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5.2. ERMUSR 11-13-2012 Elk River �. Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission ERMU Wage and Benefits Committee John Dietz—Chair John Dietz—Chair Daryl Thompson—Vice Chair Troy Adams, P.E. —General Manager Al Nadeau—Trustee Theresa Slominski—Finance and Office Manager Mark Fuchs—Electric Superintendent MEETING DATE: AGENDA ITEM NUMBER: November 13, 2012 5.2 SUBJECT: Wage and Benefits Committee Update BACKGROUND: In October 2011 Utilities Commission formed a Wage and Benefits Committee. The Utilities Commission created the committee to be comprised of one Commissioner, John Dietz—Utilities Chair, and three Utilities managers, Troy Adams—General Manager, Theresa Slominski— Finance and Office Manager, and Mark Fuchs —Electric Superintendent. The intent for the creation was to have the committee review and analyze wage and benefits information, receive comments and questions from employees relating to wage and benefits, function as a forum for discussion, and ultimately present select wage and benefit information to the Utilities Commission for action. DISCUSSION: The Wage and Benefits Committee met on October 16th and 30t. The Committee determined the following items should be presented to the Utilities Commission for consideration: Wages A survey was conducted of the metro utilities benchmarking the hourly wage for journeyman lineworkers. National and State survey benchmarking information was also reviewed by the Committee. The budget currently reflects a 3% Cost of Living Adjustment (COLA). This has a budget impact of$69,000. The Committee has elected to pass a summarized overview of this information along to the Commission for consideration. A comparison to the other metro utilities is summarized in the attached tables. Per the intent of the creation of this Committee, employees have the option to make requests and contribute to the Committee discussions. The lineworkers have formally submitted a request for a 7% COLA. This would have a budget impact of$92,000 above the currently budgeted COLA. This request is attached for Commission review. 1.1 . Page 1 of 4 r U I FAIB •E NATUR Reliable Public Power Provider POWERED T o SERVE Benefits The dental renewal effective January 1,2013, will result in an annual increase of$2,726.76. Of this amount,the Utilities would be responsible for 75%, or$2,045.07. The employees would be responsible for the remaining 25%,or$681.69. The Committee has elected to make the recommendation that the Commission approved the dental renewal. A dental renewal summary is attached. Other A number of other requests and issues where discussed that are relevant to compensation. The Committee has elected to submit a number of these items for Commission consideration. 1. ERMU Performance Metrics—This is a company performance base program designed to incentivize employee commitment towards the company's success. Divided into categories representing core values of the company and again into sub- categories that are quantifiable,this program is designed to track goals that require companywide support of the employees to continually achieve. When the employees work together as a team to achieve these goals,the company recognizes a corresponding reduction in operating expenses. In the provided draft ERMU Performance Metrics table there are 5 company goal categories divided into a total of 15 sub-categories. Staff has worked to identify trends for these sub-categories for use by the Commission in defining realistic goals. This program would be initiated at the beginning of a given year and run through the calendar year. After the audit is received by the Commission the following year,the Commission would then release a corresponding lump sum payment to the employees. For example, if the Performance Metrics was approved with a 2% payment and the metrics results in 75%achievement,a 1.5%of gross annual hourly wages would be issued in a lump sum payment to employees still employed and in good standing who worked during the measured year. This payment would be prorated for those hired during the year. An approximation of the payment would be known at the time of budgeting and would be included as an expense line item. The payment would have a number of criteria regulating the disbursement. These are identified on the attached table. The Wage and Benefits Committee supported this program and have elected to submit it to the Commission for discussion and consideration. 2. On-Call Residency Rule—The ERMU Handbook establishes a residency requirement for certain employees that participate in the required on-call program. This residency rule requires these employees to live within a 12 mile radius of the ERMU Field Services Building. Employees have requested the Committee review this rule and consider extending the radius. Attached is a map with 4 concentric circles. The inner most circle shows the existing 12 mile radius. The other circles show a 15, 18,and 20 mile radiuses. Expanding to a 15 mile would include Andover and portions of Becker. Expanding to an 18 mile radius would also include Becker, Buffalo, and Maple Grove. Expanding to a 20 mile radius would also include Princeton. This @OMtRff At Page 2 of 4 NATURE Piellede Ptlit? Pow[neP Ti, Sen, e over Proultler would not have an impact to the budget but would have a potential impact to response time. The Committee has elected to submit the request to the Commission for consideration. 3. Nightwork Rest Time—The ERMU Handbook establishes: "The Utilities will provide a regular field worker with one hour paid rest time for each hour worked between midnight and the start of the worker's scheduled shift, excluding work performed after midnight on Saturday or Sunday. The worker must make arrangements with his or her supervisor before taking such rest time. This nightwork rest time shall be taken during the next scheduled work shift. If the supervisor does not release the worker to take this nightwork rest time, all hours worked by the worker on the next scheduled shift shall be paid at one and one half times the worker's base rate of pay. It is the employee's responsibility to note the supervisor and obtain approval prior to taking the rest time. It is also the employee's responsibility to take the nightwork rest time if it is approved by the supervisor." Lineworkers have requested that this time period be modified to 10:00pm through 6:00am. This shifts the start of the period back 2 hours and the end of the period back 1 hour effectively increasing the coverage period by 1 hour. Because of frequent scheduled outages that are typically scheduled between 6:00am and 7:00am, this requested change would likely reduce operating costs slightly. The Committee elected to submit this request to the Commission for consideration. 4. Sick Time Conversion—The ERMU Handbook Establishes: "Employees who voluntarily end their employment and who give the Utilities proper (generally at least two-weeks) notice, and employees whose employment ends involuntarily because of lack of work, will have 50%of unused sick leave, up to a maximum of 100 days, converted into cash and deposited into their Post Employment Health Care Savings account provided they sign and do not rescind an agreement releasing claims arising out of their employment, in a form prescribed by the Utilities. Employees involuntarily terminated by the Utilities for any reason other than lack of work shall not be eligible to receive such conversion." Employees have requested that the maximum conversion be increased to 120 days to be consistent with the sick time bankable hours allowed by policy. At journeyman lineworker wage, this would have a potential liability of$2,864 conversion payout at separation of employment for any employee who had worked the equivalent of 10 years without taking sick time. The Committee has elected to submit this to the Commission for consideration. 5. Meal Per Diem—The Committee discussed establishing a per diem reimbursement policy. Currently, employees submit receipts for meal expenses occurring while attending trainings where meals are not included, meal expenses occurring while traveling on company business, or for other preapproved reasons. These receipts are subject to approval by management. If approved,a reimbursement will be made to the employee. In the past few years there have been employees requesting to have funds provided prior to the planned meal expense occurrence. There have also been issues with employees not getting an itemized receipt or losing their receipts. These POE I ► Page 3 of NATURE RelieGe Public Power Provider Pow,nEO To Srnvr types of issues can be resolved with the establishment of a per diem policy. The maximum per diem as defined by the Internal Revenue Service is location specific. The standard daily meal and incidental expenses total for most of Minnesota is $46. Breaking that total down: breakfast= $7, lunch= $11,dinner= $23, incidentals= $5. The first and last days of travel would have a total of$34.50 per day. Comparing these numbers to a sampling of reimbursements made during 2012,the current system totals excluding administration time are slightly higher than applying the per diem standards. The Wage and Benefits Committee elected to submit this topic to the Commission for review and consideration. 6. Longevity Pay—The Committee also discussed longevity pay and elected to submit the topic to the Commission for consideration. Staff is currently surveying other utilities for comparison data. Information will be brought to the Commission for consideration at a future meeting. At the Commissioners requests, additional detail from the Committee meeting discussion topics can be provided. ACTION REQUESTED: Staff requests direction on the above listed wages, benefits,and other topics for inclusion in the final budget presentation in December at which time the Commission would approve the budget. INATUPE1 Page 4 of 4 Reliable Public Power Proveder P oMeo To Serve Elk River Municipal Utilities 11/8/2012 2013 Journeyman Lineworker Benchmarking Metro Metro Metro Metro Year Municipals Coop/IOU CPI ERMU Average Average Tope Average3 2011 $36.49 $35.12 $35.75 $38.20 3.00% $34.84 2012 $37.42 $35.91 $36.29 $39.30 3.00% $35.80 20134 $38.38 $36.72 $37.02 $40.48 $36.87 Budgeted 3.00% Costs $ 69,000 Percent Comparison'to ERMU Metro Metro Metro Metro Year Average Municipals Municipals Coop/IOU Average 2 Top 2 Average 3 2011 4.73% 0.80% 2.61% 9.64% 2012 4.53% 0.31% 1.37% 9.77% 2013° 4.07% -0.41% 0.40% 9.77% Costs Impact to Budget to Match' Metro Metro Metro Metro Year Municipals Coop/IOU Average Average Tope Average3 20134 $ 93,688 $ (9,502) $ 9,107 $ 224,697 Notes 1 Metro Average calculation includes Anoka, Chaska, N. St. Paul, Shakopee, Connexus, GRE, and W/H. 2 Metro Municipal calculations includes Anoka, Chaska, N. St. Paul, and Shakopee. 3 Metro Coop/IOU calculation includes Connexus, GRE, W/H, and Xcel. 4 2013 calculations include best available data. 5 Calculated at rate of 1%equal to $ 23,000 6 Final Budget Approval in December 2012 7 Reflects Difference from Budgeted Amount Competitive Cost of Living Adiustment In order to be competitive with wages in this industry in our area and to help retain trained and knowledgeable employees, we are asking for a 7% wage increase. We have lost 5 Journeyman Linemen to Xcel Energy within the last 15 months due to better pay. This 7% wage increase will bring us to a fair wage between our neighboring companies, and still over 3% below Xcel Energy. We believe that we will continue to lose our dependable work force and our place as one of the best, most efficiently run and safe utilities in the state if we continue to lose ground on our wages. This loss of our longtime staff is something that cannot continue if we are to remain a reputable and dependable electric utility.