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Unions and Deregulations: Some Lessons for Utilities

Fortnightly Magazine - September 1 1996

will view the growth of the nonunion segment of a company's business activities as a threat to their power, because the utility can better weather a strike if it receives revenue from nonunion affiliates. Unions will worry about future growth concentrating on unregulated business activities, while the number of employees in the regulated utility business remains static or declines. As demonstrated by CWA's efforts at NYNEX and AT&T, unions can be expected to pressure utilities for permission to organize the employees of new businesses, particularly if the union is losing members in the regulated portion of the business.

For example, in response to the proposed merger of Baltimore Gas and Electric Co. (BG&E) with the unionized Potomac Electric Power Co., IBEW recently announced its intent to organize employees at nonunion BG&E. Unions may also try to use their leverage at unionized utilities to obtain neutrality agreements that cover nonunion affiliates or even utility suppliers or contractors.

Increased organizing activity (em and the increased use of corporate campaigns and other nontraditional methods of pressuring employers (em would also be consistent with the initiatives recently proclaimed by AFL-CIO president John J. Sweeney. The broad-scale attacks on such companies as Eastern Air Lines, NYNEX, and Overnite stand as harbingers of the future shape of conflict.

As in other industries, the impact of deregulation on labor relations in the electric utility industry will evolve. Labor unions have already been through several deregulations and are developing strategic approaches to protect their interests in the utility industry. In planning its business strategies for the deregulated era, electric utility management must likewise develop a new strategic approach for addressing labor issues. t

Ronald Johnson is a partner in the Washington, DC, office of Akin, Gump, Strauss, Hauer & Feld, L.L.P., where he has served in both the Energy and the Labor and Employment Sections. The views expressed here are a product of the author's and the firm's experience in both areas of practice. Although this article focuses on electric utilities, many of the same issues will face gas and mixed gas/ electric utilities.

Merger Insurance for Employees

What's Good for Railroads ...

Unlike organized labor in other industries, railroad workers threatened by mergers have enjoyed a measure of security through labor protective conditions imposed by the Interstate Commerce Commission (ICC), now superseded by the Surface Transportation Board.

The protective conditions developed by the ICC require the merging railroads to give advance notice of proposed coordinations and to enter agreements with the unions that represent affected employees before concluding merger-related transactions. The ICC conditions also require the merged carrier to guarantee pay and fringe benefits for employees for up to six years after the employee is adversely affected by a merger-related transaction. Other benefits can include moving expenses, retraining, and separation allowances. While costly, these protective conditions have taken some of the political heat off rail unions to otherwise oppose mergers or related restructuring.

Why are these protections relevant? Today, the International Brotherhood of Electrical Workers is suggesting that regulatory agencies should address labor protection in some similar fashion in