Connecticut Power Struggle

Under the surface, like an electric distribution system, there’s a lot going on in the power struggle between the State of Connecticut and Northeast Utilities over layoff notifications.

At first glance, it seems like a purely legal tiff over when NU has to notify Connecticut of layoffs associated with its merger with NSTAR. Back in March, the state and NU signed an agreement requiring the utility to provide credits and freeze rates in Connecticut, as well as notify the state of layoffs associated with the merger. In exchange, Connecticut approved the combination of Massachusetts-based NSTAR and NU.

But could this really be about power and not the kind that runs across the wires. The State practically dictated to NU about what it could do when it merged and even required the company to maintain two corporate headquarters, something at least one analyst has pointed out makes no sense if you’re trying to save customers money. The rate freeze and other conditions also seem prohibitive from a purely corporate standpoint.

Of course from the state’s point of view, it’s trying to preserve as many jobs as it can for as long as it can. Unemployment remains a big problem here, after all.

So, now we have a fight over one of the seemingly least offensive provisions in the agreement. It’s unclear why NU wouldn’t just provide the notification. Providing it doesn’t give up any competitive advantage, they’re a utility with a fixed region of service. And providing it in advance would give workers time to start hunting for jobs and prepare for a transition to something else. Many of these workers were long-time employees, who unlike the executives of the NU and NSTAR, won’t be getting huge payouts for the merger. Instead, they’re getting the opposite, so you’d think the company could provide this little bit of respect and for their work over the years.

But NU has decided to cut jobs and not provided notice drawing the ire of the Attorney General, who is now urging the Public Utility Regulatory Authority to compel them. The company says they’ll abide by federal standards for mass layoff events, an odd decision, as they would have to abide by that law anyway. For this to be the standard, would mean the AG’s office wrote in an unnecessary condition into the agreement and the AG claims that the actual wording of the provision is for any layoff.

The contentiousness doesn’t end over just this, even the number of jobs is now being disputed, with the AG saying 319 have been lost since the merger and NU claiming it’s added 164 since, so the actual jobs lost is 155.

many jobs have been lost since the merger has become contentious. The AG points to 319, while NU now says it has replaced 164 of those jobs, so it’s only down 155.

And the company, after an initial response saying they would answer the AG in an official filing, is now saying they might not even do that.

Machiavelli might look at all this and say, NU is after something else and is using the notification to get it. Could they be looking at reopening the agreement to get some changes? Could they offer to bow to the demands of the AG over notification in exchange for reducing some of the other conditions?

Or is it just a good old fashioned power struggle?

Rob Varnon