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Nuclear plant shutdowns closer, FirstEnergy Solutions mum on retention bonuses

October 2, 2018

Nuclear plant shutdowns closer, FirstEnergy Solutions mum on retention bonuses

CLEVELAND, Ohio -- The Davis-Besse nuclear power plant is slated for shutdown in less than two years and key employees are likely to leave sooner, raising safety concerns.

Yet bankrupt plant owner FirstEnergy Solutions won’t explain to the bankruptcy court, or its numerous creditors, how it would choose workers for “retention bonuses” that would add $100 million in new costs.

One thing is certain, though. The company has not budged much on its plan to give bonuses to nearly 1,000 salaried workers at Davis-Besse, the Perry nuclear plant, and the Beaver Valley plant near Pittsburgh while bypassing unionized workers.

Nor will the company explain how it chose the 1,000, other than to say that managers analyzed the job function of each employee, a process that somehow excluded every union member.

At this point, the company still has not even identified who would receive a bonus and who would not. The three power plants employ about 2,300.

The bonuses, known under bankruptcy law as Key Employee Retention Plans, or KERPs, are common and have been used by other power companies closing nuclear reactors because adequate staffing is crucial to safety.

Bankruptcy Judge Alan Koschik rejected the FES bonus KERP plan two weeks ago after the unions representing workers at the three power plants contested the plan as having been deliberately opaque and deliberately designed to exclude union workers who do most of the “hands-on” work at the plants.

In a “status conference” Monday, Koschik told lawyers representing the company and those representing its unions that the company must be more open if it expects the court to approve its KERP.

“If the debtor is going to continue with its approach, which is to analyze by job function, which I think is a perfectly reasonable way to do it, I think there needs to be more information as to which job functions are going to get bonuses, which are not and perhaps why,” he said.

“Is it because they are not going to be as necessary going forward as you approach shutdown? Is it because you have too many of those? That is the sort of information that needs to be disclosed to the court and to the creditors who are looking over your shoulder.

“I just want a clear explanation and it has to be reasonable. I am not managing this. The debtor is managing this,” he said.

Lawyers for the company told the judge they had been negotiating with the union lawyers, who immediately countered that there had been only one bargaining session in which the company offered a limited bonus plan to unionized reactor operators, a change that at most would add $4 million to the plan.

The company had previously excluded unionized reactor operators, though by federal regulation, a nuclear power plant cannot be operated without operators trained and licensed specifically for that plant. That puzzled the court more than other aspects of the plan.

Abid Qureshi, a lawyer with Akin Gump Strauss Hauer & Feld’s New York City offices, told the judge at the start of Monday’s status conference that the company will not appeal his Sept. 17 ruling, that negotiations had begun, but it was too early to say whether an agreement could be reached.

Labor lawyer Joyce Goldstein of Cleveland described the situation as “very discouraging.”

Goldstein has argued that the company’s method of analyzing each employee’s job function should be open and that the company’s unions should have a say. Otherwise, FES should give everyone a smaller KERP bonus, she has argued, a proposal immediately rejected by the company.

FES wants another two or three weeks before reporting back to the court. The company filed for Chapter 11 bankruptcy protection on March 31.

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