered utility may pay a bonus pursuant to subsection (b)(1); and(B)the maximum allowable amount of that bonus under subsection (b)(2).(d)

Oversight of bonuses

(1)

Notification

Not later than 7 days after paying a bonus to an executive, a covered utility shall provide to the Commission information on—(A)the amount of the bonus; and(B)the fiscal year for which the bonus was paid.(2)

Determination of compliance

Not later than 30 days after receiving a notification under paragraph (1), the Commission shall determine whether the covered utility submitting the notification is in compliance with subsection (b).(3)

Penalties

(A)

Forfeiture

A bonus shall be forfeited to the United States if—(i)the bonus was paid in violation of any provision of subsection (b);(ii)the covered utility paying the bonus failed to provide a notification under paragraph (1) by the date described in that paragraph with respect to the bonus; or(iii)the covered utility paying the bonus made a materially false or misleading representation in a notification provided under paragraph (1) or subsection (c)(1) with respect to the bonus or any other matter described in paragraph (1) or subsection (c)(1) for the applicable fiscal year.(B)

Collection of forfeited bonus

(i)

In general

To collect a bonus forfeited under subparagraph (A), the Commission shall impose a civil penalty in the amount of the bonus on the covered utility that paid the bonus.(ii)

Transfer to the Secretary

Amounts collected by the Commission under clause (i) shall be transferred to the Secretary for purposes of carrying out subparagraph (C).(iii)

Prohibition

A covered utility may not recover through customer rates the cost of a civil penalty imposed under this subparagraph.(C)

Ratepayer checks

For any bonus described in subparagraph (A) that is collected pursuant to subparagraph (B)—(i)the applicable covered utility shall provide any information to the Commission or the Secretary that the Commission or the Secretary, as applicable, determines to be necessary to carry out clause (ii); and(ii)the Secretary shall issue to each customer of that covered utility a payment in an amount equal to the quotient obtained by dividing—(I)the amount forfeited under subparagraph (A) and collected under subparagraph (B); by(II)the number of customers of the covered utility.