Utility Workers:
Is Their Mistreatment a Commission Responsibility?

            Whether it’s 100 degrees or 20 degrees, men and women are outside—digging trenches, laying pipes, flagging traffic, climbing poles, repairing transformers.  It’s difficult, dangerous work.  For years I have driven, biked, walked, and run right by these hard-hatted, orange-vested workers, not thinking twice about their pay and their treatment.  Now, as result of working with the Laborers’ International Union of North America and its D.C-area affiliate, I've learned a few things.

            Every franchised utility has an obligation:  to provide service cost-effectively, reliably, and safely.  Utility service is capital-intensive; so utilities need to get the right equipment and treat it right.  But utility service is also labor-intensive; so utilities need to get the right workers and treat them right.

 

Utility workers are at risk

            Two trends—outsourcing and multiyear rate plans—are converging to put utility service and utility workers at risk.  With outsourcing, utilities are replacing some of their full-time employees with temporary workers hired by contractors.1  With multiyear rate plans, utilities can keep savings from cost-cutting for longer periods.  Combined, these practices can mean utilities earn more while workers earn less.  Why?  Because any rate plan that lets a utility keep the excess of projected cost over actual cost rewards the utility for contracting out work to companies that underpay their workers.  And if the contractors can also keep the excess of projected cost over actual cost, the incentive to mistreat is amplified. 

            Worker mistreatment takes multiple forms:  illegal underpayment (such as payments below minimum wage and failure to pay overtime); legal underpayment (paying workers below their value); and insufficient sick leave, vacation time, and training time.  We want utilities to keep costs down.  But a utility's obligation to minimize its customers' costs is always subject to other constraints, both legal and practical.  Just as a cost-minimizing utility may not use child labor, it may not underpay its workers, or tolerate contractors that mistreat their workers.

            Outsourcing to specialty companies, and outsourcing when labor needs temporarily exceed internal staff, can be cost-effective.  But when outsourcing is motivated by earnings rather than cost-effectiveness, we risk mistreating workers.  Mistreating workers leads to productivity losses, errors, and injuries—problems that affect utility service both now and in the future.  Those effects make a utility’s labor practices legally relevant to utility regulation.

            If a utility causes contractors to compete on price, with no standards for worker treatment, contractor competition can lead to contractor mistreatment.  Labor supply is often inelastic.  For a contractor's other needs, like equipment and rent, supply is relatively elastic.  If the contractor doesn’t pay what suppliers want, they’ll sell to someone else.  But for workers—especially non-union workers with limited options (due to ethnicity, race, immigration status, language, childcare or eldercare responsibilities, or transportation costs), their supply is relatively inelastic.  So the contractor can lower its workers’ pay, treat them poorly, and still get the workers it needs.

Services

Testimony, Papers, and Presentations

Direct testimony before the Public Service Commission of Wisconsin in the Joint Application of Wisconsin Electric Power Company and Wisconsin Gas LLC, for Authority to Adjust Electric, Natural Gas, and Steam Rates
A layperson’s introduction to regulation created by Scott Hempling in support of The British Columbia Utilities Commission's inquiry into whether utility regulation should extend to utilities owned by indigenous nations.
This tesimony relates to the modification of rates, charges, and tariffs for retail electric service in Oklahoma.
The testimony relates to AltaGas’s proposed acquisition of WGL Holdings, Inc. and Washington Gas Light Company.
The testimony addresses the following: the effect of the transaction on consumers, including: (1) reasonableness of the purchase price, including whether the purchase price was reasonable in light of the savings that can be demonstrated from the merger and whether the purchase price is within a reasonable range; (2) whether ratepayer benefits . . .

Books by Hempling

Regulating Public Utility Performance

“[A] comprehensive regulatory treatise …. In all respects, it merits comparison with Kahn and Phillips."

Regulating Public Utility Performance:  The Law of Market Structure, Pricing and Jurisdiction

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Preside or Lead

Preside or Lead?
The Attributes and Actions of Effective Regulators

Now Available on Kindle

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Hempling Appearances

Energy Bar Association
Panel on Practice Principles for New Regulatory Lawyers


UDC Law School Panel
Is the Exelon Takeover of Pepco in the Public Interest?


Nigeria Electricity Regulatory Commission
3rd Judges’ Seminar


Telecom Forum
Asamblea Plenaria REGULATEL


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Electricity Jurisdiction

Testimonials

I highly recommend Scott Hempling. I have known him since 2003, since he was a consultant for the Hawaii Public Utilities Commission on various important and cutting-edge policy regulatory matters in Hawaii, through his time as the Executive Director at the National Regulatory Research Institute. His expertise, knowledge, and experience in all regulatory and energy matters is unmatched, and he would be a highly valuable resource and asset in any such endeavor.
— Carlito P. Caliboso, former Chairman, Hawaii Public Utilities Commission