Chugach board approves labor contract

The board of directors of Chugach Electric Association approved a 4-year labor contract with one of its bargaining groups that will help the utility recruit and retrain highly skilled workers in a tight labor market. The board took the action at a meeting Dec. 19.

Union workers had voted to approve the new contract shortly before Thanksgiving.

The "Outside Agreement" the board approved covers 58 workers – primarily journeymen linemen. The contract is one of three the utility has for workers represented by the International Brotherhood of Electrical Workers Local 1547. All three expired July 1, 2006, but both the union and Chugach have continued to honor the prior contracts while negotiations have been underway on new agreements for the past several months. Chugach and the union will now resume negotiations for workers covered by the "Generation Agreement" and the "Office and Engineering Agreement."

Journeymen linemen are the workers who help build, maintain and repair the electric system – including restoring power during outages. Surveys of Chugach customers have repeatedly shown that the thing customers value most is reliability. Going into the negotiation Chugach determined it was near the middle of the pack in terms of wages paid to linemen in Alaska. For the past three years of the prior Outside Agreement, workers had either received no wage increase or increases that lagged the consumer price increase.

The Chugach board wanted to be able to offer fair wage increases, but also achieve work rule changes that would give management greater flexibility and efficiency – thus offsetting a significant portion of the cost of the raises. The agreement agreed to by both parties does just that.

"This new contract will benefit members and customers for years to come," said Jeff Lipscomb, chairman of the Chugach board. "Both parties bargained in good faith and I am pleased with the outcome. In the end this contract will provide some of our employees with real wage and benefit increases for the first time in over six years while lowering other costs and increasing productivity.

"Over the last 10 years, both the number of Chugach customers and power sales have increased significantly, while the number of employees at Chugach has decreased," Lipscomb said. "In the first year, this new agreement will add about two-tenths of 1 percent to the cost of power."

The estimated value of the work rule changes balanced against the raises and pension benefits in the contract mean that Chugach was able to make considerable gains without unduly affecting the price of power paid by customers. The estimated first-year cost of the contract will amount to less than 20 cents per month to the average residential customer.

Under the contract, during the 4-year term of the contract employees will receive wage increases of 6 percent in the first year, 5 percent in the second and third years and a CPI increase in the fourth year. They will also receive the first pension increases in approximately 20 years, amounting to 50 cents a year in each of the first three years of the contract.

On balance, when considering the value of the work rule changes, the estimated cost of the contract is less than the 3.2 percent nationwide annual labor wage cost increase in the past year.

An effort by a dissident Chugach member to try and block the board vote on the contract was unsuccessful when a federal judge refused to grant a temporary restraining order earlier in the day. A copy of the judge's order is attached.

Chugach is the largest electric utility in Alaska, providing power for Alaskans throughout the Railbelt through retail, wholesale and economy energy sales.