Utilities bonuses: down, but still $10M

0 Comments | Gazette, The (Colorado Springs), Apr 14, 2007 | by PAM ZUBECK THE GAZETTE

Colorado Springs Utilities on Friday paid $10.3 million in employee bonuses for 2006 in a program that rewarded all but 3.7 percent of the work force.

The total was $2.3 million less than last year's payout, because the department wasn't as prosperous as it was the previous year, Mayor Lionel Rivera said.

He said the utility exceeded its budgeted cash net income by only 1.4 percent in 2006, compared with more than 20 percent in 2005.

Several factors led to the flagging performance.

"We had a very wet summer and so we did not bring in as much income for irrigation as we did the year before, and that reduces income," Rivera said. He also noted customers conserved energy, driving power sales down.

Rivera expects next year's bonus payout, for 2007, to be even lower, because of significant program changes.

This year, the average bonus -- $5,536 -- was $936 less than in 2006; all but 72 employees were paid. Only 30 didn't get rewards last year.

The highest sum went to CEO Jerry Forte at $27,810, which is 10.3 percent of his $270,000 annual pay, the lowest percentage of the top 10 bonus amounts paid.

Rivera noted Forte's bonus is tied to his 2006 annual evaluation, on which he scored 3.66 on a five-point scale, with 3 being "meets expectations," 4 being "exceeds expectations" and 5 meaning "outstanding."

Rivera said Forte's evaluation standards are more rigorous than a 3-point scale applied to other employees.

"That's why we pretty much directed Mr. Forte to look at how we award pay for performance to the rest of the work force," he said.

Starting with the 2007 year for which bonuses will be paid in 2008, all employees will be rated on the five-point scale.

Another change: Workers no longer will be paid the bonus based on the top pay in their salary range.

Instead, like Forte, they will be given performance pay based on their actual base pay, with hourly workers paid up to 11 percent, salaried workers up to 14 percent and managers up to 17 percent.

Those and other changes are forecast to reduce the payout by $3.7 million next year.

The program started in the late 1990s when Utilities reduced pay from the 75th percentile of comparable utility companies to the 60th, and added performance pay.

In 2003, the program was adjusted to factor in the department's overall performance, which in recent years has boosted payouts by millions of dollars. Last year, the program cost ratepayers $12.6 million, a record high. That triggered the changes.

Bonuses are either modest or nonexistent in other city agencies, making Utilities the most lucrative city bonus program, even after the following changes kick in:

Employees will be rated on a five-point scale instead of three. To be eligible, employees must be rated at one of the upper three levels. Savings: $136,000.

Payouts will be based on rate of pay rather than top pay for a position. Savings: $1 million.

Utilities' overall performance factor will be eliminated. Savings: $2.5 million.

Employees hired after July 1 will not be eligible for the payout for that year. Savings: $80,000.

CONTACT THE WRITER: 636-0238 or pam.zubeck@gazette.com