Big Energy CEO rewarded with $3 million bonus after historic California gas leak devastates community
Debra L. Reed (Sempra Energy)

Despite a massive environmental catastrophe in California, the CEO of an energy company does not appear to be personally facing any imminent financial hit.


In the wake of the enormous gas leak at Southern California Gas Company's Aliso Canyon facility, located near the upscale Los Angeles neighborhood of Porter Ranch, the head of parent company Sempra is still receiving a massive bonus and only a minimal pay cut.

As reported by Los Angeles Times columnist Michael Hiltzik, Sempra's board cut CEO Debra Reed's pay by $130,000 — while awarding her a bonus of $3.17 million: "It brings her total compensation for 2015 to $16.1 million, meaning that her executive penalty for presiding over an elemental corporate fiasco comes to about eight tenths of 1% of her pay."

The leak was discovered on Oct. 23, and not successfully capped until Feb. 18. It also followed years of known issues with deterioration of the company's infrastructure. The company had also requested rate hikes in order to finance comprehensive inspections, though the position of the state Public Utilities Commission was that the company had a previous obligation to make those repairs in the first place.

The disaster resulted in the release of 100,000 tons of methane, making it the largest methane leak in U.S. history. (Also note that from an environmental standpoint, methane has a greenhouse effect and impact on climate that is many times greater than an equal amount of carbon dioxide.)

SoCalGas could now face extensive fines, penalties, civil damages, and other punitive actions.

"The health consequences for thousands of residents are unclear. Legally speaking, the leak is a black hole that could suck Reed's operational record into the void," writes Hiltzik.

"The position of the Sempra board of directors, on the other hand, is that the Porter Ranch disaster is a 'safety [and] customer satisfaction' issue warranting minimal penalties for the executives who presided over it. The board's discussion of its compensation policies is a pure distillation of the reality that corporate executives can collect huge raises despite underperformance in key areas."