Costs at coal plant won’t rise, union says

by Clay Chandler

Published: December 24,2012

Tags: AFL-CIO, Kemper County, Mississippi Power Company

Kemper-Update-Logo_rgbIf Mississippi Power Co. successfully defends its Kemper County coal plant from litigation that seeks to invalidate it and the facility eventually opens, workers from two labor unions will have played a big role in getting it operational.

General laborers and craftsmen are among the membership from the Central Mississippi Building and Construction Trade Council and the Mississippi chapter of the AFL-CIO who have already started work at the facility’s site in rural Kemper County.

The agreement the unions reached with Southern Co. — Mississippi Power’s parent — marked a complete turnaround in relations among the entities from as recently as this summer. Then, officials with both unions lambasted Southern Co. for its failure to employ what they felt were enough Mississippi workers.

That disagreement settled, the same labor leaders say that their membership’s involvement will help guarantee the plant is finished on time and on budget.

David Newell, president of the CMBCTC, said last week if there were any wage difference in his membership and non-union workers, it would be “negligible.”

“We actually looked at that when we were negotiating (with Southern Co.),” he said.

Newell’s claim bucks a national trend.

Adams, Nash, Haskell and Sheridan, a labor relations firm that assists companies in negotiations with unions, recently surveyed one of its manufacturing clients that operated 30 facilities, half of which were unionized all or in part, and half of which were union-free.

What the firm found was the cost of operating the either wholly or partially unionized plants were 25 percent to 35 percent higher than the union-free plants. At the unionized facilities, the administrative budgets were 30 percent higher. The study cited as the main reasons for the increased expenses larger human resources staffs and increased legal costs associated with navigating workplace compliance and collective bargaining negotiations.

According to 2010 statistics from the U.S. Department of Labor, the average annual wage for a union employee was 28 percent higher than non-union workers.

Newell says that won’t be the case in Kemper County. For one, he said non-union workers who have gotten the plant to where it is now were paid a per diem that covered things like meals for those who did not live in the area and mileage. His membership will not receive that, Newell said.

He added workers from his organization and the AFL-CIO have already undergone their apprenticeships, completed pre-employment screening that includes drug tests and safety and site training that the unions paid for. All of that makes the notion that union workers drive up the cost of a project “just not true,” Newell said. Most of the training will be done at an old school near the job site that the CMBTC bought and retrofitted into a training center, Newell said. The AFL-CIO’s Robert Shaffer made similar claims during a news conference at the Capitol in early December.

Newell said reports that Southern Co. had promised the two unions a minimum of 1,000 Kemper jobs were inaccurate. “There were never any job numbers agreed to” during the three month-negotiation process, he said.

Southern Co. referred questions about the agreement to Mississippi Power spokesperson Jeff Shepard, who said the agreement was between Mississippi Power contractors and the building trade organizations. In a written statement, Shepard said the addition of skilled labor was needed to make sure the plant started operation in May 2014.

Independent monitors hired by the Mississippi Public Service Commission and the Public Utilities Staff have issued different estimates recently that put the cost of building the plant between $2.88 billion and $3.15 billion. A Mississippi Power spokesperson said last month that the company still expects the project to cost $2.88 billion or less. Public service commissioners have capped at $2.88 billion the costs Mississippi Power can pass to its ratepayers. Any pass-through costs above $2.4 billion must meet prudency requirements before commissioners will approve them.

Commissioners over the summer denied Mississippi Power’s request to raise rates about 13 percent to generate $58 million for the plant. Commissioners said then they would not consider anymore rate increase requests related to Kemper until the Mississippi Supreme Court had ruled on the latest round of litigation involving the company and the Sierra Club. A Harrison County chancellor is currently considering the issue. Whoever is on the losing end of that ruling will almost certainly appeal to the state’s high court.

The plant is scheduled to begin commercial operation in 2014.

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