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5.2. ERMUSR 08-13-2013 Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Wage and Benefits Committee John Dietz—Chair John Dietz - Chair Al Nadeau—Vice Chair Troy Adams, P.E. —General Manager Daryl Thompson—Trustee Theresa Slominski —Finance and Office Manager Mark Fuchs—Electric Superintendent MEETING DATE: AGENDA ITEM NUMBER: August 13, 2013 5.2 SUBJECT: Wage and Benefits Committee Update BACKGOUND: In June 2013, one of ERMU's Journeyman Lineworkers gave notice to leave to work for Xcel Energy. This was the 6th lineworker to leave for Xcel in 2 years. Of the 11 lineworkers that were working in the field in 2008, there are only 3 still working in the field. And currently over 50% over ERMU lineworkers have 2 years or less experience. At the recommendation of staff at the July Utilities Commission Meeting, the Commission gave direction for the Wage and Benefits Committee to analyze the issue and bring back a recommendation at the August meeting. DISCUSSION: Providing safe and reliable utility services is the core of ERMU's mission. And although all ERMU employees are components of providing excellent service, lineworkers are a core position to an electric utility. It is essential for ERMU to be able to employ qualified lineworkers to provide our core service. With several potential retirements in the electric department that are possible within the next 10 years and a potential electric service territory acquisition, it is critical that ERMU have and maintain depth in trained and qualified lineworkers. The minimum qualifications for our line worker position require the completion of a one year lineworker vocational program. Once hired, the apprentice lineworker is required to complete a four year apprentice program to become a journeyman lineworker. The apprentice program involves bookwork that is completed afterhours, examinations, and hours of experience. This type of program is similar in structure to what an electrician or other licensed trade professionals would need to complete. It typically takes between 7 to 10 years of training and experience before a lineworker is qualified for our Lead Lineworker position. rowtetI it Page 1 of 3 NATURE Reliable Public Power Provider P ov. T o r o T o S rrvr The Wage and Benefits Committee met on July 15 to discuss the issue. Staff reviewed the existing pay plan as shown in Table 1. It was determined that the pay plan point for the Lineworker position, as well as a few others, did not take into consideration the required 4 year apprentice program. An analysis of the pay plan system found a few other position adjustments. These positions and their corresponding point adjustments are shown on Table 2. The Committee discussed the pros and cons of a pay plan structure that has a static relationship between pay grades and determined that market can be different for different positions. A pay plan structure with additional flexibility would allow for specific market corrections that may prevent one position from becoming out of line with our competitive employers. After review, the Committee found a pay plan with multiple groups an improved option to provide needed flexibility and fairness for the different positions. For ERMU with our size and type of positions, the Committee felt that the best fit was a pay plan with four groups: Office Employees, Field Employees, Lineworkers, and Management. These proposed groups with the corrected position points are shown in Tables 3 — 6. For reference, staff surveyed 7 metro utilities historically used for determining ERMU lineworker pay. The top was $40.66/hour and the low was $35.99/hour. ERMU is currently at $36.87/hour. The metro average is $38.52/hour. This data is shown on Table 7. With the correction in points to recognize the required apprentice program education, the Lineworker position would move up one pay grade in our current pay plan. The increase of pay grade is within cents of the current metro average. With the adjustment to points for education and the proposed four group pay plan there are four positions which would have an affected pay increase: Electric Superintendent, Foreperson, Lead Lineworker, and Lineworker. These changes are indicated on Table 8. Almost all of the 7 metro utilities used in the benchmarking are unionized, so it is easy to determine what their projected COLA would be. For reference, it is estimated to be a 2.55% COLA for 2014 and less than 3% for 2015 and 2016, well within line of the consumer price index. The financial impact to adopt the proposed pay plan revision would result in an approximate $20,000 additional expense for the remainder of 2013 if retroactive to August 1. These numbers are shown in Table 9. The adoption of the pay plan as proposed does not throw the current labor expense or employment ratios out of balance for the company. As indicated in Charts 1 —4, the implementation of the pay plan does not significantly alter the ration of labor dollars. In fact it is such a small part of the total company labor expense that it doesn't significantly change the proposed group's percent of labor dollars. ACTION REQUESTED: The Wage and Benefits Committee recommends that the Commission adopt, retroactive to August 1, 2013, the pay plan structure as proposed with the four separate groups for: Office Employees, Field Employees, Lineworkers, and Management. PIMEAEI AI Page 2 of 3 JNATURE Reliable Public POWERED Power Provider T o S E R V P ATTACHMENTS: • Table 1 —Current Pay Plan • Table 2 —Job Evaluation System Proposed Point Changes • Table 3 —Proposed Office Employees Pay Plan Group • Table 4—Proposed Field Employees Pay Plan Group • Table 5 —Proposed Lineworkers Pay Plan Group • Table 6—Proposed Management Pay Plan Group • Table 7 —Metro Journeyman Lineworkers Wages • Table 8 —Proposed Pay Changes • Table 9—Financial Impact • Chart 1 —2013 ERMU Labor Expense • Chart 2 —2013 ERMU Employees (FTE) • Chart 3 —2014 ERMU Labor Expense • Chart 4 —2014 ERMU Employees (FTE) PONEOEI BI Page 3 of 3 NATURE Reliable Public Power Provider Wage and Benefits Committee- ERMU Pay Grade Analysis -8/13/2013 Proposed Pay Plan Revisions: Current Pay Plan Job Evaluation System Position Title Position Points Grade Point Spreads by Grade General Manager 1598 N/A 16 1215 1342 Finance and Office Manager 1108 15 1097 1214 Electric Superintendent 1103 14 994 1096 Water Superintendent 917 13 899 993 Technical Services Superintendent 899 Foreperson 822 12 814 898 Conservation and Key Accounts Manager 813 11 738 813 Lead Lineworker 740 Lead Electrical Technician 733 Lineworker 667 10 665 737 Assisant Office Manager 659 9 600 664 Plant Operator/Mechanic 627 Lead Water Operator 580 Electrical Technician 555 8 542 599 Accountant 551 Security Technician 542 Locator/Mapping Technician 526 Locator/Bore Rig Operator 526 7 490 541 Executive Administrative Assistant 525 Water Operator 508 Locator 450 6 443 489 Maintenance Person 450 Accounts Payable& Payroll Specialist 418 Billing Specialist 418 5 400 442 Collections Specialist 418 Purchasing Specialist 418 Customer Service Representative 369 4 361 399 Meter Reader 337 3 326 360 2 294 325 1 265 293 Table 1 N II at C Co -C U V1 N C C C C 0 O a as Coo O Co L: U U N o N 7 o- E E E E E a cu o 0 s .c u u o 06 06 3 0- N 2 °� 0 0 0 m c C U C- N Y en a+ C O N U H C C I-1 ro 03 E cro N yO, U bi u u U U u O U U T C an N 0 N N N W cu W N 00 In C •01 'C 'C 'a 'C 'C 'C '� N 'C C u 0 a a a a a a a a = a Q w w w w w w w w a w 9 C C D 071 071 071 021 07S 071 021 021 c 071 O Co a a a a a a a a O a ro N a w 0J 0) C) O! 01 01 C) 0! = v ,...1- ' v a a a a a a a a a c a Rd N F N Co Co CO CO CO CO w CO a ° E E E E E E E E E o o a III .. 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C O C U C I- C C 0 d C O N u O U u N pj U • v C O w Co U Y IN • E a 3 3 '4., 01 10 w H LL J C J J w V1 . a Wage and Benefits Committee-ERMU Pay Grade Analysis-8/13/2013 Proposed Pay Plan Revisions: Proposed Office Employees Pay Plan Group Position Job Evaluation System Position Title Grade Point Spreads by Points Grade 8 668 739 Assistant Office Manager 659 7 603 667 Accountant 551 6 544 602 5 491 543 4 443 490 Accounts Payable&Payroll Specialist 418 Billing Specialist 418 3 400 442 Collections Specialist 418 Purchasing Specialist 418 Customer Service Representative 369 2 361 399 1 326 360 Table 3 Wage and Benefits Committee-ERMU Pay Grade Analysis-8/13/2013 Proposed Pay Plan Revisions: Proposed Field Employees Pay Plan Group Job Evaluation System Position Title Position Points Grade Point Spreads by Grade 10 752 834 Lead Electrical Technician 734 9 677 751 Plant Operator/Mechanic 627 8 609 676 Lead Water Operator 597 Electrical Technician 562 7 548 608 Security Technician 552 Water Operator 536 Locator/Mapping Technician 526 6 493 547 Locator/Bore Rig Operator 526 Locator 450 Maintenance Person 450 5 444 492 4 400 443 3 361 399 Meter Reader 337 2 326 360 _ 1 300 325 Table 4 Wage and Benefits Committee-ERMU Pay Grade Analysis-8/13/2013 Proposed Pay Plan Revisions: Proposed Lineworkers Play Plan Group Job Evaluation System Position Position Title Grade Point Spreads by Points Grade Foreperson 884 3 817 897 Lead Lineworker 782 2 751 816 Lineworker 740 1 700 750 Table 5 Wage and Benefits Committee-ERMU Pay Grade Analysis-8/13/2013 Proposed Pay Plan Revisions: Proposed Management Pay Plan Group Job Evaluation System Position Position Title Points Grade Point Spreads by Grade General Manager 1598 N/A 11 1341 1473 Electric Superintendent 1277 10 1218 1340 Finance and Office Manager 1108 9 1105 1217 8 1001 1104 Technical Services Superintendent 961 7 906 1000 Water Superintendent 917 6 819 905 Conservation and Key Accounts Manager 813 5 740 818 4 668 739 3 603 667 2 544 602 Executive Administrative Assistant 525 1 491 543 Table 6 Wage and Benefits Committee-ERMU Pay Grade Analysis-8/13/2013 Proposed Pay Plan Revisions: Metro Journeyman Lineworker Wages 2013 Utility Increase Hourly Wage Anoka' 2.00% $ 35.99 Chaska 2.00% $ 37.02 Connexus 2.75% $ 40.58 GRE 3.00% $ 40.66 N.St.Paul 4.81% $ 37.94 Shakopee 3.00% $ 36.96 W/H 3.00% $ 40.51 Metro Average 2.94% $ 38.52 ERMU 3.00% $ 36.87 Table 7 Wage and Benefits Committee-ERMU Pay Grade Analysis-8/13/2013 Proposed Pay Plan Revisions: Proposed Pay Changes Current Position Proposed Position Title Position Max Max Hourly Pay Hourly Pay Electric Superintendent $ 44.85 $ 48.12 Foreperson $ 40.07 $ 42.06 Lead Lineworker $ 38.90 $ 40.83 Lineworker $ 36.87 $ 38.52 Table 8 Wage and Benefits Committee-ERMU Pay Grade Analysis-8/13/2013 Proposed Pay Plan Revisions: Financial Impact Position (Quantity) Impact for Remaining 2013' Electric Superintendent(1) $ 2,878 Foreperson(2) $ 3,502 Lead Lineworker(5) $ 7,874 Lineworker(5) $ 5,793 Total $ 20,047 Table 9 1. Anoka's 2013 increase pending final approval. 2. Reflects 8/1/2013 Implementation of proposed pay plan revisions. Includes scheduled step increases and filling vacant Lead Lineworker position.