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The Union Label: Electric Restructuring's Hidden Side

Fortnightly Magazine - September 15 1997

big severance packages," Wood says. "We're trying to find a way to keep jobs."

Looking at the country, labor is not looking for a one-size-fits-all solution, he says. "There are some states that are low-cost producer states where we really don't anticipate any job loss.

"We don't view this worker protection thing in isolation with the overall policy issue of maintaining a reliable and affordable utility system," he adds. "We think they're really intimately tied to each other. Our goal is not to get all of our members out on early retirement and severances. It's to keep the industry going and to keep our people employed."

But beyond the two years of legislated protection in California, that may prove difficult.

In the agreement negotiated between PG&E and IBEW Local 1245, which represents about 750 PG&E employees, the issue of successor clauses arose. Successor clauses (em where a new owner would have to honor current labor agreements (em form a key part of the worker protection debate across the country.

It's an issue that also has emerged in Illinois and New York (see below).

Jack McNally, business manager for IBEW Local 1245, says the clause negotiated could have been stronger. Although the new owner will have to recognize the collective bargaining unit, the union will have to bargain for a new contract.

McNally admits the costs of worker protections are hard to predict, because he doesn't know how many employees will take the packages. He estimates as much as $200,000 per employee, or $40 million if 200 employees took the package.

Wood says the amount isn't worth worrying about, compared to overall stranded costs. "In California, the worker protections are chump change in the entire equation," he says. "At most, we're talking millions compared to billions."

The California union locals discovered legislators have been sympathetic to their perspective.

But other commissions and legislatures may want to wash their hands when it comes to workers hurt by power plant transfers or divesture or other restructuring fallout. Officials may want to leave worker perplexities to utilities and unions. "Do the Pontius Pilot" is the phrase used by one commission official.

Illinois. That reluctance to get involved may explain why, on March 31, the Illinois Commerce Commission approved the sale of Commonwealth Edison Co.'s Kincaid Generating Station without considering the future of the 155 bargaining-unit employees. See, Re Commonwealth Edison Co., Docket Nos. 96-0245, 96-0248, March 31, 1997, 1997 Ill.PUC LEXIS 174.

According to David Farrell, ICC representative, the commission had decided the labor issue was none of its business, that its discussion was limited to the plant sale and related ratepayer benefits. Under state statute, there's not much the commission can do about workers anyway, he says. Reviewing the docket, "it simply says that IBEW was first denied entry into the case," Farrell says. "They took it up with the commission. The commission said you can come in to the case and accept the record as it is right now, which was somewhat late in the game."

Earlier, IBEW Local 15 had filed suit in