Regulatory Activities

Officers Report 2015, Part 3

UWUA participates in state utility commission proceedings and related regulatory and legislative matters in which our members’ vital interests – including jobs, wages, safety and benefits – are at stake. UWUA members’ interventions reflect their firsthand knowledge of utility operations.

UWUA participates in state utility commission proceedings and related regulatory and legislative matters in which our members’ vital interests – including jobs, wages, safety and benefits – are at stake.

Tennessee American Water Rate Case

The UWUA and Local 121 intervened in a Tennessee Regulatory Authority (TRA) proceeding concerning Tennessee American’s request for a nearly 15% rate hike. At the proceeding, Senior National Representative Jim Lewis testified on behalf of the union. Then-company President John Watson admitted that the company was continuing to pay dividends to its corporate parent, American Water, even though Tennessee American was failing to hire and retain sufficient staff to provide safe and reliable service. The UWUA urged that the company be required to maintain or fill all 110 positions that the company claimed were needed to provide adequate service.

In a final order on April 2012, the TRA adopted most of the UWUA’s recommendations, requiring that the company either fill all 110 positions, or provide information on when any job vacancies would be filled. Unfortunately, the company failed both to fill all 110 slots, and to provide an explanation to the TRA as to when the positions would be filled. The UWUA subsequently filed a motion with the TRA, which led to an order that the company provide information on when the positions would be filled.

Layoffs at West Virginia American Water Company

In May 2011, the UWUA and Local 537 filed a complaint with the West Virginia Public Service Commission, asking that it enjoin a threatened layoff of 1/10th of the employee workforce at the West Virginia American Water Company. (The company put blame on an adverse rate hike ruling issued by the PSC several weeks earlier, in a case in which the UWUA and Local 537 were intervenors.) Our complaint asserted, based on the testimony of a local member and the company’s own assertions during the prior rate case, that if the layoffs were implemented, the company would no longer be able to provide minimally adequate service to its customers. In response, the commission enjoined the layoffs on an interim basis, and opened an investigation into the impact of the layoffs on the provision of safe and reliable service.

Following a trial, the commission kept the injunction in place for the bulk of the laid off employees, and for all of those represented by the UWUA. The commission found that those employees perform essential services, including valve maintenance, meter reading, and related functions, and ruled that they were to remain on the job until at least the completion of the company’s next general rate case — and that their positions could be eliminated only on a proper showing by the company. The commission rejected the company’s argument that it should defer taking action until there had been a more definitive showing of harm, as the commission found that it need not wait “until the facilities of a utility are so poor that consumer complaints increase to unprecedented levels or result in instances of dangerous conditions or inadequate service.” The commission found that the “situation requires an extraordinary remedy.” (We believe this is the only time a state utility commission has seen fit to enjoin layoffs at a utility.)

Consolidated Edison Company of New York Summer 2012

In July 2012, and following the expiration of its collective bargaining agreement with UWUA Local 1-2, Consolidated Edison Company of New York locked out its roughly 8,000 union employees. The company sought to continue operations using its 5,000 managers, supplemented with some 700 retirees and contractors. The lockout lasted for 27 days.

The UWUA and Local 1-2 filed a petition with the New York State Public Service Commission, asking it to investigate the quality, reliability, and safety of the service Con Edison was providing during the lockout. The UWUA asserted that the company could not provide acceptable service absent the presence of its in-house, skilled, union-represented workforce. The petition was supported by the testimony both of local members and, indirectly, Con Edison personnel.

Following the filing of this request, the PSC received responses and reply pleadings from Con Edison and the local. As the proceedings before the PSC continued, New York Governor Cuomo announced his intention to insert himself into the negotiations directly. The Governor subsequently met with both sides, and assisted them in reaching agreement on a new (and favorable) collective bargaining agreement that resolved the lockout.

UWUA Testimony as Part of Maryland Investigation of Utility Resilience

In June 2012, the mid-Atlantic region suffered extensive and lengthy power outages following the devastating “derecho” storm. In response, then- Maryland Governor Martin O’Malley formed a task force to solicit recommendations from experts as to how to improve the resiliency and reliability of the Maryland electric distribution system. UWUA System Local 102 President Bob Whalen was invited to provide testimony concerning the restoration of service following major storms. Bob offered recommendations on workforce management, with a focus on maintenance practices and related staffing concerns. UWUA Counsel Scott Strauss offered suggestions for how the Maryland PSC investigates workforce “graying” issues.

The ensuing report, issued in September 2012, recommended that the Maryland Public Service Commission commence a proceeding to study the utilities’ human infrastructure. The report explains that the task force “is concerned that the data reveals a significant downturn in personnel per circuit mile over the past decade [,]” and notes that “it would be an appropriate line of inquiry for the PSC to determine whether there are sufficient personnel on the ground to make the repairs necessary.” The task force recommended that the PSC inquire into workforce “graying” issues, to allow utilities to share best practices, and if necessary, help facilitate further regulatory or state and local government actions.

Chesapeake Energy Purchase of Eastern Shore Gas (Before the Maryland Public Service Commission)

In 2011, Chesapeake Energy proposed to purchase the assets of Eastern Shore Gas (ESG). The fourteen (14) employees who form the operations staff of ESG were System Local 102 members. The acquisition could not proceed absent Maryland Public Service Commission approval. The UWUA and System Local 102 intervened in MPSC proceedings.

System Local 102 President Bob Whalen expressed concern before the Commission that the skilled ESG workforce had not been informed whether they would continue to be employed once the proposed asset acquisition had been completed. Bob noted that, while Chesapeake intended to convert the system from propane to gas service, that transition would take at least six years, and that, at least in the meantime, it would be essential for Chesapeake to retain the knowledgeable and experienced ESG workforce.

A settlement was reached under which Chesapeake extended fulltime job offers to all fourteen (14) hourly employees of ESG, contingent on the close of the acquisition. Each of the employees accepted the offer.

UWUA Assessment of Service Restoration Following Super Storm

In October 2012, Super Storm Sandy devastated New York City, leaving millions in the dark for several days (or longer). New York Governor Cuomo established the “Moreland Commission”—a panel of individuals tasked with evaluating the performance of New York’s utilities in response to the storm.

The UWUA and UWUA Local 1-2 undertook their own assessment of Con Edison’s performance, and published their findings in a whitepaper. It evaluated Con Edison’s performance in restoring service, providing recommendations for actions to minimize service disruptions following future storms.

The whitepaper criticized Con Edison’s performance on a number of fronts. Key points raised by the UWUA included:

  • Con Edison appears to operate its electric distribution system based on a policy of “run it until it fails,” meaning the company lacks sufficient manpower to conduct needed preemptive maintenance and related repairs.
  • At the time Hurricane Sandy hit New York, Con Edison’s electric distribution systems were weakened, due in part to the company’s lockout of its field and operations staff during the summer of 2012.
  • In restoring service post-Sandy, Con Edison resorted to patchwork and temporary repair arrangements that it cannot now revisit and correct due to documentation gaps, further weakening the system.

The UWUA urged that Con Edison be directed to address physical infrastructure deficiencies on the company’s system. With specific regard to human infrastructure issues, the UWUA asked that Con Edison be directed to propose and support a baseline staffing level for company operations, and thereafter be obligated to staff at that level.

The Moreland Commission report, issued in June 2013, contained several references to the UWUA Whitepaper. The report included a recommendation that the state’s utilities be obligated to “review existing staffing levels and evaluate the impact of an aging workforce.”

Con Edison Rate Case (Before the New York Public Service Commission)

In early 2013, Con Edison filed for approval of a substantial rate increase, in part to fund improvements aimed at making its system more resilient. The UWUA and Local 1-2 participated actively in this proceeding, submitting testimony from both a local member and an outside consultant. The union focused on staffing deficiencies and related concerns about the lack of needed maintenance. The union also highlighted the company’s overreliance on contractors in lieu of in-house personnel, noting that they were generally underqualified to perform the tasks performed by the company’s in-house, experienced, and well-trained workforce.

After extensive hearings, the case was settled in early 2014. Although the company is not obligated to hire a specific number of additional in-house staff, there are some tangible benefits that were achieved through participation in the proceeding:

  • Senior company officials testified that there would be additional hiring in certain of the company’s service areas.
  • While the settlement was pending before the commission, the New York PSC announced its intention to hire an independent consultant to conduct an audit of utility staffing practices and the use of outside contractors. The audit, to be completed in August 2015, will include Con Edison and all of the other NY IOUs. This appears to be the first time a state commission has ordered an audit focused on staffing practices involving the use of in-house versus contractor employees. Con Ed was obligated to conduct its own study of the cost-effectiveness of in-house employees versus contractors. That study was completed in February 2015.

West Virginia American Water Company Rate

In December 2012, West Virginia American filed a request with the West Virginia PSC for approval of a rate increase, and the UWUA and Local 537 intervened in the proceeding. The union raised several concerns including that (1) the company continues to be understaffed; (2) its lack of manpower prevents employees from performing essential valve maintenance, flushing, and leak survey activities; (3) there is evidence that the company’s maintenance practices unnecessarily increased capital expenditures (thereby harming ratepayers); and (4) the commission should continue requiring the company to provide quarterly reports.

Immediately prior to the commencement of the hearing, the parties to the proceeding other than the UWUA settled on terms that permitted the company to raise rates, but failed to address any of the union’s concerns. The UWUA went forward with the hearing, both presenting their witness and cross-examining the company’s president. The commission ultimately approved the settlement and rejected the union’s concerns. However, while not ordered to do so by the commission, the company has taken actions supportive of the Union’s concerns—most notably by hiring additional in-house staff. As part of the settlement, the commission (over the union’s objection) relieved the company of the obligation to continue to submit quarterly service quality reports. That directive was reversed following the infamous January 2014 chemical spill into the Elk River, after which the company was required to continue the reporting on an indefinite basis.

Presentations on Aging Workforce Issues

In November 2012, Michigan Governor Rick Snyder announced he would develop data to help the state manage Michigan’s energy future. The state’s Public Service Commission opened an investigation to identify the information needed by energy policy makers to make good energy decisions.

In March 2013, the UWUA responded by presenting comments to the PSC, highlighting concerns over deteriorating infrastructure and related staffing deficiencies. The UWUA pointed out that a “core component of reliable service is a sufficient and sufficiently well-trained utility workforce. Absent that workforce, the physical systems will not perform as required.” The union promised to provide the commission with the results of a detailed, internal assessment of utility staffing levels.

In May 2013, the UWUA submitted an update to the earlier report, including these findings:

  • Michigan’s utilities are understaffed;
  • Understaffing has adverse impacts on the delivery of utility services, on the growth of Michigan businesses, and on the quality of the lives of both customers and workers; and
  • Michigan’s utility workforce is aging rapidly, and the UWUA members do not perceive that utility employers are doing nearly enough to ensure that there will be a sufficient supply of experienced and well-trained workers to operate Michigan’s utility infrastructure and to deliver essential services.

The report noted that some UWUA locals have experienced as much as a 50% reduction in the size of the workforce, as compared with levels in the 1970’s and 1980’s. During this same multi-decade time period, customer demands and the overall workload facing Michigan utilities has increased. The depleted utility workforce has struggled to keep up with completing essential day-to-day operation and maintenance activities, and addressing occasional system emergencies. Crew sizes have been reduced, and preventive maintenance activities are being curtailed.

Presentations to Michigan Legislators on Energy Issues

In October 2013, the UWUA gave a presentation to Michigan legislators at a joint Michigan Republican and Democratic “lunch and learn.” It addressed the aging utility workforce, and the need for succession planning.

In 2015, we developed a “UWUA Michigan Energy Platform” as part of the legislative debate over energy legislation. It was provided to the Michigan Democratic Energy Committee Chair, and the Governor’s Energy Office. The UWUA will testify before the Michigan House Energy Committee on the issue of reregulating Michigan’s utilities—i.e., returning Michigan to a fully regulated state.

Comments on Electric Choice Issues

On October 31, 2013, the UWUA provided comments to the Michigan Public Service Commission on the adoption of “Electric Choice” (open access or deregulation of energy supply) in Michigan. The union’s recommendations included urging the PSC to consider long-term stability, predictability and fairness when drafting its final recommendations on utility deregulation and customer choice. The union advocated for a fully regulated utility system as opposed to keeping the choice cap at 10%, as the way to ensure effective customer service quality standards, accessibility, investment and job growth.

Assessment of Utility Performance Following Ice Storm

In late December 2013, Michigan’s Lower Peninsula experienced a severe ice storm. An estimated 600,000 customers of Consumers Energy Company and DTE Electric Company lost power for as long as eight days. The Michigan PSC opened an investigation in early January. As in the case of SuperStorm Sandy, the UWUA responded by surveying its members in locals affected by the storm, conducted its own assessment, and provided the results of the survey in comments filed with the commission.

The UWUA expressed concerns that Consumers’ staffing strategies over the past few years have hurt the condition of the company’s distribution systems prior to the arrival of the storm, and the efficiency and timeliness of restoration efforts. Failure to have sufficient in-house staff affected the resiliency of the distribution system immediately prior to the storm, and the duration of the service outages afterwards.

The vast majority of the personnel used in the restoration effort were not Consumers’ employees. The UWUA estimated that only 14% of the line crews and no forestry crews involved in restoring service were in the direct employ of Consumers. Restoration efforts involved a combination of contract labor and mutual aid workers. Contractors and mutual aid personnel have a place in utility operations, but the large-scale outsourcing of utility functions to non-utility personnel should be of concern to the commission.

In response to these concerns, the commission issued an order in May 2014, in which it “urge[d]” the utilities and the UWUA to “jointly consider the union’s recommendation for an independent audit regarding the adequacy of current baseline staffing levels.” The commission stated that any staffing discussion should start with the traditional collective bargaining process, because the utilities and the unions are well-positioned to address (and experienced in addressing) the issue of staffing levels.

FirstEnergy Plant Closure Issues

In July 2013, FirstEnergy (FE) announced its intention to close two Pennsylvania coal-fired power stations: Hatfield’s Ferry Power Station and Mitchell Power Station. Together, the plants have a total capacity of 2,080 MW, which represents roughly 10% of FE’s total generating capacity. The closure was planned for October 2013.

The UWUA and System Local 102 objected to the closures as threatening to utility system reliability. The union pointed out that the closures would result in the termination of 380 employees at the two plants, including 183 members of UWUA System Local 102.

The UWUA challenged FirstEnergy’s actions, both before the Pennsylvania legislature (where Bob Whalen provided testimony to a legislative committee investigating the matter) and the Federal Energy Regulatory Commission. The UWUA urged FERC to open an investigation into the propriety of FE’s actions. FE claimed that the plants were losing money, but no evidence to that effect had been presented.

The regional transmission organization, Pennsylvania New Jersey Maryland (PJM), which operates an electric grid across thirteen states and the District of Columbia, announced it could not close the plants for several years due to reliability concerns. But PJM subsequently changed its mind, paving the way for FE to proceed with its closure plans. FERC refused to initiate an investigation.

Consolidated Edison Staffing Study (Pending)

Con Edison complied with the obligation it assumed in the 2014 settlement of its rate case by completing (in early February 2015) a study of the cost effectiveness of using contractors, as compared with in-house employees. As expected, Con Edison found that its continued retention of contractors in lieu of permanent employees is cost effective. The study also states that Con Edison “maintains a well-trained and stable internal workforce (company employees) to handle normal day-to-day operations and maintenance of its energy systems and to respond to emergencies.”

UWUA Local 1-2 has responded by (1) requesting that Con Edison provide data supporting the conclusions reached in the study (including any cost-benefit analyses); and (2) gathering data from members concerning the use of contractor versus in-house resources. Those efforts are ongoing. The local will prepare its own assessment of Con Edison’s use of contractors.

Legislative Advocacy Around Gas Safety Issues

In California, the UWUA has pursued an integrated strategy of legislation and regulatory interventions concerning the state’s natural gas utilities. The Union’s efforts have focused on the development of preventive measures in response to the September 2010 explosion and fire in San Bruno, CA, which was caused by the rupture of a high pressure transmission line owned and operated by Pacific Gas & Electric Company. In focusing on preventive measures, the UWUA mandated a legislative role in the process for the workforce, such as developing a safety plan, rather than leaving this to management.

  • SB 705 Gas SafetyThe UWUA was the co-sponsor and co-source of SB 705, which was enacted in 2011, adding Cal. Pub. Util. Code sections 961 and 963. This legislation makes safety an over-arching priority in the provision of utility gas service, and implements a procedure for identifying and minimizing gas hazards before damage occurs. The law obligates gas utilities to achieve and maintain an adequate work force, and requires robust and ongoing involvement of the utility workforce in identifying and eliminating hazards.
  • SB 1371 Leak Reduction and Best Practices (adding Cal. Pub. Util. Code sections 975 and 977)In 2014, the UWUA was sponsor of and source for SB 1371, in response to public concern for the safety of the gas utility system, and for the environmental implications of gas (methane) leaks into the atmosphere. It mandates an aggressive leak reduction strategy that reduces hazards and methane emissions. It requires identifying and adopting best practices, and engaging the utility workforce in developing the leak reduction strategy.

Regulatory Proceedings Before the California Public Utilities Commission

  • Sempra Test Year 2012 General Rate Case, A.10-12-005/006California energy utilities file general rate cases (GRC) every three years before the California Public Utilities Commission (CPUC). Their costs and programs are reviewed, and base rates are established to provide revenues to support adequate service. The UWUA intervened in Sempra’s Test Year (TY) 2012 GRC, and raised concerns about (1) workforce adequacy after years of downsizing among represented operating and maintenance employees; and (2) the resulting degradation of service to the public. The UWUA proposed adopting standards for leak response, leak repair, service order completion and call center responsiveness, based on restoring practices in effect previously, but ended during deregulation. The UWUA proposed workforce augmentations that would place the utility in a position to meet service reliability and adequacy standards. These proposals were based, in part, on specific requirements and hazard identifications in SB 705.The utility opposed both the adoption of standards and the workforce augmentations, and the CPUC rejected the union’s proposals. The CPUC did, however, require the utility to monitor and report on the leak response and repair practices in the next GRC.The UWUA relied on testimony of employee witnesses. In order to overcome barriers to employee communication stemming from fear of retaliation and reprisal, the UWUA asked the CPUC to issue a preemptive order admonishing the utility against any acts of retaliation. The commission issued the requested order.
  • Gas Safety Rulemaking, R.11-02- 019 (issued February 2011 and on-going)The CPUC’s primary response to the San Bruno explosion led to a rulemaking to transform the safety culture and safety practices of the California gas industry. The UWUA has engaged in advocacy efforts relating to a number of the issue areas in this proceeding:
    • Gas Safety Plans and SB 705 Implementation – SB 705 established for the first time an absolute priority for safety in the gas industry. The focus is prevention: a specific requirement that gas utilities develop a safety plan that identifies hazards, and mitigates them, before they cause injury and damage. Utilities created and filed these plans in December 2012, subject to review and approval by the CPUC. The UWUA made a number of specific suggestions for improvement, some adopted and some rejected in the CPUC’s approval order.
    • Independent Panel Report/Safety Culture Change – The CPUC convened a blue-ribbon panel of outside safety experts and utility executives (Independent Review Panel or IRP) to make recommendations for transforming utility practices and attitudes toward safety. The UWUA commented on the IRP Report and engaged in legislative and regulatory advocacy to implement some of its recommendations.
    • GO-112 Update – The CPUC has a general regulation covering many aspects of gas utility operation and maintenance. After San Bruno, the CPUC has attempted to update this regulation, including adopting a framework for grading and repairing gas leaks. The UWUA has made a number of proposals for improvement. A decision approving the updated regulation is pending.
    • Pipeline Safety Enhancement Plans – The National Transportation Safety Board highlighted the inability of PG&E to document the status and condition of its transmission pipe in the San Bruno explosion. It was unable to determine the appropriate maximum operating pressure for the pipe. The CPUC determined that all California gas utilities face the same issue, and responded by ordering them to test or replace all transmission pipe for which documentation is lacking. The UWUA recommended enhanced maintenance on undocumented pipe in Southern California: more frequent patrols and leak surveys; preventive maintenance on valves; timelier repair of exterior problems and cathodic protection.
    • Sempra Pipeline Safety Enhancement Plan, A.11-11-002 (April 2012 and on-going) – Issues involving Southern California Gas Company’s PSEP were transferred to another docket in 2012. The UWUA participated in that case, recommending enhanced maintenance and opportunities for employees and public participation in the decisionmaking on PSEP projects, to enable full implementation of safety concerns and expedited cost recovery. The CPUC issued a decision in May 2014, approving some of the enhanced maintenance proposals and deferring issues of cost recovery to subsequent proceedings.
    • Branch Office Closure, A.13-09-010 (September 2013 and on-going) – Southern California Gas Company proposed to reduce in-person service availability for its customers by closing several community offices, and proposed closing additional offices without further CPUC approvals. The UWUA worked with consumer groups to oppose the closure, and to propose providing all customers with an opportunity for interacting with their utility. A decision is pending.
    • Sempra 2016 General Rate Case, A.14-11-0003/004 (November 2014) – The UWUA has indicated support for Sempra rate revenue requests, while negotiating to assure that rate revenues are spent in ways that will ensure compliance with safety and service regulations, and company policies and procedures. The UWUA seeks properly sized workforces and effective training programs, including pre-employment skill acquisition, classroom training, and field mentoring and coaching by experienced leads. The UWUA UMAP program at Southern California Gas Company is an element of the training proposal. Service order completion improvement remains a priority, with centering on service connections (turn-ons) and leak response.
    • SB 1371 Implementation, R.15-01-008 (January 2015) – SB 1371 requires the CPUC to convene a proceeding to develop a utility leak reduction strategy. As sponsor of the legislation, the UWUA is actively involved.
  • Federal Regulatory Activity Around the EPA Clean Power PlanAs the U.S. Environmental Protection Agency has rolled out its Clean Power Plan (CPP) process, the UWUA has provided a strong voice for workers through continuing interaction with the EPA, the Department of Energy, and the Federal Energy Regulatory Commission.The Union advocates for reliability, affordability, carbon capture and sequestration technology investment and development, and displaced worker/community protection. The UWUA has been participating at the state level in AFL-CIO sponsored stakeholder meetings on the CPP and related State Implementation Plans.

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