Utility Union Strikes Amid Heat Wave

Despite the presence of a sweltering heat wave raising demands on New York's power grid, power utility Consolidated Edison Inc. and its unionized workforce failed to reach a contract agreement. After 10 straight days of talks, extending past Sunday night's midnight deadline, negotiations broke down. Con Ed asked the union to extend the talks for an additional two weeks. The union, which had threatened to strike, refused. As a result, the company told its 8,500 union employees not to report for work today.

"Both sides are far apart," said Con Ed spokesman Mike Clendenon. "We asked the union to extend the talks for two weeks but they refused. We can't operate the system reliably for customers if the union can still call a strike at a moment's notice," he added. John Melia, a spokesman for the Utilities Workers Union of America (UWUA) characterized the move as a lockout. "ConEd took the extreme measure of locking out its unionized workforce putting the city of New York and Westchester county in peril during a heat wave," he contended.

Mr. Melia also said the union was willing to continue working while negotiations continued. Con Ed countered that the union rejected an offer to continue negotiating under the condition that both sides provide seven days "notice of a strike or work stoppage." "Without a contract and the assurance that the union leadership would not call a strike without notice," the utility said, Con Ed "would not have been able to assure customers of reliable service." Mr. Melia was asked if Con Ed gave the union any indication when negotiations might resume. "None whatsoever. They stood up and kicked us out," he replied. Con Ed again countered that its offer to extend the current contract while negotiations continued remained on the table.

Unsurprisingly, the disagreement centered around wages, pensions, and health care benefits. The largest sticking point is pensions. Union workers currently have a defined benefit plan. According to Investopedia, that is an employer-sponsored retirement plan where employee benefits are sorted out based on a formula using factors such as salary history and duration of employment. Investment risk and portfolio management are entirely under the control of the company. The company wants to phase out that system and put workers in a cash balance plan. In this plan, an employer credits a participant's account with a set percentage of his or her yearly compensation plus interest charges. Unlike the regular defined-benefit plan, the cash balance plan is maintained on an individual account basis. The latter plan tends to yield lower benefits to older workers, according to the New York Times.

Con Ed phased in a cash balance plan for its management hires over a decade ago, but the union is refusing to accept the same conditions for its workforce. "There's a feeling that the defined-benefit plan is something that shows that the company is earnest when it says it values its workers," said Mr. Melia. Again, the company countered, saying it "negotiators have presented numerous proposals to the union leadership to address long-term wage-and-benefit issues, in an effort to meet the needs of employees while respecting the cost concerns of customers."

It's a difficult balance to achieve. Power prices in New York City are already nearly two-thirds higher than the average price paid by consumers in other U.S. cities during any given month of the year, according to the Bureau of Labor Statistics. Yet in fairness to the union, much of that cost is associated with high taxes, mismanagement of New York's electric grid, and transmission constraints that severely limit New York City's ability to import power, much of which is beyond the control of Con Ed.

Con Ed's union salaries differ significantly depending on one's job title. On the engineer and technical support side, a help desk engineer can earn an average of $45,000. An engineer may earn an average of $83,143, while a supervisor who may oversee an entire electrical grid can earn anywhere from $97,000 to $104,000 per year. Overall, the average salary at Consolidated Edison is $69,924. Con Ed has 13,000 employees including union members.

As the contract deadline approached, some union workers resorted to a familiar tactic. 200-300 of them staged a rally in downtown Manhattan, chanting "if we go out, the lights go out." Union delegate Tony Ballone told Reuters that, with respect to contract negotiations, "they (ConEd) want to take everything we have fought for 50 years." "We're the first responders, we come out in rain and snow, we keep the lights on. All we want is a fair contract," he added.

In the meantime, the company announced that it has assigned 5,000 "trained" managers to maintain electric, gas and steam service to its 3.3 million customers in New York City and Westchester County. Yet it also announced that its walk-in centers will be closed, meter readings will be suspended, and work on major construction projects in New York will be limited. The union believes the company's efforts may be insufficient to keep electricity flowing in the midst of a brutal heat wave that extends at least through today.

"This is crazy! There's a heat wave," said David Palomino, who came to Con Ed's headquarters near Manhattan's Union Square early yesterday in an effort to find out what's happening next. As of early yesterday, only two workers stood near barricades city police had set up in front of the building. More were expected to show up, once the news of the lockout became more widely known. It remains to be seen where the inevitable demonstrations will lead. A similar strike in 1983 lasted nine weeks.

Summer in New York City is about to get a lot hotter.