Nat’l Grid says lockout all about its customers

Cost of ‘old-fashioned’ benefit plans falls to ratepayers

The Massachusetts president of National Grid defends the nearly four-month lockout of 1,250 workers by saying the company is doing what it needs to do to bring its costs in line and protect customers from excessive charges.

It’s an interesting line of reasoning at a time when union leaders and their supporters are saying the company is putting profits ahead of public safety. To buttress their point, the unions and their allies regularly note that National Grid is a British company that earned more than $4.6 billion in profits last year.

Marcy Reed, the Massachusetts president and executive vice president for US policy and social impact at National Grid, says on the Codcast that the utility had three options when the contracts of its two steelworker locals expired on June 24. The union could strike, which its members had voted to do, she says. The company could keep the workers on under the terms of the current contract while the two sides continued negotiating, which is what the union says it wanted. Reed, however, says National Grid tried that approach two years ago but had no success in reducing costs. “We didn’t feel it would result in any productive conversations,” she says.

The third option – and the one the company chose – was to lock out the workers, leaving them with no jobs and no health care coverage. Politicians across the state have rallied to the side of the workers, particularly after the September gas explosions and fires in the service area of Columbia Gas in the Merrimack Valley and an overpressurization incident in Woburn, National Grid’s service territory, earlier this month. Regulators have limited what work National Grid’s management employees and contractors can do in the field, but Reed says the company doesn’t regret the lockout.

“It was one [decision] we felt and continue to feel that we needed to make in order to maintain the safety and reliability of the gas system in the 85 communities in which these two union locals serve,” Reed says.

“These two unions are asking for a set of traditional – I’ll use the word old-fashioned – benefit plans that most of America doesn’t have. Certainly no one in National Grid has,” she says. “In fact, the steelworkers themselves have negotiated and accepted these benefits and even less with every other utility in New England. For me, it comes back to why are we even having this conversation.”

The utility says it’s five-year offer to the two unions includes pay increases that will boost the current average employee salary from $120,000 a year, including overtime, to $137,000. The offer also includes a 10 percent increase in the pension plan for current employees. New employees, however, would be assigned to a 401k plan with a 3 to 9 percent company match. The company’s health insurance proposal would also introduce deductibles and coinsurance for the first time.

Meet the Author

Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Union officials say National Grid is not treating all employees equally. “The tactic of hoping older employees will sacrifice the benefits of new hires is a disgraceful attempt to drive a wedge between employees,” the union says on its website.

As for National Grid’s profitability, Reed says that has nothing to do with the union negotiations. “Yes, we were fortunate last year to have a profit. We are a large company, so the numbers to some are eye-watering, and they [the unions] point that out,” Reed says. “However, any regulated utility, electric or gas, the way it works is you add up the costs you spend on people trucks, computers , health care, etc., and pass it along to your customers. That’s how it works. And I refuse to do that at a level that is not sustainable for the customers that we have. No other customers in New England are paying the level of the costs for these benefits that we’re forcing our customers to pay for. It has nothing to do with what the company outside the regulated entity made. It’s getting our costs to our customers sustainable.”