Edison’s Contract Diversity Continues Slide

By Published On: November 6, 2009

All but one of the California’s investor-owned utilities increased their procurement of goods, services, and fuel from minority, women, and disabled veteran-owned businesses last year. However, Southern California Edison had one of the worst diversity records in the 2007-2008 period in contracting with non-traditional firms, according to the California Public Utilities Commission’s annual diversity procurement report. Only 13.5 percent of its contract dollars went to minority firms, which is below the commission’s goal of 15 percent. The numbers continued a five-year trend of decline. “Edison’s steep and continuing slide is especially disconcerting when compared to the rising performance of its industry peers,” said Samuel Kang of the Greenlining Institute. “Fortunately, the emerging areas of renewable energy and energy efficiency will present ample opportunity for Edison to improve.” John Fielder, Edison president, blamed the matter on accounting errors in diversity numbers, which were corrected last year. “The actual dollars (spent) went up in 2008, but the percentage went down,” he said. The CPUC set a 21.5 percent goal for contract diversity for 2008, with 15 percent of that number targeted for minority-owned businesses; 5 percent women-owned enterprises; and the remainder disabled veteran-owned entities. “This is a changing nation,” Mike Peevey, CPUC chair, said during a November 2 public hearing examining the state’s regulated utilities’ diversity programs. “Those who don’t understand it and don’t get with it are going to be left in the dust,” he added. Combined, Pacific Gas & Electric, Edison, San Diego Gas & Electric and SoCal Gas procurement from diverse companies increased from 14 percent in 2004 to over 16 percent last year. Investor-owned utilities have been long recognized for their commitment to diversity in their procurement and hiring practices. Nearly 20.5 percent of contract dollars spent by Sempra Energy, parent company of SDG&E and SoCal Gas, went to women, minority and disabled veteran-owned business enterprises between 2007 and 2008. PG&E saw 15.7 percent of its contract dollars go to minority-owned businesses last year, which was just above the CPUC’s 15 percent goal. PG&E president Chris Johns said that regulated utilities need to encourage diversity not simply because of pressure by government. “It has to be something that moves from our heads,” he said, “to our hearts.” The Greenlining Institute urged the CPUC to raise the goal for total minority, women, and disabled veteran business spending to 25 percent next year from the current 21.5 percent. Various suppliers at the diversity hearing this week suggested strategies for reaching set diversity goals. “We want to focus on supply and diversity, but also on supply and development,” said Len Canty, chair of the Black Economic Council. He said a set up like the farm system in professional baseball was needed, where ‘major league’ regulated utility and telecom companies would spend more time developing minority, disabled veteran, and women-owned businesses into vendors. Some speakers said that outreach is fine, but doesn’t amount to much if the result isn’t an increased number of contracts. Edison’s Fielder backed implementing a farm system/mentoring program for minority suppliers. He added that Edison would increase its percentage of diverse suppliers by 25 percent this year. This was the seventh year of the CPUC diversity hearing. There were two panel discussions: one featuring nine representatives from women and minority-owned businesses; and another with nine chief executive officers or other high-ranking representatives representing most of the state’s major utilities.

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