5.1. ERMUSR 11-16-2010 - Laserfiche WebLink

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system that has worked well and management supports working towards reestablishing the metro average. At this time, there are 3 of the 7 utilities used in the survey that have not finalized their 2011 wages. These are Great River Energy (GRE), North St. Paul, and Anoka. The contract negotiations at GRE are currently being conducted, but may not be finalized until December. It is expected that GRE will approve a similar wage increase to last year and is tentatively included in the survey at 2.91 %. North St. Paul and Anoka have not finalized their wages for 2011. Both aze expecting no increase in hourly wage but possibly other positive compensation changes. Attached are the Metro Average Wage Survey table and graph. ERMU would be at a negative wage differential from the metro average. It would require a 6.13% increase for ERMU to reach the metro average. In 2011, Connexus will be paying $4.20 more per hour for the equivalent Journeyman Lineperson position. Also, ERMU would be the lowest hourly rate of all the 7 utilities used in the metro average survey if no wage increase is approved. On one hand, to not have a wage increase would put ERMU at a wage disadvantage. On the other hand, to get back to the metro average in 2011 would be a significant wage increase. A realistic solution falls in between and should involve a commitment towazds reestablishing the metro average pay over a given time period. This plan to reestablish the metro average wage would not necessarily require the timeline to be set in stone. It may need flexibility to allow exceptions to accommodate any unknowns in the economy and variations in the finances of the Utility. Based on the conservative assumptions previously noted, the percent change in the metro average wage from 2010 to 2011 has an increase of 2.03%. This year the CPI is 2.33%. The summary of the CPI for this region is attached for commission review. This CPI increase is somewhat corrective for the 2009 CPI "over compensation" for fuel costs in 2008. Both the 2.03% increase in the metro average and the 2.33% increase in CPI generally represent the cost of living increase and adjustments to the industry market. These two components represent what it takes for ERMU to not lose ground in competitive wages. In addition to this cost of living component, there would also need to be an additional adder component to "chip away" at the differentia] in pay and work toward reestablishing the metro average. If the Utilities initiated a plan to annually award the percent change in metro average (2.03% in 2011) and annually awazded a 1.03% increase component for reestablishing the metro average, the metro average would be reestablished in 4 years. This schedule could be shortened as the economy recovers. The financial impact to the Utilities is approximately $22,000 per percent of wage increase. The philosophical component to this topic is that of perception and vision. In difficult economic times there is negative public perception to wage increases funded by fees. The flip side is that of long term vision. In this industry, these skill sets aze a commodity and a utility needs to remain competitive even in difficult economic times to help promote employee retention. Short term vision can result in higher long term costs due to training. The solution falls somewhere in between and is a balance of many considerations. ACTION REQUESTED: Management recommends approving a plan to reestablish the metro average over 4 years and approving a 2011 wage increase of 3.06%.