Whoa! The SMUD CEO's Salary is Over $900,000 Annually
The U.S. average retail price per kilowatthour is 12.68 cents; California's price per kilowatt hour is 27.04 cents
By Katy Grimes, January 6, 2026 3:25 am
06 Jan 2026 3:25 am
Sacramento Municipal Utility District CEO and General Manager Paul Lau is paid $936,617 in total wages, and $45,374 in retirement and health benefits, totaling $981,991 annually. Lau is paid nearly $1 million annually to manage 2,400 employees, and revenue of $2 billion.
El Dorado County Auditor-Controller Joe Harn brought this to the attention of the Globe because he's "concerned that if situations like this continue, it will further erode the public support in our public employee retirement system and continue to erode the financial health of our public employees retirement system."
According to his bio, Lau is a 41-year SMUD veteran, and has held several other executive leadership positions, including Assistant General Manager of Power Supply & Grid Operations and Assistant General Manager of Customer, Distribution & Technology, starting with a SMUD internship in 1982.
"As CEO, he leads the sixth largest community-owned electric utility in the nation, serving a population of 1.5 million residents and managing a $2.1 billion budget."
Lau's resume is impressive, as is his 41-year tenure with SMUD. "A registered professional electrical engineer in the state of California, Lau received his bachelor's degree in electrical power engineering from California State University, Sacramento."
But paying a public employee nearly $1 million annually is an abuse of taxpayer funding.
The Globe contacted SMUD Board President David Tamayo about the CEO/GM salary. I identified myself as a credentialed member of the Capitol media and asked for information:
Hello SMUD Director and Board President Tamayo,
I have been reviewing government salaries and see that the SMUD GM makes over $900,000 per year.
Can you direct me to the public meeting where this was discussed and approved? Particularly since SMUD voted in tiered pricing, punishing ratepayers for using electricity at peak times.
The Globe was referring to SMUD's tiered rates:
In May 2019, we reported "Sacramento Utility Penalizing Working Families With Tiered Rates":
"The Sacramento Municipal Utility District announced last year Sacramento electricity ratepayers would be under a new rate system that charges residential users higher rates between 5:00 p.m. and 8:00 p.m. -- just in time for everyone to arrive home after work and begin evening family rituals: homework on computers, dinner, television, stereo, baths, laundry, and dishwasher after dinner."
In June 2019, we reported "SMUD Utility 'Summer Rates' Surge To Accommodate Increasing Renewable Cost Subsidies":
On June 1st, the Sacramento Municipal Utility District began charging Sacramento electricity users and ratepayers a new rate system that charges residential users higher rates between 5:00 p.m. and 8:00 p.m... much higher rates, just in time to get home from work, feed the family, do a couple loads of laundry, bathe the kiddies, maybe vacuum a room or two, and watch a little Netflix.
These new summer "peak" rates appear to be about 40% - 200% higher, looking at the bill.
SMUD says the goal is to "reduce energy usage," but they don't say why. Instead they make suggestions like "start or program your dishwasher, washing machine or clothes dryer to run and finish before 5 p.m. or to start after 8 p.m., or schedule these chores for any time on the weekend when all hours are at the lowest off-peak price."
"A SMUD analysis suggests that 57 percent of customers would experience a monthly bill increase if they do not change their usage patterns," the Sacramento Bee reported. "A statewide customer advocacy group says switching to time-based rates does not necessarily prompt lower usage or energy conservation, and it could penalize some families who are not in a position to change their use hours."
SMUD President Tamayo responded to my email request for information:
Hello Ms. Grimes, Discussion of SMUD's CEO's performance and salary were conducted in closed session, (pursuant to section 54957 of the Government Code) on October 16, 2025. We did not take action at that meeting, so there was no public report out at that time. There is no video or audio recording of our closed session. The final approval of his salary for 2026 was conducted in public session at our last Board meeting on December 11, 2025. There were a number of comments made by Board members in support of a 3.5% merit raise (subsequently approved) during that meeting and recognizing exemplary performance of our CEO. The public had an opportunity at that meeting to speak on that item. You can find notice of both meetings, as well as video of the Dec 11 meeting, by visiting SMUD.org and search "Board". Look for the links to the meeting records. I can't reveal specifics about our closed session discussions, but I will tell you why I support our CEO's salary. First of all, it is based on his performance. SMUD has the second or third lowest rates among all utilities in the state, and over 50% lower than PGE (Turlock and Modesto may be lower right now). That saves our customers on aggregate about $1.9 billion dollars, compared to what it would cost to provide electricity at PG&E's rates. That's money that stays in the community rather than going to shareholders. We have consistently high customer satisfaction ratings. We are recognized as a regional leader in supporting workforce development, economic development, and investing in disadvantaged communities to ensure they are not left behind in the transition to clean energy. We are a national leader in reducing carbon emissions from our electricity sources, improving energy efficiency, and converting buildings and transportation from fossil fuel dependency to clean electricity (zero carbon electricity by 2030). And our CEO has built and maintained a culture in our organization that elicits excellent performance by our team of 2300 employees that is very much appreciated by the public. By far, the most common comment that I hear from the community is "I love SMUD" (really!) which is a remarkable testament to our organization, and our CEO. Second, we have to compete for leadership talent with other large public power agencies, as well as private sector electric utilities. Our CEO's salary is above the median, but not at the top level of CEO salaries of large public power agencies. PG&E's CEO makes in excess of $50M a year. Fortunately, our CEO is a dedicated public servant who is not solely motivated by his salary level, but we do have to provide a fair level of compensation for his services. Third, our CEO's salary constitutes only about 0.0005 of our overall budget of over $2 billion. I recognize that our CEO's salary of over $1 million dollars is a large number. However, in light of the factors cited above, especially focusing on the benefit to our customers and the community, I also believe it is fair, and necessary to maintain the high level of organizational performance that has been achieved under our CEO's leadership. I will end by addressing your characterization of our time of day (not "tiered") rates as "punishment", which I believe is incorrect. Time of day rates were structured to more closely match our rates with our time specific costs to acquire electricity, as well as to incentivize our customers to shift their use of electricity to times when it costs SMUD less to acquire it, and when it is less environmentally impactful. They were also structured so that overall, we remained revenue neutral on an annual basis. Many of our customers were able to SAVE money by doing so. SMUD's peak electricity use during critical summer heat days is now shifted to earlier than the statewide peak, which relieves stress on our local grid (increasing reliability), as well as the state's grid, and even allows us to benefit all of our ratepayers in circumstances when we are able to sell excess electricity to other California utilities during the peak that we avoid. We also provide information and technical assistance, as well as energy efficiency tools, to assist our customers to reduce their energy use, even for those times when they can't completely avoid using electricity during peak hours. Absent the price signal provided by time of day rates, few customers would shift their uses, resulting in overall higher costs to our customers and increased grid stress, as well as more environmental impacts. Dave Tamayo
SMUD Board President, and Ward 6 representative
As for the CEO/GM's salary being fair, "especially focusing on the benefit to our customers and the community," SMUD Board President Tamayo could use a gentle reminder.
The tiered rate goal never actually appeared to be for customers to use less power; "The utility provider said the rate increases will be used for upgrades for a modern energy grid and to meet customer needs," according to the Sacramento Bee. "The increases also will go to improve technology that SMUD customers use to monitor and manage their energy use."
Public comments made during the 2017 proposal process, published on SMUD's website, were all about the same. On time-of-day rates, a customer said: "I can hardly wait to see how I'll be gouged by my utility provider so that I can be comfortable in my own home because I need to use the electricity when I need to use it. I suppose I'll have to get used to being uncomfortable."
We reported that the February 2019 data of electricity rates in the country show the average U.S. price of 12.70 cents per kilowatt hour. California is 19.82, one of the highest in the country, despite the natural gas and petroleum resources indigenous to the state, but heavily regulated and limited by the Legislature.
Today, U.S. Energy Information Administration reports that the U.S. average retail price per kilowatthour is 12.68 cents (Release Date: November 10, 2025). In California the retail price per kilowatt hour is 27.04 cents.
And the SMUD CEO is paid nearly $1 million annually... it's not clear how he is "focusing on the benefit to our customers and the community" when California is paying some of the highest electricity rates in the country.
The SMUD Board President says the CEO/GM's $1M salary "is based on his performance. SMUD has the second or third lowest rates among all utilities in the state, and over 50% lower than PGE."
Given that California's electricity providers have a history of hiking the rates, SMUD hovers 5% behind PG&E and claims it is "performance based." Right.
Anecdotally, my SMUD bill is up 38% over this time last year, at a home I use 50% of the time. It's not clear how I am up 379 kWh in a year. And the cost does not add up... except for these 2024-2025 rate changes:
The rate increase proposal includes the following rate increases for all customers:
2.75% effective Jan. 1, 2024 2.75% effective May 1, 2024 2.75% effective Jan. 1, 2025 2.75% effective May 1, 2025
For the average residential customer, the rate increases would add:
$3.61 per month beginning Jan. 1, 2024 $3.72 per month beginning May 1, 2024 $3.81 per month beginning Jan. 1, 2025 $3.92 per month beginning May 1, 2025
From my most recent SMUD electricity bill:
Author Recent Posts Katy GrimesKaty Grimes, the Editor in Chief of the California Globe, is a long-time Investigative Journalist covering the California State Capitol, the co-author of California's War Against Donald Trump: Who Wins? Who Loses? and a contributor to "Taxifornia 2016."
A California native and Navy mom, Katy lives in Sacramento, CA. Latest posts by Katy Grimes (see all) Whoa! The SMUD CEO's Salary is Over $900,000 Annually - January 6, 2026 The Gavin Newsom Effect: More People are Moving from California U-Haul Reports - Again - January 5, 2026 Gubernatorial and Controller Candidates Request Federal Investigation into California's Widespread Fraud, Waste, and Mismanagement - January 5, 2026 Spread the news: RELATED ARTICLES SMUD Utility 'Summer Rates' Surge To Accommodate Increasing Renewable Cost Subsidies June 25, 2019 Sacramento Utility Penalizing Working Families With Tiered Rates May 24, 2019 Tax Fighter Warns 'Big Problems for California's Income-Based Utility Rates' April 24, 2023
