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In the Matter of Interest Arbitration Between IBEW, LOCAL 125, and CITY OF FOREST GROVE, LIGHT AND POWER COMPANY. IA-05-02.
This case concerns a voluntary interest arbitration between the International Brotherhood of Electrical Workers, Local 125 (IBEW) and the City of Forest Grove, Light and Power Department (City).
Agreement to Arbitrate
The agreement to arbitrate-signed by counsel for each party--states:
"The parties agree to arbitration to be binding on both parties and as outlined in ORS 243.746 with the following modifications:
"1. ORS 243.746(4)(a) shall not be a statutory consideration applied by the arbitrator.
"2. ORS 243.746(4)(e) shall be replaced with the following comparable communities:
-City of Monmouth Light & Power
-Tillamook Public Utility District
-Salem Electric
-Utility Board of the City of Canby
-Pacific Power and Light
-West Oregon Electric Co-Operative
-Clark County Public Utility District
-Clatskanie PUD
-Portland General Electric
"3. ORS 243.746(5) and ORS 243.746(3) shall not require the arbitrator to choose between the last best offer package of each party. The parties shall designate a range to determine the compensation package as to hourly wages. That range shall not exceed the higher of the two final offers submitted to the ERB.* That range shall not be lower than the lowest of the final two offers submitted to ERB*
"4. Issues involving the Senior Utility Worker shall be resolved in conjunction with the arbitration or otherwise settled by the parties prior to arbitration.
"*Pay ranges are total % increase over the life of the contract."
Issues for Arbitration-Last Offers
The issues regarding which the parties remain in disagreement concern the amount and the timing of percentage increases to be applied to the hourly wage rates of the 12 members of the bargaining unit during the term of a three-year contract to be effective retroactively to July 1, 2001.
The IBEW describes its last offer as follows:
Effective July 1, 2001, all job classifications in the unit would receive a 4.8 percent increase in their hourly wage rates. Effective January 1, 2002, all classifications would receive another adjustment in their wage rates. That adjustment would be figured by taking 3.8 percent of the July 1, 2000 wage rate and adding the amount to the wage rate that became effective for July 1, 200l. Across-the-board wage rates would increase for the remainder of the contract by 4 percent effective July 1, 2002, by 2 percent effective July 1, 2003 and by 2 percent effective January 1, 2004. IBEW also proposes a "spot" increase of 3 percent for the Senior Utility Worker to be effective July 1, 2001, and applied before the generally applicable wage increases.
The City's last offer is as follows:
Three across-the-board adjustments of 3 percent each for linemen and 2 percent each for meter readers and the Senior Utility Worker.(1) The adjustments are to be made effective July 1 of each of the contract's three years (2001, 2002 and 2003). The City opposes the "spot" adjustment for the Senior Utility Worker.
Statutory Criteria and Findings
The parties agreed to arbitrate this dispute "as outlined in ORS 243.746," but with modifications. ORS 243.746(4) lists certain criteria an arbitrator must consider in reaching a decision. In their agreement, however, the parties stipulated certain changes in the criteria to be used in this particular arbitration.
The first modification is that subsection (a) of that section shall not be a "statutory consideration" applied by the arbitrator. The criterion in subsection (a) is "the interest and welfare of the public." There was some disagreement between the parties at hearing concerning the precise meaning of this stipulated restriction, but the parties acknowledged that they had an agreement to arbitrate despite their perhaps varying interpretation of that provision. After considering their positions on the matter, I agree with the statement of the IBEW in its post-hearing brief (p. 4) that, at the least, the stipulation means that "* * * the Arbitrator is not to consider directly the public's 'interest and welfare' in reaching his decision, and he most certainly is not to give 'first priority' consideration to that criterion as ORS 243.746 requires for statutory interest arbitration cases." I therefore will not analyze the interest and welfare of the public as a discrete criterion, although it may be a factor to consider in examining the City's ability to pay for the IBEW proposal, for example.
The second modification in the statutory criteria is that the parties have stipulated to the "comparable" jurisdictions to be used when comparing compensation in Forest Grove with that of other workers.
With the modifications as described above, the statute requires an analysis of the various criteria.
"The reasonable financial ability of the unit of government to meet the costs of the proposed contract giving due consideration and weight to other services, provided by, and other priorities of, the unit of government as determined by the governing body. A reasonable operating reserve against future contingencies, which does not include funds in contemplation of settlement of the labor dispute, shall not be considered as available toward a settlement."
The City's goal in operating the Power and Light Department is to provide low-cost electrical power to its residents. The Department's budget is basically self-sustaining in that its revenues are derived from energy sales and other sources rather than being subsidized from the City's general funds. Over a period of years, the Department was able to generate and maintain a surplus. In the 2001-2002 fiscal year, however, expenditures exceeded revenues by $325,287 (revenues of $9,457,669 and expenditures of $9,782,956; Exhibit C-6). This deficit followed a rate increase charged for electricity by the Bonneville Power Administration, which supplies more than two-thirds of the Department's power. The BPA increase was effective October 1, 2001. The City Council decided to increase the Department's rates by 10 percent, absorbing the remainder of the BPA increase by drawing from the Department's reserves. Paul Downey, the City's director of support services, estimated that a 20 percent increase in rates would have been needed to fully compensate for the BPA increase and make a draw down of the reserve fund unnecessary. The trend of deficits continued in July of 2002, when the Department sustained a loss of $170,728 compared to net income of $65,994 for July of 2001. (Exhibits C-6 and C-7)
Prior to October of 2001, the Department had not increased electricity rates for more than a decade. In fact, the last change in rates, according to Downey, was a decrease that took effect in the early '90s. As of November of 2001, the average monthly residential power bill in Forest Grove was $52.77. Among the comparable entities selected by the parties, the figures are: Monmouth, $65.71; Tillamook,, $86.27; Salem Electric, $66.03; Canby, $76.76; Pacific Power & Light, $65.95; West Oregon, $115.79; Clatskanie, $46.45; Portland General Electric, $78.50. (Exhibit U-21) Thus, only Clatskanie had a lower average power bill than Forest Grove.
The Department's reserve fund at the time of the hearing was estimated by Downey to be
$4.8 million. This is a substantial decrease of about $2 million from the previous year, caused-according to Downey-by a draw down in the fund of $1.4 million for construction of a Power and Light building and auditorium, about $500,000 as a result of the BPA increase, and about $100,000 for other operating expenses. The City's policy is to require a reserve fund equal to at least 10 percent of revenues. In addition, part of the reserve is needed to fulfill the City's construction bond covenant because there currently is not a surplus in revenues over expenditures.(2)
Based on exhibits and Downey's testimony, the difference in cost to the City over the life of the three-year contract to implement its proposal compared to the IBEW proposal would be approximately $157,000, with the City proposal costing about $322,000 and the IBEW position estimated at $479,000. Downey estimated that it would take an electricity rate increase of about on-half of one percent to raise funds sufficient to pay the difference between the two proposals without depleting further the reserve account. This would amount to about 26 cents per month on the average residential bill. The IBEW estimates are similar for the increase needed to cover the additional costs, as it contends that the total cost of its position could be funded with an 86 cent increase in the average monthly bill as compared with a cost of 60 cents to cover the amount included in the City proposal.
"The ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provided."
Travis Eri, IBEW business representative, testified that there is a high demand for linemen in the region, particularly for construction projects. Nevertheless, IBEW witness Larry Hanville, who has been with the Department for 28 years, stated that there has not been a significant rate of turnover in the Department since the mid-1980s.
"The overall compensation presently received by the employees, including direct wage compensation, vacations, holidays and other paid excused time, pensions, insurance, benefits, and all other direct or indirect monetary benefits received."
In addition to wages, which will be discussed fully in the following section, the IBEW contract provides for a range of benefits, including:
Paid vacations of 10 days a year for first and second year employees, increasing by increments to a maximum of 25 days for employees with 15 or more years of continuous service.
Nine paid holidays and two personal holidays.
Up to $250 per year for the purchase of rain gear, certain meal allowances, replacement tools and work gloves and biannual reimbursement for prescription safety glasses, where necessary.
Medical, dental and vision insurance benefits paid by the City at 90 percent of the Blue Cross premium, as well as disability insurance and life insurance paid in full by the City.
A retirement plan paid by the City.
A review of such benefits provided by the stipulated comparators shows they are similar to those included in the Forest Grove contract.
"Comparison of the overall compensation of other employees performing similar services with the same or other employees in comparable communities."
As explained above, the parties have stipulated to the "comparable communities" to be used in this statutory criterion. They disagree, however, concerning how these comparable figures have influenced wages in Forest Grove. The IBEW contends that the parties historically have looked to the hourly wages paid by PGE in negotiating Forest Grove settlements, without much regard to the wage rates in other jurisdictions; that is, that by practice the wages for Forest Grove linemen have reflected the increases gained by PGE workers. The City, on the other hand, contends that its policy in bargaining wages has been to reach a settlement that reflects the "market median" for the comparable jurisdictions.
The following chart, which is based on exhibits in the record, shows a comparison for a 10-year period of the following: the median lineman hourly wage of the nine comparators, the average wage, and the wages paid by PGE and Forest Grove.
Year 199l 1992 1993 1994 1995 1996 1997 1998 1999 2000
Median(3) 19.60 20.52 21.34 22.01 22.62 23.24 24.15 24.87 25.73 26.50
Average 19.62 20.43 21.25 21.94 22.74 23.42 24.19 24.95 25.71 26.44
PGE 19.76 20.55 21.17 21.81 22.53 23.21 23.91 24.72 25.52 26.03
FG 19.00 20.55 21.17 21.81 22.53 23.21 23.91 24.39 25.63 26.40
This chart shows that the Forest Grove wage rate mirrored that of PGE in six of the ten years (1992-1997). It was less than PGE in two years (1991 and 1998) and above PGE in 1999 and 2000. Meanwhile, the Forest Grove rate was below the median and average in every year except 1992 and PGE was also below the median and the average in all but 1991 and 1992. These figures appear to support the IBEW contention that Forest Grove settlements generally have followed more closely those of PGE than of the median, although in three years (1991, 1999 and 2000) the Forest Grove rate actually was closer to the median than to that of PGE.
Comparable figures for 2001 and 2002 (the two years for which wages are established for all the jurisdictions except Forest Grove) are as follows:
Year 2001 2002
Median 27.32 28.35
Average 27.55 28.78
PGE 27.67 29.83
IBEW Proposal 27.67 29.87
City Proposal 27.19 28.01
This chart shows that the IBEW proposal follows the PGE settlement, as the union contends has been the practice. The City offer likewise reflects its position that its policy is to negotiate wage increases that generally follow the market median; and thus its proposal produces hourly rates that are somewhat below the median, which has been the circumstance in most of the last 10 years. The City proposal would set the Forest Grove rate in 2002 more than 30 cents per hour less than the median, the greatest differential of any year except 1991, however. The difference between the City offer and the average is even greater. The City points out that two settlements among the comparator jurisdictions were, based on historical trends, abnormally high; the two being the PGE settlement and that of Salem Electric, where the contract is "pegged" to the PGE percentage increases. It is clear that the current PGE contract provides greater increases than those workers were accorded in the previous decade. This is illustrated by the fact that the PGE wage rate for 2002 is substantially greater than that for the median or the average of the comparable jurisdictions; and PGE had not exceeded those figures since 1992, when the PGE rate was only marginally higher.
That the percentage increases for PGE and Salem Electric exceeded those of other jurisdictions is illustrated by these figures:
Employer 2001 %age 2002 %age
Monmouth 2.9 2.5
Tillamook 3.0 3.0
Salem Electric PGE wage rate +3.25 PGE wage rate +3.25
Canby 3.0 3.0
PP&L 3.0 3.0
Western Ore. 3.25 4.0
Clark PUD 3.7 3.5
PGE 4.2 and 3.6 4.0
Clatskanie 3.8 1.625
The median percentage increase of these jurisdictions for 2001 is 3.25 percent and for 2002 is 3 percent, significantly less than provided by the PGE and, consequently, the Salem Electric settlements.
PGE's rate effective July 1 of 2003 will be $30.43, with an additional bump to $31.04 on September 1, making Salem Electric's comparable figures $31.42 and $32.05. These figures reflect two increases of 2 percent each. Increases for 2003 have not been settled for most of the comparators. For Western Oregon and Clatskanie, increases are contractually tied to increases among other jurisdictions, and so cannot yet be determined, while no contracts for 2003 have been executed in the other entities.
Wage rates for meter readers for the first two years (as of July 1 of each year) of the comparators and the parties' proposals are as follows:
Employer 2001 2002
Monmouth (Not in bargaining unit)
Tillamook 19.68 20.27
Salem Electric 18.35 18.90
Canby 14.65 15.12
PP&L 14.83 15.27
Western Oregon 15.00 15.50
Clark PUD (Not in bargaining unit)
Clatskanie 21.81 22.16
PGE 16.95 17.55
Median (of 7) 16.95 17.55
Forest Grove
City Proposal 16.94 17.28
IBEW Proposal 17.41 18.79
The City's proposal places the rate for meter readers at or below the median, while the IBEW proposal places them above the median. The latter historically has been the position of meter readers in Forest Grove (for example, in 2000 the median was $16.38 and the rate in Forest Grove was !6.61). This apparently reflects the fact that Forest Grove meter readers have some complex duties-such as connecting and disconnecting meters-that are not assigned to meter readers in all jurisdictions. In Clatskanie and Tillamook, where meter meters also have such duties, the hourly rates are higher than the median, too, and in fact are considerably higher than the rates proposed by either party here.
It is clear that the practice of the parties for at least the past 10 years has been to apply the same percentage wage increase to meter readers (and other classifications) as that negotiated for linemen.
The third major area of dispute between the parties concerns the pay for the one person who holds the position of Senior Utility Worker (SUW). Under the expired agreement, the SUW was paid $18.54 per hour, compared to $16.94 for a meter reader and $27.19 for a lineman. According to a job description produced by the City, the job objectives of the SUW are:
"To perform duties in support of utility programs; to conduct locates on underground primary and secondary power lines; to receive, stock, monitor, and deliver materials and supplies; to monitor and track active work orders; to perform light maintenance on tools, vehicles and equipment; to assist the line crews as required; and to perform a variety of maintenance tasks relative to assigned area of responsibility."
There do not appear to be classifications of workers in the other jurisdictions that comprehend all the same duties of the SUW. IBEW Representative Eri credibly testified, however, concerning certain positions in other jurisdictions that include similar duties, notably the "warehouse person" in Tillamook and several other positions in Clark PUD, Monmouth and Salem. Nearly all the incumbents in such positions are paid more than the SUW. The IBEW proposes to mitigate this perceived inequity by according the SUW a one-time "spot" wage increase of 3 percent before the application of the other unit-wide increases. The City argues that the matter should be subject to a reclassification discussion that might lead to an appropriate pay adjustment rather than have such a "spot" increase.
"The CPI-All Cities Index, commonly known as the cost of living."
According to Exhibit C-2, the CPI-U shows increases of 2.3 percent in the second half of 2001 and 1.3 percent in the first half of 2002. Neither party relies materially on the CPI figures in formulating and justifying its position in this dispute.
"The stipulations of the parties."
The only stipulations made by the parties are those included in the agreement to arbitrate.
"Such other factors, consistent with paragraphs (a) to (g) of this subsection as are traditionally taken into consideration in the determination of wages, hours, and other terms and conditions of employment. However, the arbitrator shall not use such other factors, if in the judgment of the arbitrator, the factors in paragraphs (a) to (g) of this subsection provide sufficient evidence for an award."
Neither party raised any other factors that should be considered in this matter, and none are needed to supplement the evidence necessary to make an award.
The parties's proposals differ substantially in the amount of the percentage increases to be applied to the unit members wages and as to the concept of the same percentage being accorded all workers.
The City would accord meter readers and others a lesser percentage increase than that given to the line workers. The IBEW points out that this would be a departure from the parties' practice of applying the same negotiated percentage increase to all classifications. The City's
2 percent offer for meter readers also would result in the wages of those workers falling significantly below the median of the comparators by 2002 and probably even further below in 2003. The City offers no compelling rationale for departing from a decade-long practice of percentage parity at this juncture. Under these circumstances, I conclude that the Award in this case should conform with the parties' bargaining practice of providing the same percentage wage increase for all members of the unit.
The difference in cost between the two proposals over three years is estimated to be $157,000. An increase in the average residential power bill per month of 26 cents would be sufficient to fund that amount. To fully fund the IBEW proposal (at an estimated cost of $479,000) without using reserves would require a rate increase for the average user of 86 cents per month, while funding the City's offer (at an estimated cost of $322,000) would require a rate increase of 60 cents. Even if the potential increase of 86 cents had been in effect this past year, the residents of Forest Grove still would have had the second-lowest average monthly electricity bill among the stipulated comparable jurisdictions. In addition, the Department's reserves, though recently depleted, remain sufficient to fund all or part of the increased costs, if the City so chooses, despite the requirements of the City's policy and the bond covenant. I find, therefore, that the City has the ability to pay for the settlement to be awarded without materially affecting its policy of providing low-cost power to its residents.
A more difficult question is the appropriate amount of the percentage increase to be applied, based on the evidence presented. The IBEW showed that the Forest Grove lineman wage approximated the PGE wages over the last 10 years, as illustrated by the chart on p. 5. At the same time, however, the evidence shows-as contended by the City-that the current PGE contract provides wage increases that substantially exceed those in comparable jurisdictions and that result in a dramatic shift in PGE's ranking relative to the other comparators. This is clearly demonstrated by the charts and discussion on pp.5-6. For example, the PGE lineman wage ranked below the median in each of the prior eight years, but for 2001 and 2002 significantly exceeds the median. The PGE rate surpasses the median by 35 cents per hour as of July 1, 2001, by $1.32 per hour on September 1, 2001, and by $1.48 per hour for 2002.
During the nine years when the Forest Grove wage "mirrored" or approximated the PGE wage, both units also maintained their rank among the comparators of being slightly below the median, except for 1992 when both were just 3 cents above. Thus, it can be argued-as does the City-that the Forest Grove settlements over the years were keyed to maintaining proximity to the median, rather than just to the wages paid by PGE.
In any case, considering the conflicting contentions of the parties and the evidence presented, I cannot conclude that there was any tacit understanding between them about keying settlements to either the median or the PGE rate. Nor do I find that the historic pattern of settlements conclusively supports the contention of one party or the other. In this circumstance, I believe it is appropriate to award percentage increases that reflect, to some extent, both views; that is, increases that follow PGE's lead by being greater than average among the comparators, but that are not so large as to cause the Forest Grove hourly rate to stray too far from the median.
For these reasons, I will order that the hourly wage rates for all members of the bargaining unit be increased as follows: 4 percent effective July 1, 2001; 4 percent effective July 1, 2002; and 3 percent effective July 1, 2003. This will produce hourly rates that are above the median for 2001 and 2002 and probably 2003, but that remain within a reasonable margin rather than dramatically exceed the median as they would under the IBEW proposal, particularly in the second year of the contract.
Concerning the "spot" increase of 3 percent for the Senior Utility Worker, I am not persuaded that the compensation, including the awarded increases, will not be commensurate with the duties involved or with what is paid in other jurisdictions to a degree that would warrant the proposed special adjustment at this time. Consequently, the increase will not be included in the award.
The hourly wage rates for all members of the IBEW bargaining unit shall be increased as follows: 4 percent effective July 1, 2001; 4 percent effective July 1, 2002; and 3 percent effective July 1, 2003.
Respectfully submitted November 13, 2002,
Allen M. Hein, Arbitrator
For IBEW: John S. Bishop, Attorney, McKanna Bishop Joffee
For the City: Christine M. Meadows, Attorney, Jordan Schrader
1. There are other classifications included in the contract, but there are incumbents in only the following: line foreman, line working foreman, meter relay foreman, meter man working foreman, journeyman lineman, apprentice lineman, senior utility worker, meter reader and part-time senior utility worker. The City's proposal of 3 percent applies to all line workers and the 2 percent applies to all other incumbents. As described above, the IBEW proposal applies to all classifications equally.
2. On current revenues the 10 percent reserve called for by City policy would be approximately $950,000. Under the bond covenant which requires that revenues equal 125 percent of expenditures, however, if expenditures continue to exceed actual revenues, the City would have to maintain additional reserves that could not be used for operating expenses.
3. In this and all other charts, the term "median" means "the middle number in a series containing an odd number of items." Webster's Unabridged Dictionary, 2d ed., p.1117.