Pepco may face strike; union rejects contract offer

September 26, 2012

The union representing Pepco workers overwhelmingly rejected what the company called its final contract offer Wednesday, putting the electric utility that serves much of the Washington region on the brink of a strike.

The labor discord comes just as Pepco is pressing forward with controversial plans to raise rates. As union members voted Wednesday, the D.C. Public Service Commission approved a majority of Pepco’s rate increase request, raising the average residential bill by $2.60 a month.

D.C. Council member Mary M. Cheh (D-Ward 3) blasted the commission, noting that the increase Maryland regulators recently approved was smaller.

“I just believe they are lap dogs for Pepco,” said Cheh, who represents upper Northwest Washington, where residents have endured several prolonged outages over the past three years. “They really missed an opportunity to improve Pepco’s reliability.”

Amid widespread consumer resentment over service shortfalls and outages after last summer’s derecho storm, Pepco must now contend with the possibility that much of its workforce could soon walk out.

The union rejected the contract proposal by about 5 to 1, International Brotherhood of Electrical Workers Local 1900 President James A. Griffin said Wednesday night. He declined to give a precise tally but said more than 1,000 members cast ballots.

“We’ve never ever had such a turnout,” Griffin said. “Our membership is really angry about this.”

Voting by the 1,100-member union — including overhead line personnel, clerks, cable splicers and warehouse workers — was at seven sites across the region during the day.

In a recent message to members, union leaders called the contract “the worst proposal this local has faced in its entire history,” and Griffin had predicted a “resounding no.”

If Pepco maintains its position after the vote, the union’s next step could be to poll its members on authorizing a strike, Griffin said.

Pepco spokeswoman Myra Oppel said the company is disappointed by the vote and is making arrangements to continue negotiating with the union.

“We were hoping they would see past the rhetoric to the reality that this was a fair and equitable offer,” she said.

Council member Muriel Bowser (D-Ward 4) said she is concerned that a potential strike could hamper ongoing efforts to improve Pepco’s service.

“They have a lot of people out in the street, installing new poles, new wires and transformers, and I would hope there wouldn’t be any disruption to that work,” said Bowser, who represents an area of the city where many neighborhoods do not have buried power lines. “We have seen the positive impact of that work, and we don’t want to see it disrupted.”

Pepco officials said that they are prepared for a strike and that its 788,000 customers in the District and Maryland would not notice any changes: Managers and contractors would fill in for workers, when necessary. In the event of a major storm, Pepco could call in workers from neighboring utilities.

“Over the past several months, we have trained management employees from across Pepco Holdings to operate the Pepco system,” the company said in a statement. “Field personnel would be replaced by qualified and experienced field personnel. . . . If power outages were extensive, we would continue our normal process of requesting mutual assistance crews.”

A strike against Pepco Holdings two years ago by 900 workers for Delmarva Power, a subsidiary serving Delaware, Maryland and Virginia, lasted 12 days, the company said.

Pepco also offered a “last, best and final” offer then, which the union rejected. In the end, Pepco Holdings officials said, the union signed off on pension changes. The officials said electrical service had not been affected because the parent company drafted managers to fill in. A call to Delmarva’s union was not returned Wednesday.

In the current dispute, the contract proposal Pepco offered includes annual wage increases. Over four years, they would be 2.25 percent the first year and then 2.5 percent annually, Pepco said. Workers have received annual wage increases of 2 percent or more since 1999, Pepco said.

The union isn’t asking for larger raises. Instead, it has raised objections to several provisions in the company’s new offer. The leaders say workers should receive additional pay for taking on second roles during storm restoration. They are worried that Pepco wants to increase call center staffing using part-time workers, and they object to company efforts to eliminate seniority when promoting workers to certain senior positions.

“Seniority is the only system we have come up with that eliminates the inherent unfairness when management gets to choose people on their own,” Griffin said.

He said his largest concern is that Pepco wants to eliminate the union’s ability to arbitrate changes to its health and welfare plans in favor of a different, more arduous process.

In response, Bill Wolverton, Pepco’s chief labor negotiator, said this week that the contract would limit the changes the company could make. He said the union would be able to appeal any decision through a separate plea process.

“We’re mystified” by the union’s objections, he said.

Montgomery County Council member Hans Riemer (D-At Large) said the union is right to ask for greater benefits for its workers. Pepco hasn’t hired enough trained staff members, he said.

“I don’t think the issue of whether Pepco treated its workers well or whether Pepco had enough of them until this year came up for customers,” Riemer said. “Now people are mad. They now see the connection between quality of service and having a workforce be properly treated. So we’re all watching.”

Pepco continues to face intense skepticism from customers, many of whom have argued that regulators should deny its price increases because of service problems.

Over the summer, the Maryland Public Service Commission rejected the bulk of Pepco’s rate increase, raising the average residential bill by $1.81 a month.

In the District, by contrast, Pepco had requested a $42.1 million increase last year, which would mean $5.20 more a month on average. The commission approved nearly 60 percent of the increase, Chairman Betty Ann Kane announced in a packed hearing Wednesday.

In a news conference afterward, Kane said that the increase is modest and that the average residential customer would see less than a 3 percent rise.

Kane said giving Pepco most of its rate request was reasonable because the two jurisdictions have different regulations and Pepco had satisfied the District’s. Moreover, Kane said, even Maryland officials say Pepco’s service in the District is better than in Maryland.

“It’s a fair and balanced decision, given what our responsibilities are,” she said.

Even so, customer frustration was evident at the meeting.

As the increase was being announced, a man raised his hands to the air and yelled: “Pepco shouldn’t have gotten a penny. I have my hands up because I feel like I’m being robbed.”

At the same time, dozens of other activists from Our DC, a community group opposing the increase, stood up and raised clenched hands. Then they opened their fists, dropped pennies and chanted protests.

The rate increase takes effect in mid-October.

Staff writer Tim Craig contributed to this report.

Peter Whoriskey is a staff writer for The Washington Post handling investigations of financial and economic topics. You can email him at peter.whoriskey@washpost.com.
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