Midwest Gen seeks one-year extension of IBEW labor contract

To get it through the last stages of its bankruptcy case, and through the initial stages of the sale of its mostly coal-fired assets to NRG Energy (NYSE: NRG), Midwest Generation EME LLC is asking its bankruptcy court to approve a temporary one-year labor contract extension.

Midwest Generation and various other affiliates of Edison Mission Energy have been since December 2012 in Chapter 11 protection at the U.S. Bankruptcy Court for the Northern District of Illinois. A deal was recently struck, pending bankruptcy court and other approvals, for the sale of Edison Mission Energy assets to NRG, including the four operating Illinois coal plants.

Midwest Generation has a labor contract with the International Brotherhood of Electrical Workers (IBEW) Local 15, with about 93% of its hourly employees being members of Local 15. The current collective bargaining agreement with those workers expires at the end of 2013.

Midwest Generation told the court in an Oct. 23 filing that it has engaged in arms-length negotiations in an effort to come to terms on an extension to the contract, thereby avoiding the risk and uncertainty associated with expiration and/or termination of that agreement. Moreover, the pending sale of substantially all of EME’s assets and interests in its subsidiaries to NRG expressly contemplates an extension and ultimate assumption of the collective bargaining deal as part of a Chapter 11 plan of reorganization that incorporates the NRG transaction.

So, Midwest Generation and Local 15 leadership recently reached agreement on the terms of a one-year contract extension. The key terms of the extension include:

  • term of one year, through Dec. 31, 2014;
  • base wages unchanged. Current base wages are approximately 108-110% of median for the Central/Midwest region based on market data;
  • increase in short-term incentive plan payment from a historical practice of 4% to 6% of base pay. Cost to company at “target” level performance would be about $850/employee (about $365,000 in the aggregate) for each 6-month performance measurement period.
  • Local 15 leadership has consented to certain changes in health and welfare benefits, including basing the employer subsidy on the 80/60 preferred provider option; and
  • a ratification incentive worth $1,000/employee (about $450,000 in the aggregate).

The company motion for approval of this contract extension is scheduled to be heard at a Nov. 6 court hearing.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.