Consolidated Edison management has locked out 8,500 workers in a vicious attempt to cut back on basic pension and other rights won over decades. They took this action even after Con Ed workers had struggled to get electricity back online during the recent heat wave just as they have in crisis after every crisis caused by storms or by the 9-11 attack.
Con Ed’s skilled union workers face danger every day as they work to bring power to homes and businesses. On April 24, 2009, Ghanwatti Boodram, a nurse and mother of three was killed in Queens due to a gas leak. Six others, including a Con Ed worker inspecting for leaks, were taken to the hospital. Only after the death did Con Ed management change procedures to allow Con Ed workers to coordinate with the Fire Department on evacuations and venting manholes.
On July 18, 2007, an 83-year-old steam pipe exploded killing a pedestrian and injuring 20 others. Old pipes and constant management pressure to work faster and faster with fewer workers leads to unsafe conditions for the public and the workers. Any union battle to increase staffing and safety is a battle for all of us.
Since 1937, the Utility Workers Local 1-2 has been fighting for and winning basic rights that are now under attack in this lockout. Decent pensions for workers who have spent decades in hot, asbestos- and PCB-filled environments to bring power into our homes is something we all should support. Everyone, no matter where they work, deserves a decent pension. Management wants to use the fact that some people have pensions while many do not as a divide-and-conquer tactic to end pensions for all.
In 2008, management tried to force the union to accept an end to pensions that guarantee a monthly benefit. They wanted to end it for all newly hired workers knowing that over a short time no worker would have a guaranteed pension. Under their plan, new workers would only have a 401(k), which means that they would live at the whim of the stock market, which wiped out the savings of millions of workers in just the last five years. In 2008, the union stopped this plan. Now management is focused on eliminating guaranteed pensions again—this time by the force of a lockout.
The threat is very real and very immediate. Over 30 percent of the workers have under five years on the job. Older workers are retiring. Any agreement for a two-tier pension will rip apart solidarity. Con Ed workers doing the same job in a manhole or a bucket truck or in a substation or in a clerical position all deserve the same benefits!
This is a high-profile battle in New York, and if massively profitable Con Ed can get away with it against these workers, every other employer will feel emboldened to cut wages and rights. That’s why every worker should show solidarity with the utility workers.
Sky-high bills and gas and electricity shut-offs
If you are one of the tens of thousands of New Yorkers who has gotten a shut-off notice from Con Ed, you already know how heartless they are. In 2010, Con Ed sent out 93,469 gas and electricity termination notices.
A March 2011 AARP study of New Yorkers over age 50 found that 41 percent had trouble paying their monthly bill. The rate was even higher for the most oppressed—48 percent of African Americans and 56 percent of Hispanics had trouble paying their gas and electric bills. (See the AARP study “New York’s Utility Termination Storm ‘The Quiet Blackout’”)
The AARP study reports: “Similarly, in April 2010, when Con Edison shut off service to 9,427 customers, 229,989—8% of its total number of customers—had arrears exceeding 60 days, and notices threatening shutoff were sent to 215,111 customers. Thus, in those months, the number of customers terminated for nonpayment was a small fraction of the total number of customers whose households were threatened with termination of service—11% in the case of National Grid and 4% in the case of Con Edison. According to the PSC, over 950,000 customers in New York State are currently more than 60 days in arrears on their utility bills.”
Con Ed charges the highest residential rates of any major utility in the lower 48 states. Residents in Alaska, Hawaii and some islands off of the coast of Maine pay more. The only reason for this is the fact that the New York political power structure allows it to happen.
When deregulation was sold to the people years ago, it was done on the basis of the lie that it would be better for the consumer. Instead, it has been hell for energy company workers and consumers across the country. It has only benefited the rich and those companies able to swallow other companies in an inexorable drive towards monopoly.
As a part of deregulation, in November 1999 the state created the New York Independent System Operator. From that point to 2001, wholesale electric prices in New York rose over 100 percent in just two years! Since then, rate increases have kept basic heat, light and cool air out of reach for thousands of people.
Sky-high profits
While people suffer from the heat or die from resorting to unsafe alternate heating sources in the winter, Con Ed owners are going to the bank with more and more money.
Income and profits in 2011 were way up over 2010 and 2009. Consolidated Edison is an $18 billion electric power and gas utility holding company, which has increased dividends for its owners in each of the last 38 consecutive years.
According to their 3 May 2012 Quarterly Report and 2011 Annual Report, in the first three months of 2012 Con Ed of NY had an operating profit (net cash) of $296 million more than it did in the same period in 2011. Its investments brought in $74 million more than in 2011.
They are not hurting for cash. Their demands that the workers give up pension rights is not based on an inability to pay. Their demands that customers pay high bills or get cut off is not based on anything more than greed.
Con Ed workers make it possible for homes and businesses to have power. Con Ed customers are mostly workers and unemployed in communities across New York. Without these customers, Con Ed would be nothing.
The owners however contribute nothing to the process for getting power to New York City homes. Their only function is to take the fruit of the workers’ labor.
No income taxes for Con Ed
Between 2008 and 2010, Con Ed’s profit was $4.263 billion. But it did not pay any income tax. In fact, it got a $127 million refund.
In 2010, Con Ed had a profit of over $1.5 billion. But it did not pay any income tax. In fact, it got a $144 million refund.
Con Ed’s Feb. 21 report stated, “For 2011, 2010 and 2009, the Companies had no current federal income tax liability as a result of, among other things, the bonus depreciation provisions of the American Recovery and Reinvestment Act of 2009, the Small Business Jobs Act of 2010 and the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.” The report admitted that they got a $236 million tax refund in 2011.
Who owns Con Ed?
Finance capital, the banks and private equity companies control Con Ed. There are 641 financial institutions that own stock in Con Ed, and collectively they control 42 percent of Con Ed shares, effectively giving them total control of the company. More importantly, just five finance companies, including State Street Corporation, BlackRock, Bank of New York Mellon, and the Vanguard Group, control 20 percent of Con Ed stock. These are the forces that are gouging you with high bills and that are trying to rip the heart out of the utility workers’ union.
Finance capital’s control exercised through Board of Directors
These captains of finance have “front men,” the Board of Directors of Con Ed, which does their bidding.
On the board are representatives of some of the richest, most anti-labor, anti-community corporations, as well as people with feet in the political power establishment:
- Vincent A. Calarco is also on the board of Newmont Mining, known for its brutal exploitation of miners in Indonesia, Peru and Ghana. He is also on the board of Taylor Companies, Crompton Corporation (now known as Chemtura Corporation), CPG International and Santana Products.
- L. Frederick Sutherland, chief financial officer; executive vice president of ARAMARK. Previously VP Corporate Banking at Chase Manhattan Bank; also currently on Board of Directors of Acme Metals Inc.
- Ellen V. Futter has been on the board of JPMorgan Chase or its predecessor since 1997. In her role at JPMorgan Chase, she was on the Risk Committee at a time when the bank’s actions lost as much as $9 billion trading credit derivatives. She also was on the Bristol-Myers audit committee during the 1999 scandal there.
- Michael J. Del Giudice is on the board of Rockland Capital and also Millennium Credit Markets LLC, as well as military-related Sabre Industries. He spent 10 years as a General Partner in the finance capital company Lazard Freres and was deputy chief of staff to Governor Carey. Lazard Feres played a big role in the mass layoffs and cutbacks in the 1970s and 1980s
- John F. Killian is on the Board of Directors of Verizon NY and is CFO for Verizon Virginia, NJ and NY; he is also a director of Houghton Mifflin Harcourt Publishing Company. Verizon is in the midst of an anti-union campaign against the Communication Workers and has refused to come to reasonable terms for over a year in bargaining
- Eugene R. McGrath is a former chairman and CEO of Con Ed 1997-2005 (chair of Con Ed NY from 1990-2006). He is a trustee of the Economic Club of New York, an exclusive big business organization.
- Sally Hernandez-Pinero was previously chair of the NY City Housing Authority from 1992 to 1994; and was the NYC deputy mayor for finance and economic development from 1990 to 1992, and chair of the Board of Directors of the Financial Services Corporation of New York City from January 1988 to January 1990. She was appointed by Mayor Bloomberg to head the Lower Manhattan Development Corp.
- Michael W. Ranger is on the Board of Directors of Beacon Health Strategies and director, Managed Healthcare Associates, Inc.; he is a former director, Energy Future Holdings Corporation.
- Gordon J. Davis is on the Board of Directors of Dreyfus Funds and also Phoenix Home Life Mutual Insurance Company.
Kevin Burke driving the program of finance capital
Kevin Burke is the chairman and CEO of Con Ed. He has also served on the Board of Directors of the Business Council of New York State, as well as the American Gas Association, and the Economic Club of New York. He is deeply connected to the broader big business interests in New York.
Burke is also on the Board of Directors of Honeywell, a profitable corporation that on June 28, 2010, locked out 229 members of United Steelworkers Local 7-669 from its uranium conversion facility in Metropolis, Ill., in an attempt to eliminate seniority and retiree health car and other basic rights. This plant is the largest conversion plant in the world to produce nuclear fuel for commercial reactors, and the number of workers dying from cancer is astounding.
Yet big capital, led in part by Kevin Burke, wanted to force them to give up the most basic rights. In this struggle, on the most important issues, the workers held out one day longer than management. Yet it was not a complete victory. It was a struggle in the rural Midwest, a place that made it difficult for real solidarity on the line. New York is a different story.
In 2011, Kevin Burke’s compensation from Con Ed was $10,965,047. This was 322 times the average worker’s pay.
It would take a worker making minimum wage 727 years to earn what Kevin Burke makes in just one year. In fact it would take a U.S. president 27 years to make what Burke makes in one year.
His pension is not under attack, but he wants to attack the pensions of Con Ed workers.
The role of the state: exposing the so-called ‘Public Service Commission’
The “Public Service Commission” was set up as a result of a struggle to rein in the big energy and other utility companies, to stop them from price gouging. But this was a sham. From the beginning, its actions has been in the interest of big business. Time after time, they have raised rates even when Con Ed was making money and even when poor and working people could not afford more. (See the box below for a short history on increases.)
In 2006, this “commission” held hearings on the massive power outage in Queens but refused to advertise the hearing in any language other than English. Most of residents in the affected section of Queens were immigrants.
The Public Service Commission has not even done what others have around the country, such as requiring much lower rates for the poor. In New York, the rate reduction is 5 percent while in California it is 20 percent. (Southern California Edison)
In 2010, the administrations of Governors Paterson and Cuomo eliminated funding for the liberal public watchdog the Public Utility Law Project of N.Y. After 28 years of funding, it was eliminated while aid to corporations continued. (It has since restarted with other funding in 2012.)
The struggle to regulate monopolies like gas and electric utilities has been a long one. The workers who labor for these monopolies and the affected communities have at various times put up a herculean struggle.
Both the Democratic Party and the Republican Party have supported the system of profits before people. Both demanded deregulation, and both voted to destroy regulation. Both have supported the fiction about the capitalist market producing the best and cheapest gas and electric service.
This policy, now enforced by the Federal Energy Regulatory Commission, allows for monopolies to buy and sell at undisclosed prices—even with market malfunctions, price rigging and huge overcharges. On June 25, the U.S. Supreme Court denied a review that challenged this setup.
Even without the rigging, however, the system is designed for the profit of a few—that profit coming from the labor of workers like those at Con Ed.
Deregulation has ultimately led to more monopoly and a drive to reduce wages, benefits and rights for workers and communities. It has always led to higher prices.
A different world is possible
Con Ed’s vast wealth shows that it is possible for all New Yorkers to have a decent, cool place to live, hot water and power for lights—at a cost that would be affordable to all.
Decent wages, pensions and rights on the job should be rights that every worker has.
The only thing standing in the way of that possibility is the system run for profit over human need.
The role of the Public Service Commission:
A history of constant gas and electric price increases despite jobs being cut and wages not rising to even meet inflation
- March 2010, PSC voted unanimously to raise Con Ed’s rates for electricity by about 4 percent annually for three years. The plan was intended to add $420 million to Con Ed’s annual revenues, on average, over the three years. Con Ed estimated that the increases would raise a typical household bill, now about $84 a month, to more than $94 a month in 2012.
- Nov 2009, Con Ed filed papers with the PSC to raise the price of gas for residents by 6 percent a year for three years and is seeking permission from the board to raise residential gas prices 6 percent annually beginning in October 2010 (note that their 3rd quarter profits this year were up 85 percent). They did not care that poor and working people could not afford the increase. In June 2009, 13 percent of Con Ed’s residential customers on Staten Island were 60 days late in paying their bill, up from 11 percent a year earlier. On Staten Island alone, shut-offs were up over 9 percent from a year earlier.
- May 2009, “Con Edison submitted plans to state regulators … that would increase monthly electricity bills in 2010 by as much as $8 for typical residential customers.” They filed this proposal less than three weeks after the April 21, 2009, PSC approval of an increase of about $6 per month. That $6 added up to $523.4 million more for Con Ed. But that is not all. On top of the $6 was an added surcharge raising another $198 million for Con Ed. In total, the increase was 6.1 percent across the system. (The New York Times, April 22 and May 8, 2009)
- October 2008, Con Ed admitted that during September 2008, 9,639 residential customers had their electricity turned off for nonpayment, 13 percent more than in the same period in 2007. “In September, 342,073 residential customers were in arrears for more than 60 days, an 18 percent jump from the same period the year before.” (The New York Times, Oct. 10, 2008)
- May 2008, Con Ed seeks another rate increase to add $557 million more to their coffers—only weeks after getting approval for a rate increase that added $425 million rise in electricity rates.
- April 2008, “Customers in western Queens can expect to receive about $100 each from Consolidated Edison as compensation for having to sweat through nine days without power in July 2006.” (The New York Times, April 24, 2008)
- March 2008, “Con Ed Wins Approval for a Big One-Time Increase Rates for Electric Service.” The PSC gave unanimous approval for a $425 million increase in rates for ConEd. (The New York Times, March 20, 2008)
- September 2007, PSC says Con Ed should get another rate increase in transmission prices—$618 million in the year starting in April 2008. (The New York Times, Sept. 8, 2007)
- May 2007, Con Ed filed papers to get a 17 percent residential rate increase—this triggered big protests in Queens at public hearings.
- July 2006, Con Ed caught in a lie that they describe as a “discrepancy.” Instead of 2,000 affected by a blackout in Queens, there were closer to 100,000. (They had only counted complaints to arrive at a lower number for the press.) (The New York Times, July 21, 2006)
- March 16, 2005, PSC approves an electricity rate increase for Con Ed, adding $325 million to their coffers.
- April 2001, The New York Times: “Electric bills in New York have hit record highs in the last year, but Consolidated Edison and state regulators say they should have been a tad higher. State officials have given Con Edison the go-ahead to raise its rates by $6 million a month, to correct what they and the company say was a mathematical error the utility made a year ago.” (April 28, 2001)
- August 2000, The New York Times: “Millions of Consolidated Edison customers got a rude shock last month when they discovered that even though this was one of the coolest summers in memory, their electricity bills had increased by an average of 43 percent over last summer.” (Aug. 22, 2000)
- September 1997, ConEd and state regulators agreed to a plan—a cut in rates, a break up Con Ed into several pieces and to competition among power companies in a market that Con Ed has held for decades as a monopoly. … Con Ed’s rates are about double the national average, and are the second highest in the continental United States, after the Long Island Lighting Company’s. At the time, The New York Times reported, “The New York Public Interest Research Group said that, despite the changes, it opposed the agreement on both consumer and environmental grounds. ‘The whole thing was stage managed so that the Governor could look like the hero by improving somewhat on a truly terrible deal,’ said Larry Shapiro, a lawyer at the group.” (Sept. 11, 1997)
- March 1993, PSC approved a 5 percent electricity rate increase for ConEd. (The New York Times, March 11, 1993)
- August 1987, Con Ed agrees to freeze rates for gas customers for two years— because its corporate income tax rate was reduced from 46 percent to 34 percent. (The New York Times, Aug. 7, 1987) That decrease was not limited to two years. (The New York Times, March 5, 1987)
- March 1981, PSC unanimously approved a 15.5 percent rate increase for Con Ed—largest on record in New York state and the full amount that they requested in April 1980. (The New York Times, March 13, 1981)
