H.R. 6590: No Bonuses for Utility Executives Act

This bill, known as the No Bonuses for Utility Executives Act, is designed to regulate the payment of bonuses to executives of certain electric utilities. Here is a breakdown of what the bill would do:

1. Introduction of Bonus Limitations

Starting from January 1, 2025, the bill states that a "covered utility" can only pay bonuses to its executives under specific conditions:

• Bonuses can only be paid if the average percentage increase in customer rates does not exceed the percentage increase in the Consumer Price Index for the previous fiscal year. This effectively links bonus payments to how well the utility manages its customer rates in relation to inflation.
• The total bonus amount cannot exceed 25% of the median annual compensation for non-executive employees of the utility for that fiscal year.

2. Oversight and Reporting Requirements

The bill requires covered utilities to provide certain information to the Federal Energy Regulatory Commission (FERC) regarding their financial practices:

• Utilities must report the average percentage increase in customer rates and the median salary of non-executive employees to FERC no later than one week after the end of their fiscal year.
• FERC will then determine within one month whether the utility is allowed to pay out bonuses and what the maximum allowable bonus amount is.

3. Compliance and Penalties

To ensure compliance with the bill:

• The bill mandates joint oversight by FERC and the Commissioner of Internal Revenue to monitor whether utilities are adhering to the bonus limitations.
• If a utility pays an unauthorized bonus, that bonus must be forfeited to the United States. Details must be provided to the IRS, and the amount forfeited will then be redistributed to customers of the utility as a payment.

4. Definitions

The bill also includes specific definitions for key terms used within the legislation:

• Covered utility: This term refers to state-regulated electric utilities that are not completely owned by U.S. persons.
• Customer rates: This refers to the charges that utilities apply for providing electric energy and, where applicable, natural gas.
• Executive: The bill defines an executive as a C-suite member, such as a CEO, CFO, COO, and others holding similar high-level roles.
• United States person: This includes individuals who are citizens or lawful permanent residents of the U.S. as well as entities organized under U.S. laws.

Relevant Companies

• DUK (Duke Energy): As one of the largest electric utilities in the U.S., Duke Energy would be significantly impacted by this bill, as it would have to limit executive bonuses based on customer rate increases, potentially affecting its compensation strategies.
• NEE (NextEra Energy): This company, known for its energy generation and utility services, would need to adhere to the regulations set forth in this bill concerning executive compensation, particularly regarding customer rates.
• EXC (Exelon Corporation): As a major player in the utility sector, Exelon would also have to comply with the stipulated limitations on executive bonuses, potentially reshaping its executive compensation framework.