The Joint Subcommittee created by Senate Joint Resolution 91 to study electric utility restructuring appointed a Consumer, Environment and Education Task Force. Co-chaired by Delegates Plum and Jones, the Task Force also included Senator Norment and Delegates Kilgore and Parrish. This Task Force addressed several issues related to restructuring, including worker protection. The Drafting Group, at its December 29, 1998 meeting, recommended further study of worker protection issues by the Legislative Transition Task Force. The areas to be studied by the 1999 Task Force are outlined in § 56-595 of the Virginia Electric Utility Restructuring Act.
The International Brotherhood of Electrical Workers (IBEW) appeared several times before the joint subcommittee and the Consumer, Environment and Education Task Force to express concerns about restructuring’s potential impact on electric utility workers. The IBEW’s key concerns were job retention for current workers and transition assistance for workers who are displaced due to restructuring.
The IBEW recommended statutory protections for utility workers, to include (i) minimum staffing levels to ensure reliability, (ii) continuing utility worker employment at generation units or stations, (iii) protecting generation unit employees’ wages and terms and conditions of employment, (iv) worker qualifications for purposes of quality, safety and reliability, (v) mandating quality, safety and reliability standards for new market entrants, and (vi) mandatory training and skill standards for all electrical workers responsible for systems and equipment after restructuring.
The consensus group noted that a well-trained and highly skilled workforce is essential to system reliability in a competitive market for electricity. The group said, however, that programs offering education, retraining and outplacement services should be established to assist electric utility employees directly affected by the implementation of competition in the generation and supply of electric energy.
American Electric Power and Allegheny Power joined Virginia’s cooperatives and Virginia Power in supporting downsizing-related needs through a nonbypassable wires charge, e.g., covering such costs as severance pay, outplacement services, and retraining. However, AEP and Allegheny Power did not support the statutory protections for electric utility workers proposed by the IBEW. The utilities also believed that electric utility workers assigned to any incumbent utilities’ generation assets sold in restructuring-related sales, should receive no new statutory protections insofar as job protections or wage and benefits guarantees.
Virginia’s utilities suggested that reliability is a responsibility all energy suppliers currently have and will have in the future, and that minimum staffing should not be mandated. They therefore did not support any minimum plant or station staffing level requirement.
The utilities emphasized that new market entrants would and should be subject to current state, federal and industry requirements governing safety and reliability. These include standards imposed by the National Electric Safety Code, the North American Reliability Council and Regional Reliability Council rules, and utility interconnection requirements. The utilities also emphasized that utility workers—employed by new entrants and incumbents alike—should continue to be trained in accordance with existing utility practices and standards, and in conformity with requirements imposed by applicable state and federal law. Any new standards generated by restructuring, they said, should be applicable to all.
States adopting restructuring laws have considered a number of issues relating to the protection of electric utility workers who may be displaced with the implementation of competition. Due to a reduction in workforce which has already taken place in many states, and is expected to continue as competition becomes imminent, state legislatures have provided for some measure of protection for displaced electric utility workers in their restructuring legislation. These protective measures include requiring utilities to provide retraining of employees for different jobs, including paying for college-level education. Severance and reemployment packages are also included in these requirements, as well as continuation of employees’ licenses and health insurance benefits.
A number of states require utilities applying for certification with the appropriate regulatory body to provide evidence of the applicant’s qualification to perform, including certification of the number and training levels of its employees. This is required not only to ensure adequate staffing levels for protection of employee jobs, but also to protect service reliability and workplace safety.
Many states have addressed employee retention in the event of a merger or transfer of ownership in a utility. Some states require the purchasing entity to retain the selling entity’s employees for a period of months under the same terms and conditions of employment. Others merely require the purchasing entity to offer the selling entity’s employees a first right of refusal for positions with the new entity.
In one state, Massachusetts, study commissions examining at this issue are required to have two members appointed at the recommendation of the local AFL-CIO. Most states do provide an ending date for transition worker protection costs. Portions of state restructuring statutes addressing worker protection are summarized in the attached Exhibit A.
Arizona
Under Arizona law, companies applying for registration as Electric Service Providers (ESPs) must provide a list of key personnel capable of handling the duties of the company and a list of each person’s qualifications to handle such duties. Additionally, the Arizona Corporation Commission has established safety and technical skills standards for employees of Metering Service Providers (MSPs) and skills standards as well as certification requirements for Meter-Reading Service Providers (MRSPs).
Arkansas
Arkansas legislation does not provide for the recovery of transition costs related to employees. Legislation specifically prohibits the use of early retirement or severance programs in the transition costs to be recovered by electric utilities.
California
California law allows the recovery of reasonable employee-related transition costs incurred and projected for severance, retraining, early retirement, outplacement and related expenses for utility personnel directly affected by electric industry restructuring. In any proceeding for the sale of an electric generating facility, the Commission shall require the selling utility to contract with the purchaser for the selling utility, an affiliate or a successor corporation to operate and maintain the facility for a minimum of two years. Companies who apply for registration as Electric Service Providers (ESPs) must provide a list of key personnel capable of handling the duties of the company and a list of each person’s qualifications to handle such duties.
Connecticut
Connecticut restructuring regulations imposes restrictions on the sharing or transfer of employees between electric distribution facilities and their generation entities or affiliates. A system benefits charge shall be imposed to fund programs for various restructuring issues, including displaced worker protection costs. "Displaced worker protection costs" means the reasonable costs incurred, prior to January 1, 2006, by an electric company or a generation entity or affiliate arising from the dislocation of any non-supervisory employee, provided such dislocation is a result of restructuring of the electric generation market and such dislocation occurs on or after July 1, 1998. Such costs must result from either the execution of agreements reached through collective bargaining for union employees or from the company's programs and policies for nonunion employees. "Displaced worker protection costs" includes costs incurred or projected for severance, retraining, early retirement, outplacement and related expenses. Electric utilities shall also receive a tax credit of one thousand five hundred dollars with respect to each displaced worker hired by the utility and shall be allowed in the income year in which such displaced worker first completes six full months of full-time employment with the taxpayer.
Illinois
In applying for certification as an alternative retail electric supplier, the supplier must certify that its employees have the requisite skill and knowledge to adequately complete the work. The impact of workforce reductions due to restructuring shall be mitigated to the extent practicable through such means as offers of voluntary severance, retraining, early retirement, outplacement and related benefits. Therefore, before any such reduction in the workforce during the transition period, an electric utility shall present to its employees or their representatives a workforce reduction plan outlining the means by which the electric utility intends to mitigate the impact of such workforce reduction on its employees.
In the event of a transfer of ownership to a subsidiary or third party during the mandatory transition period of one or more Illinois business units of an electric utility, the utility's contract and/or agreements with the acquiring entity shall require that the entity hire a sufficient number of non-supervisory employees to operate and maintain the unit by initially making offers of employment to the non-supervisory workforce of the electric utility's business unit at no less than the wage rates, and substantially equivalent terms and conditions of employment that are in effect at the time of transfer. This shall continue for at least 30 months from the time of said transfer of ownership unless the parties mutually agree to different terms and conditions of employment within that 30-month period. The utility shall offer a transition plan to those employees who are not offered jobs by the acquiring entity.
Maine
Prior to the beginning of retail access, each investor-owned electric utility shall prepare a plan for providing transition services and benefits for eligible employees. The plan must include a program to assist employees in maintaining fringe benefits and obtaining similar employment. Employers must provide retraining services and out-placement services as well as full tuition for 2 years at the University of Maine or a vocational technical school, or training of equivalent value, at the employee’s discretion. Eligible employees are entitled to receive health insurance coverage for 24 months following termination or until replacement coverage takes effect through reemployment. Finally, utilities must provide severance pay to employees equal to 2 weeks of base pay for each year of full-time employment. Utilities must file transition services plans with the commission 90 days prior to the beginning of retail access, or prior to an employee layoff, whichever comes first.
Massachusetts
Employees of Massachusetts electric utilities terminated as a result of restructuring shall receive reemployment assistance benefits and health insurance benefits, including employees terminated due to plant closings. Notice by the employer of cessation of employment does not preclude employees from benefit eligibility. These benefits shall be in addition to any benefits received under a collective bargaining agreement. Employees previously licensed at a regulated utility shall continue to be licensed for so long as such employee performs the same work at the same location(s) for any successor employer. Any prior experience as a licensed public utility employee shall be credited toward any future license applications.
Electric utility companies may recover transition costs related to personnel until March, 2005. These costs may include costs for severance, retraining, early retirement, outplacement, supplemental unemployment benefits and related expenses. Electric utilities must comply with service quality standards, which shall include benchmarks for employee staff levels and training programs. Companies must disclose to customers and to the appropriate licensing authorities whether they operate under collective bargaining agreements. Two members of a utility’s board of directors must be appointed upon recommendation by the Massachusetts AFL-CIO.
Nevada
The Nevada restructuring legislation requires a vertically integrated electric utility to take reasonable steps to minimize layoffs and any other adverse effects on its employees that result from the onset of competition. Neither the legislature nor the Commission has elaborated further regarding what steps may or may not be "reasonable" under the statute.
Pennsylvania
Pennsylvania’s Public Utilities are required to file a restructuring plan with the Public Utility Commission to be eligible for restructuring. A restructuring plan must include plans for pricing, universal service, energy conservation and "a discussion of the impacts of the proposed plan on the utility’s employees."