California PUC orders utilities' layoffs rescinded

The California Public Utilities Commission Thursday ordered the state's two biggest utilities to rescind planned employee layoffs and restore all of the positions cut so far, and prohibited future layoffs. The commission's order, which was sought by union employees, said layoffs already made and reductions in overtime hours 'have reduced the level of service below what customers expect as an adequate, efficient, just, and reasonable level of service.'


By the OGJ Online Staff

HOUSTON, Mar. 15�The California Public Utilities Commission (PUC) Thursday ordered the state's two biggest utilities to rescind planned employee layoffs and restore all of the positions cut so far, and prohibited future layoffs.

The commission's order, which was sought by union employees, said layoffs already made and reductions in overtime hours "have reduced the level of service below what customers expect as an adequate, efficient, just, and reasonable level of service.''

PG&E Corp., with about 18,800 employees, said the layoffs were part of a $180 million cost-cutting program made in conjunction with other measures intended to help keep the company out of bankruptcy court. Southern California Edison Co., with about 13,000 employees, planned to cut overall costs by $465 million/year. Together, the companies planned to lay off about 3,000 workers.

Jack McNally, business manager of Local 1245, a union representing 13,500 PG&E employees, said in a statement the PUC did the right thing by approving the layoff ban. "The amount of money the utilities would save from the layoffs is just a drop in the bucket compared to the huge financial problems they're having. Getting rid of workers isn't a solution-in fact, it would create more problems.''

But Southern California Edison said it believed it was "irresponsible of the commissioners who voted in the majority to disallow needed cash preservation measures. No one would seek these cost reductions except in a situation where they are necessary to preserve basic services."

It accused the commission of failing on repeated occasions to take the measures "necessary to assure a reliable supply of electricity and a stable rate structure."

Instead, the company said, the PUC has driven the state's investor-owned utilities to the "edge of bankruptcy, and jeopardized the essential services they provide millions of Californians. This kind of undue micro-management�preventing utilities from reasonable and temporary cost cutting�only perpetuates a remarkable episode of regulatory failure in California."

Under California law, the two utilities were not able to pass on all the cost of wholesale power to their retail customers because of a rate freeze. Now both companies have run up a combined debt of $13 billion, and the state has stepped in to buy electricity on behalf of their customers.

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