4.2. ERMUSR 10-13-2009 - Laserfiche WebLink

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2009 Pay Request to ERMU Commission Page 2 January 1, 2009 fora 2.4% increase. This brings the survey metro average to $34.74 per hour for a lineperson. In August, the commission voted to implement results of a salary structure study. This study utilized 2008 wage information to benchmark and reset the entire ERMU pay structure. As a result of this study, the lineperson hourly wage was adjusted to $33.82. ERMU falls below the metro average of 2009. An increase of 2.73% would be required to bring it up to the average. The survey is attached for commission review. Another note of importance on the survey is that Connexus and Wright/Hennepin both had just negotiated labor contracts in 2009. Both of these utilities explained a major concern when negotiating that their contracts was to stay competitive with one of their biggest labor competitors, Xcel Energy. Wright/Hennepin's contract has even been written to give a wage increase in 2012 to match Xcel's. ERMU borders Connexus, Wright/Hennepin, and Xcel. The fact that these three utilities are strategically positioning themselves to be wage competitive years into the future is important to acknowledge. The consumer price index comparing lst half 2009 to 2nd half 2008 for this region is down 1.7%. Comparing 1St half 2009 to 1St half 2008, the CPI is down 1.0%. These numbers reflect the spike in gas prices in 2008. Natural gas and motor fuel were abnormally high in 2008, up 22.3% and 23.3% respectively in the 1St half of 2008. These costs have come down to reality by 29.4% and 28.2% respectively compared to the 2nd half of 2008. This volatility has skewed the CPI to some de~ree. The CPI, excluding energy, is up 1.6% compared to 1St half 2008 and 0.3% compared to 2n half 2008. The summary of the CPI for this region is attached for commission review. The ERMU 2009 budget covered a 3% pay increase for the period of June through December. The summer of 2009 was one of the coolest in recorded history and that has been reflected in electric revenue. September electric is up due to a warmer than average month but will not be reflected in the revenue until next month. Also, there has been great focus placed on an overall reduction in operating costs. This has helped keep pace with the reduction in electric revenue. Overall, the year end projections in reduce electric revenue are offset by reductions in operating costs. Water revenue is up and year end projections indicate nearly double the budgeted amount going into reserves. Providing a pay increase in 2009 would not financially burden the utilities. 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, the skill sets are 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, and over compensation compared to market trend is poor use of public money. The solution falls somewhere in between and is a balance of many considerations. Based on the metro survey average, staff requests a pay increase of 2.73%.