SENATE JOINT SUBCOMMITTEE
TASK FORCE ON STRANDED COSTS AND RELATED ISSUES
Comments of Brad Wike
System Council U-1, International Brotherhood of Electrical Workers
June 30, 1998

With impending competition, utilities are faced with reduced revenue. They are concerned that they will not be able to recover their investments in generation facilities and other long-term commitments and are restructuring operations. Power plants, whose operation once was virtually guaranteed, are being sold, and older less efficient fossil and nuclear plants are being shut down.

From the labor perspective, it translates into a lot of pressure on utility management to cut costs. The easiest place to cut costs is labor.

According to the Bureau of Labor Statistics, utility production workers have declined by 46,000 nation wide, from 1990 to 1996. The production workers at Virginia Power have declined by about 1,000 in the last 5 years and total employment has been reduced by about 6,000.

There are roughly 16,000 utility employees in the Commonwealth. 3,700 of them are production workers and the vast majority of those are represented by The System Council U-1, International Brotherhood of Electrical Workers.

Competition has not yet legislatively arrived. All of these worker reductions have taken place in the name of efficiencies and the preparation for competition.

What happens when competition actually arrives by legislative mandate? Given the history of other de-regulated industries, we can expect to see further cuts to the work force, increased merger and acquisition activity and new, possibly less experienced entrants into the market. All of these directly affect the job security of utility workers.

Given the inevitability of workforce reductions and the re-organization of traditional utilities, workers and their jobs are being put at risk due to legislative mandate. Would you ignore these 16,000 utility employees? I think not. Utility employees that are affected by legislative change should be identified as Stranded Workers, and presumably fall into the category of Stranded Costs. Investments in workers are just as real as utility investments in equipment and property under the regulatory compact.

The General Assembly has recognized in House Bill 1172, that utility workers need legislative assistance. There was some debate at the last meeting of this task force as to where or in which category this issue should be addressed. Massachusetts and California have addressed it under Stranded Cost Recovery.

Stranded Workers have been provided for in legislation passed in other states as well. Examples of this legislation have been passed on to Staff. The legislative examples include funding for retraining, outplacement services early retirement, severance packages and continued health care insurance coverage.

The reliability, integrity, and safety of the Commonwealth's electric system have depended on a workforce of skilled and dedicated employees, equipped with technical training and experience. Wherever you choose to address this issue, it is in the Commonwealth's best interest to protect the interests of utility workers who have been responsible for assuring reliable and safe electric service to the citizens of this Commonwealth.