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Unions and Deregulations: Some Lessons for Utilities

Fortnightly Magazine - September 1 1996

Organizing Against Deregulation

Organized labor does not support deregulation in the utility industry. The electric utility unions, principally IBEW, have appeared before state legislatures and federal and state agencies opposing deregulatory initiatives or cautioning against potential adverse side effects. Though obviously concerned about job losses among its membership, the IBEW deemphasizes these concerns, focusing instead on issues with broader public appeal (em the safety and reliability of electricity service, rates, and environmental issues. The IBEW also joins in coalitions with nonlabor groups, such as consumer and environmental groups, to promote these broader themes.

Comments the IBEW recently filed with the Federal Energy Regulatory Commission (FERC) on that agency's reexamination of its merger policy in Docket No. RM96-6-000 prove that the union realizes the inevitability of some deregulation and increased competition.6 So, rather than oppose deregulation outright, the IBEW urges the FERC to adopt a more restrictive merger policy that addresses a broader range of considerations, including assurances that the merged company "will continue to provide reliable service" and take into account "the social stability of the communities in which the companies operate."7 The IBEW also urges the FERC to critically examine claimed efficiencies to determine whether they are "ephemeral." It specifically recommends that the FERC require the merged company to submit inspection and maintenance plans and require periodic compliance filings to make sure that the plans are being adhered to. Finally, the IBEW recommends that applicants for merger approval be required to submit "economic impact statements" detailing how the planned merger will affect employees (em particularly with respect to job losses and relocations (em and the steps that the applicants will take to mitigate those impacts, such as retraining or relocation programs and severance packages. The union recommends that merger applicants "account for the costs of those programs to their own balance sheets." The IBEW appears to suggest that the expenses involved in addressing such employee impacts be treated as stranded costs to be borne exclusively by utility shareholders.

Because many utility actions will still require approval from the FERC or state utility commissions, unions will seek to influence the political process. Unions may also intervene in other regulatory proceedings, such as rate cases. Their participation and stances in the regulatory process can enhance their leverage in unrelated areas, such as bargaining for a new contract. For example, since mergers require various regulatory approvals, unions may intervene to oppose, or support (but at a price), the merger or raise labor-protection issues. The IBEW has, in fact, suggested that labor-protective conditions like those required in railroad mergers should be considered for utility workers who are adversely affected by mergers or restructurings:

"[A] portion of any monies received by utilities for stranded assets should be required to be used for the compensation, restructuring of jobs, and retraining or reemployment measures for stranded workers who have based important personal and career decisions on a higher level of industry stability. In sum, considerations must be given equally to workers as well as investors who made decisions based on reasonable expectations governed by requirements for a more