CalPERS Turns Spotlight On Energy Company Practices

The California Public Employees’ Retirement System (CalPERS) has appointed a special delegation to meet with energy firms amid concern that alleged profiteering by some of the companies could hurt the long-term value of its investments.

The fund’s $5 billion in total energy-sector investments, including stocks, bonds and private equity, represented around 3% of its $158 billion in total assets as of May 31, according to Reuters, citing CalPERS.

Delegation Message

The delegation will be headed by San Francisco Mayor Willie Brown, and will reportedly carry a message that profit-taking could prompt a backlash by regulators or the public that would hurt the companies’ future earnings.

Some CalPERS’ board members said the high profits collected by energy firms during California’s power crisis could trigger a push back to regulation ? a move that could darken the long-term value of the stocks. The delegation will also look at the compensation packages of top energy fund executives.

“The marketplace has been deeply concerned about the behavior of these companies and it has led to a downturn in the price of some of these companies’ stock,’ said California Treasurer Phil Angelides, also a CalPERS board member. “We need to insist they follow the law and we need to be actively engaged with these companies.’

California’s energy crisis stems from a 1996 deregulation plan that allowed wholesale prices to soar but capped retail rates.

– Nevin Adams                  editors@plansponsor.com