DWP to Offer Severance Packages

After meeting behind closed doors in executive session, the Los Angeles Board of Water and Power commissioners took a step Tuesday toward making the downsizing of America’s largest public utility more politically palatable, approving a severance package aimed at enticing older workers to retire rather than risk being fired.

The commissioners approved a severance package as part of a two-year contract extension for the majority of DWP’s service and line workers, who are represented by the International Brotherhood of Electrical Workers. The commissioners also gave DWP General Manager S. David Freeman the authority to approve severance packages with two other employee unions--including those expected to be hardest hit by layoffs--the DWP’s architects and engineers and managers.

The DWP, which has a whopping $7.5-billion debt, is attempting to pay down $4 billion by 2003 to prepare the utility for the competitive market.

To that end, Freeman has said he will need to lay off 2,000 DWP employees, potentially the largest job cuts in city history.

Tuesday’s actions were aimed at easing the hardship on IBEW workers, whose union is affiliated with other powerful labor unions. The two other unions are predominately composed of white-collar employees who are targeted for layoffs.

Mayor Richard Riordan said he believes that the package is a good one and “sets the stage for other employee negotiations. The idea is to reduce payroll and keep key people on board as the department prepares for deregulation in the next century,” Riordan said through his spokeswoman.

The severance package approved Tuesday, which probably will resemble the two others being negotiated, will offer IBEW members a choice: five years in any combination of service credit or age applied to retirement; or two weeks salary for each year of service with a minimum of $25,000 and a maximum of $50,000.

In an interview, Freeman said the severance packages will ease the pain of potential job losses for all employees.

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“The employee unions now have the opportunity to allow their employees to leave with dignity and money, two important ingredients,” Freeman said. “This is designed to encourage the people who are near retirement to leave so they won’t bump through the ranks and bump out someone younger and just starting their career.

“It has a humanitarian and utility--selfish--purpose,” Freeman added.

Brian D’Arcy, the business manager for IBEW, Local Union 18, said that the contract agreement is a fair one and that about 500 employees might take the buyouts. The union members now are voting on the contract, which will boost salaries of the 6,000 union members by nearly 2% in April.

“I think this is fair,” D’Arcy said. “It has a little something for everyone and it ensures we’re not in the middle of a big labor beef during restructuring.”

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If approved by the union and ultimately the City Council, the contract also gives high-voltage line workers a $10,000 retention bonus for staying with the DWP--rather than taking jobs with future competitors, such as Edison or Pacific Gas & Electric.

Other DWP union representatives say, however, they are concerned about their negotiations. They have set a Feb. 1 deadline by which agreements on contracts--and buyouts--should be reached.

“I’m not confident, but I’m hopeful,” said Jerry Pfefferman, the president of the DWP’s Management Employees Assn., which represents 350 managers, 224 of whom are slated for layoffs. “We’re clearing house here. . . . We need to find a package that will be attractive to our employees.”

City Council members, who control the DWP, have said they would prefer all other alternatives to layoffs but acknowledge that the cuts may be necessary. Councilwoman Jackie Goldberg, who is seen as perhaps the most pro-labor council member, has said she would reluctantly agree to layoffs to save the utility.

And, because the layoffs would come from the two mid-level unions, the decision to cut jobs probably will be less politically difficult for the council.

Although D’Arcy said he doesn’t want to see any jobs cut, he said, “There’s no other solution.”

Freeman is expected to brief the council on the severance packages being offered to utility employees. The council will have to vote on the salary packages in the next few weeks.

“I’m not hellbent on laying off anybody,” Freeman said. “Our purpose is to reduce our costs. If this leads to retirements, I’d be the happiest person in town.”