Wednesday, September 19, 2018
The FirstEnergy Nuclear Operating Co., now in its fifth month under bankruptcy protection, has proposed generous bonuses for key employees -- but none represented by a union -- at the Perry nuclear power plant, the Davis-Besse nuclear plant near Toledo and the Beaver Valley nuclear plant near Pittsburgh. FENOC has argued the bonuses, up to 100 percent of pay, are necessary to keep employees working until the plants shut down. The unions objected to the exclusion of their members. Bankruptcy Judge Alan Koschik has rejected the plan and given the company the option of changing it or appealing his decision. (Plain Dealer file)
By John Funk, The Plain Dealer
CLEVELAND, Ohio --The FirstEnergy Nuclear Operating Co. has failed to convince a bankruptcy judge that its plan to give bonuses to nearly 1,000 nuclear plant workers, none of them union members, makes good business sense.
FENOC had proposed spending about $100 million to bankroll a bonus plan, known as a KERP, or Key Employee Retention Plan, under bankruptcy law, to give about 1,000 of its 2,300 nuclear plant workers generous bonuses if they continued to work until the reactors are shut down in 2020 and 2021.
The company is planning to shut down the Davis-Besse nuclear plant, east of Toledo, on June 1, 2020, the Perry nuclear plant east of Cleveland and one of the two-reactor Beaver Valley plant near Pittsburgh on June 1, 2021, and the second Beaver Valley reactor on Oct. 31, 2021.
In a decision late Tuesday, Judge Alan Koschik wrote that the plan would not only be discriminatory, but also that the company had not proven it would make good business sense.
Paul Harden, FENOC senior vice president and chief operating officer, testified that when a committee decided who would be offered a bonus it considered whether an employee was more likely to be able to find another job before shutdown, whether the position the employee left was crucial to operations, and whether there were other qualified employees who could fill that job until shutdown. It was a job function analysis, he stressed, made without reference to an employee's union status.
"We are disappointed with the court's ruling and are evaluating our next steps," said a FENOC spokesman.
That none of the 991 tapped for a bonus was a union member just worked out that way and was not deliberate, he said.
Koschik did not see it that way.
"It is undisputed that the proposed KERP discriminates between union and non-union personnel ... while no union employees would receive any bonus," he wrote.
The judge noted, for example, that the plan would have given enormous bonuses to reactor operators at the Perry plant, but not to operators at Davis-Besse and Beaver Valley. The difference, he noted, is that these critical jobs are staffed by unionized reactor operators at Davis-Besse and Beaver Valley, while those at Perry are not in a union.
The Court's concern is that while Debtor FENOC is willing to spend upwards of $100 million to retain employees, it proposes to "exclude a set of employees it has already determined are the most critical to retain," he wrote.
"The burden is on the Debtors [FENOC] to prove a sound business reason for this discrimination, i.e., that this discrimination was not unfair. They did not do so."
The judge noted that the KERP as proposed "relies too often on stereotypes instead of reasonable judgement."
That may have been an apparent reference to an assertion during several days of hearings by labor lawyer Joyce Goldstein, representing the plant unions, that "the current plan is based on a lot of speculation - and, significantly, that speculation has been colored by prejudicial, class-based stereotypes, not objective evidence."
Koschik wrote that when reviewing KERP bonus plans, bankruptcy courts must evaluate whether the plan "bears a reasonable relationship to its purpose" (retaining employees), whether it is consistent with industry standards and whether it discriminates unfairly.
"The evidence does not show that the Debtors satisfy these criteria in this case, and the Court finds that the Debtors' own caginess in presenting their evidence is a significant reason for that."
Goldstein expressed gratitude for the decision.
"We are grateful for the court's decision and hopeful that FirstEnergy will recognize the value of its union workers by offering them a meaningful retention program to encourage them to remain employed. Their continued employment is critical not just to the union workers and their families but to maintain the safety of our communities in Ohio and Pennsylvania. "