On the same day in July that Ohio lawmakers approved state-wide customer charges to give FirstEnergy Solutions a six-year $1.1 billon nuclear plant subsidy, the company told a bankruptcy court it could not honor existing contracts with unions representing power plant employees and intended to negotiate completely new bargaining agreements once it emerged as a reorganized company.
That revelation emerged Friday in an objection to the company’s latest reorganization plan by lawyers representing locals of the Utility Workers Union of America and the International Brotherhood of Electrical Workers. The unions were among more than half dozen parties in the case filing objections.
In a reference to the FES reorganization plan filed July 23 — less than 12 hours after House Bill 6 had been approved by the legislature and signed by Republican Gov. Mike DeWine — the unions argue that the company intends to use the court to emerge from bankruptcy without its union contracts. And that contradicts the testimony of David Griffing, the company’s vice president of governmental affairs, the union filing to the court charges.
Griffing assured lawmakers in April before an Ohio House subcommittee that “that new [collective bargaining agreements] were in essence agreed upon … Both parties … believe the negotiations were acceptable.” But Friday’s filing on behalf of the union locals indicates that the company has neither agreed to assume the existing contracts nor reached new ones with the unions at two of the three FES nuclear plants, Perry, east of Cleveland and Beaver Valley, near Pittsburgh.
The struggle between the company and its unions is erupting publicly just weeks before court hearings are scheduled on the company’s bankruptcy reorganization plan and also comes at a time when opponents of HB 6 are gearing up a referendum petition drive to put the subsidy issue before voters on the November 2020 ballot.
The union is basing its position in the bankruptcy struggle to remain viable at the power plants on the argument that “successorship clauses” in the contracts obligate FES to require any new company — including a reorganized FirstEnergy Solutions — to assume the contracts as they were agreed to. The unions point out that FES abided by that contract language when it sold other power plants to outside companies.
FES: Can’t assume the contract
The company position, as laid out in its July 23 reorganization plan, is that the reorganized FES cannot assume the contract because “the collective bargaining agreements require the Debtors to provide benefits to their employees under health care, severance, welfare, incentive compensation, and retirement plans sponsored by FirstEnergy Corp.”
Instead, FES wants to negotiate new terms “consistent with the business plan” of the reorganized company. FES also held out the possibility that it might ask the court to throw out the contracts.
The unions are countering that under the bankruptcy code and existing case law, the company must declare before reorganization whether it is rejecting the contract. “They simply want the benefit of plan confirmation, without deciding whether to assume or reject,” the union attorneys wrote. “However this is not what the law provides.”
The union filing reveals that in bargaining talks over the past few months the company has contended that the benefits in the existing union contracts, particularly the pension benefits, “are non-replicable.”
The union filing also notes that it would have the right to file an “administrative damage claim” later if the issue is not resolved now and the company later decides to reject the contracts out of hand.
Unions play key role in HB 6
The power plant unions played what has been described as a key role in the company’s media and lobbying campaigns to persuade Democrat lawmakers of the necessity of approving the unprecedented bailout in Ohio of an unregulated power plant company.
And though it appears from the vote totals that Republicans would have been able to pass House Bill 6 in the House and Senate without help from Democrats, the margins of victory would have been much thinner. The final vote in the House was 51 to 38. To pass, a bill must have at least 50 votes in the 99-seat chamber.
The leadership of the minority Democrat caucuses in the Ohio House and Senate had no immediate comment Friday.
But two Democratic members of the House said they were outraged when reached for comment. Rep. David Leland, D-Columbus, and Rep. Michael J. O’Brien, D-Warren, both voted against HB 6.
“This is so blatant. This is like spitting in the face of every Ohio taxpayer,” said Leland, adding that the company had said it would have to close its plants without the subsidy. “They are clearly more concerned about taking care of Wall Street than they are of taking care of workers at their plant. I think this is such a damaging piece of information that if this had been known before the vote, I don’t know it would have passed.”
O’Brien, who pointedly asked Griffing about the contract talks during an April 17 hearing in a House subcommittee, said the company “has been less than honest from the beginning.”
“My question [to Griffing] was what guarantee do the unions have that you will keep everything status quo. Griffing said we absolutely intend to keep the union jobs and the union will be recognized. Now we see that is not the case at all,” he said.
