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Labor Dispute Stalls FirstEnergy Reorganization

By Christen Smith

A U.S. bankruptcy judge stalled FirstEnergy Solutions’ reorganization plan last week over unresolved contract disputes with workers at its Perry and Beaver Valley nuclear plants.

Judge Alan M. Koschik told lawyers for the utility that he cannot approve its reorganization plan — which includes shedding $3.6 billion in debt, cutting ties with FirstEnergy Corp. and possibly changing its name — until the issue is resolved. He set a status hearing for Sept. 10.

FES wants to renegotiate the terms of the collective bargaining agreements with the Utility Workers Union of America and the International Brotherhood of Electrical Workers that were originally approved by FirstEnergy because the company claims it cannot afford the pension benefits post-bankruptcy. (See FES Seeks Bankruptcy, DOE Emergency Order.)

FirstEnergy
A U.S. bankruptcy judge stalled FirstEnergy Solutions’ reorganization plan over unresolved bargaining contract disputes with workers at its Perry and Beaver Valley nuclear plants.

“We are pleased with the progress made in the hearings, which resolved substantially all non-labor-related issues pertaining to confirmation of our plan,” FES spokesman Tom Becker said in a statement Friday. “We remain focused on confirming the plan to exit bankruptcy by the end of 2019.”

In court documents filed earlier this month, Joyce Goldstein, attorney for both unions, argued that they had struck contracts that contain a “strong successorship” clause requiring FES to assume the terms of the agreements. Goldstein also noted that because Ohio lawmakers passed a bill to subsidize the state’s nuclear plants, FES will “have even more cash” on hand to pay benefits. (See Ohio Approves Nuke Subsidy.)

“There is no impediment to assuming the CBAs and providing benefits that mirror those currently provided, as has occurred eight times before,” Goldstein said, referencing FirstEnergy’s decision to assume bargaining unit contracts when it acquired other utility companies pre-split. FES “would simply prefer not to.”

Frank Meznarich, president of UWUA Local 270, applauded Koschik’s decision in a statement Friday, calling it a “significant victory for our members.” UWUA represents workers at the Perry nuclear plant, located 40 miles northeast of Cleveland along Lake Erie. IBEW Local 29 represents workers at the Beaver Valley plant near Pittsburgh.

“FES cannot escape bankruptcy without fulfilling its obligations to the individuals who maintain and operate these facilities,” Meznarich said. “Our members have been unwavering in their efforts to deliver power to ratepayers who rely on it and we expect FES to honor its legal obligations to our members.”

FES CEO John Judge wrote in an Aug. 18 column for The Columbus Dispatch that his company’s good faith negotiations have resulted in signed framework agreements at three of its five nuclear plants since March. He said the latest proposal submitted to the bargaining units at Perry and Beaver Valley include terms that preserve the wages, raises, work rules, medical, dental and paid time off benefits found in the existing contracts.

“The only open issue we have is retirement benefits after emergence, since we can no longer participate in the FirstEnergy Corp. pension plan at that time,” he said. “No retirement benefits earned prior to emergence will be taken away.”

Post-bankruptcy, FES plans to offer an “enhanced defined contribution plan” that matches 50 cents of each $1 contribution made by employees up to 6%. Employees with long tenures will receive additional contributions up to 9%, and those closest to retirement will be offered bridge payments to soften the blow of plan changes.

Judge said the program exceeds industry standards and serves as a “fair offer … since we kept other elements of the existing wages and benefits intact and all benefits earned to date will be paid.”

“Our power plants must compete with other unregulated power generators in what is a tough economic environment,” Judge said. “None of our competitors has started a new traditional pension plan or offer such a plan to new employees. Our proposal allows our plants to remain competitive, stay open and continue to employ the workers we rely on to operate those plants.”

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