...Storm Warning:
(From Page 5)
sources. “I think utilities are going to be
a target.”
With the utilities’ enormous cus-
tomer base up for grabs, acquiring utili-
ties could turn into a corporate gold
rush. And big oil won’t be the only in-
dustry saddling up its pony for the ride.
“There is something about electric
and natural gas utilities, with their cap-
tive, rate-paying consumers, that is irre-
sistible to venture capitalists,” says Har-
gis, the former FERC lawyer. “They
want to use those guaranteed revenues
to invest in risky, potentially high-profit,
nonutility schemes. They want to keep
the profits and have the utility’s cus-
tomers bear the risks and assume the
debt.”
Utility stocks, for decades a safe
repository for retirees’ savings, could
morph into short-term investment prop-
erties. Tyson Slocum, who works on en-
ergy policy at Public Citizen in Wash-
ington, D.C., says private equity funds
could seize the opportunity to “Grab a
utility, squeeze money out of it and toss
it aside for the next buyer.”
The gold rush will be global. As Stu-
art Caplan noted last October in Infra-
structure Journal: “Overseas investors
interested in acquiring critical mass in
the U.S. utility sector will no longer be
stymied by PUHCA’s … requirements.”
What Is A Utility For?
In announcing the merger of their
holding companies in late 2004, Exelon
and PSEG executives sounded almost
giddy over the possibilities for their new,
combined company.
They talked about how they would
“create efficiencies.” They enthused
about “operational synergies” and “im-
proved asset optimization” and “cash-
flow growth.” They gushed over the op-
portunity to improve “financial
flexibility” and positioning the company
“to meet the changing landscape of the
energy industry into the future.”
But all of this post-PUHCA sloga-
neering and “positioning” begs a central
question: What is a utility for?
Most people believe a utility’s pur-
pose is to keep their homes lit and
heated, to power their businesses, to do
whatever planning and maintenance is
needed to keep service reliable, and to
respond effectively and immediately
whenever that service is interrupted.
Do “operational synergies” and “fi-
nancial flexibility” serve to further that
purpose?
The Exelon-PSEG executives pre-
dicted in December 2004 that “syner-
gies” would start out at $400 million and
grow to $500 million annually by the
second year. Synergy, if you believe
Webster’s, means “to work together”
such that the total effect is greater than
the sum of the parts.
The Exelon-PSEG executives, how-
ever, seem to think that synergy is just
another word for saving money. About
85 percent of the savings, according to
their projections, will be “cost related.”
These savings include “the elimination
of duplicative activities” and “improv-
ing operating efficiencies” and “im-
proved sourcing.”
Still not clear? The executives go on
to explain that “a portion of any job
losses will be offset by anticipated re-
tirements and normal attrition.” Or to be
still clearer: “Reductions due to the
merger are estimated at approximately
5 percent of the consolidated work-
force,” which boils down to a loss of
1,400 jobs.
Utility workforces, apparently, are no
longer being downsized, they are being
“synergized.” But changing the word for
slashing the workforce will not alter the
reality that utilities nationwide are al-
ready short of the people they need to
maintain service reliability at the level
Americans have historically enjoyed.
Reliability at Risk
The utility workforce overall was re-
duced by 25-30 percent during the
1990s, when utilities believed that
downsizing was the way to prepare for
retail electric competition. Now that
shrunken workforce is quickly aging.
By 2010, half of today’s experienced
utility workers are likely to retire, ac-
cording to numerous published reports.
Some top executives may regard this
mass attrition as an opportunity to save
money for the next merger or takeover.
But some people question how utilities
can continue to function if there is con-
tinued attrition of the workforce.
“It is possible to end up with a sce-
nario where some utilities are operating
like utilities in third-world countries,”
says Steven Kussmann, executive direc-
tor of the Utility Business Education
Coalition in Reston, Va., quoted in a
story in the November-December 2005
newsletter of the American Public
Power Association. “They won’t have a
sufficient number of qualified people to
operate them. The result will be danger-
Protecting Union Members’ Smiles and Wallets
Quality, Affordable Family Dental Care:
Ask About:
• General, cosmetic, and specialty care
• Orthodontics (braces)
• Most insurance and union plans accepted
• Easy credit and low monthly payments, O.A.C.
• Evening and Saturday appointments
• Children Welcome
Bright Now! Dental
Grants Pass
1021 NE 6th St.
Grants Pass, OR 97526
541-479-6696
An Bongmin, D.D.S.
John Christopher, D.D.S.
Northwest Dental
Associates, P.C.
Bright Now! Dental
443 NW Burnside Road
Gresham, OR 97030
503-492-8487
Vicki Reichlein, D.M.D.
Chung-Jay Park, D.D.S.
Chau Ngo, D.D.S., M.S.
Northwest Dental
Associates, P.C.
Bright Now! Dental
25700 SW Argyle Ave.
Wilsonville, OR 97070
503-682-8552
Grace Park, D.M.D.
Linh Tran, D.M.D.
Christi Huynh, D.M.D.
Nathan Halstead, D.D.S., M.S.
Marco Gutierrez, D.D.S
Northwest Dental
Associates, P.C.
Bright Now! Dental
4052 S. 6th St.
Klamath Falls, OR 97603
541-883-7706
Mo Biria, D.M.D.
Northwest Dental
Associates, P.C.
Bright Now! Dental
17186 SE
McLoughlin Blvd.
Milwaukie, OR 97267
503-659-2525
Trang Nguyen, D.M.D.
Linh Tran, D.M.D.
Katherine Farrell, D.M.D.
Adam Ho, P.C.
Bright Now! Dental
3580 SE 82nd Ave.
Portland, OR 97266
503-777-0761
Allen Tam, D.M.D.
Nathan Halstead, D.D.S., M.S.
Khoa Hoang, D.M.D.
Adam Ho, D.D.S., P.C.
www.brightnow.com
PAGE 8
ous working conditions and unreliable
power.”
Five Florida Power & Light linemen
interviewed by the Miami Herald in No-
vember said the utility had thinned their
ranks so drastically that the crews now
spend most of their time doing “revenue
jobs,” like hooking up new customers
rather than performing maintenance on
existing infrastructure, which may ex-
plain why Hurricane Wilma encoun-
tered so many rotten power poles.
Inadequate tree trimming around
power lines has been implicated in
costly wildfires, and worse. When an
untrimmed tree branch in Ohio con-
tacted a sagging transmission line in Au-
gust of 2003, the resulting explosion
knocked out power to 50 million people
in eight U.S. states and two Canadian
provinces, costing $6 billion. A blue rib-
bon panel convened by Illinois Gov.
Rod Blagojevich found that inadequate
tree trimming, obsolete equipment and
inadequate training contributed to the
severity of the outage.
At a time when utilities ought to be
plowing resources into trimming trees
away from power lines, replacing aging
gas lines and rotten power poles, and hir-
ing and training the people needed to do
this work, they are having trouble staying
focused on their essential mission.
They’re looking for “synergies” when
they ought to be looking for linemen.
If it’s hard to keep utilities focused
on reliability issues as PUHCA fades
into history, it will be even harder if util-
ities fall under the ownership of oilmen
or financiers, according to Tom Schnei-
der, an independent energy consultant
and former director at the Electric Power
Research Institute (EPRI).
“Traditionally you get to be a (util-
ity) CEO by learning the business,” says
Schneider. But if these homegrown
CEOs are replaced by new management
brought in from outside the industry,
there will be a “total loss of any techni-
cal understanding or judgment” at the
top of the company.
“They’re just not going to understand
the industry. That translates to (not un-
derstanding) workforce requirements,”
Schneider says. As utilities are absorbed
into ever-larger holding companies,
there will be a “dilution of management
attention” to service issues.
Who’s In Charge?
The Energy Policy Act had the virtue
of converting voluntary reliability stan-
dards into mandatory standards, and giv-
ing enforcement powers to the Federal
Energy Regulatory Commission. Given
its past commitment to “the market,”
though, it’s hard to be optimistic that
FERC will perform this role effectively.
As Hargis, the former FERC attor-
ney, noted in 2003, the agency has
(Turn to Page 12)
BENNETT HARTMAN
MORRIS & KAPLAN, LLP
Attorneys at Law
Representing Unions and Workers Since 1960
Bright Now!
Dental Network Dentists
– serving unions
for over 25 years
S ERIOUS I NJURY AND D EATH C ASES
• C ONSTRUCTION I NJURIES
• A UTOMOBILE A CCIDENTS
Bright Now! Dental
831 Lancaster Mall Dr. NE
Salem, OR 97301
503-362-8359
Ian Phan, D.M.D.
Anthony Simon, D.M.D.
Brian Kallus, D.M.D.
Northwest Dental
Associates, P.C.
• M EDICAL , D ENTAL AND L EGAL M ALPRACTICE
• U NSAFE P RODUCTS
• B ICYCLE AND M OTORCYCLE A CCIDENTS
Bright Now! Dental
Salmon Creek
2101 NE 129th St.
Vancouver, WA 98686
360-574-4574
Clinton Harrell, D.M.D.
Peter Vu, D.M.D.
Chau Ngo, D.D.S., M.S.
Phong Bui, D.M.D.
Stirewalt, P.C.
• P EDESTRIAN A CCIDENTS
• P REMISES L IABILITY ( INJURIES ON PROPERTY )
• W ORKERS ’ C OMPENSATION I NJURIES
Bright Now! Dental
Fishers Landing
3250 SE 164th Ave.
Vancouver, WA 98683
360-891-1999
Monica Calderon, D.M.D.
Peter Vu, D.M.D.
Stirewalt, P.C.
111 SW Fifth Avenue, Suite 1650,
Portland, Oregon 97204
503 227-4600
www.bennetthartman.com
We know the value of a beautiful smile!
NORTHWEST LABOR PRESS
(Our Legal Staff are Proud Members of UFCW Local 555)
MARCH 3, 2006