The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Illinois:
Midwest Generation talks “competition” to hammer down the workers

Jul 16, 2001

At the end of June, over a thousand workers at seven electric generating plants went on strike against Midwest Generation in Illinois.

Midwest Generation sells the power it produces to Commonwealth Edison of Illinois. In fact, the seven plants involved in this strike were owned by Commonwealth Edison until a year and a half ago. In December 1999, as part of the deregulation of the electric utility industry in Illinois, Commonwealth Edison sold a total of 12 plants, including these seven, to Midwest Generation. But it then immediately signed a contract with Midwest Generation to buy back 80% of all the power produced by its former plants when they are running at full capacity.

Does this sound complicated? It’s only the beginning of complications. Midwest Generation is a new company, only recently set up as a subsidiary of Edison International. And Edison International is the holding company which owns Southern California Edison – that’s right, the same Southern California Edison which has been claiming that it is so broke it can’t even buy the electricity to provide power for the half of the state it serves. The state of California is buying electricity and handing it over to Edison to resell to consumers.

Let’s recall that, under deregulation, Southern California Edison itself sold off most of its power generating plants in California – only to then go into the marketplace to buy up electric power from the same companies to which it had sold its own plants. Many of these companies are in turn subsidiaries of other utilities who had sold off their power producing plants in other states

El Paso Natural Gas, for example, a Texas company, bought 225 power producing plants from Southern California Edison.

This is what the politicians call “introducing competition” into the public utility industries. When writing “deregulation” into the law, they promised that “competition” and the “marketplace” would lead to lower prices for consumers and more efficiencies.

But – as California has amply demonstrated – exactly the opposite is happening. Prices are skyrocketing. Of course! First of all, new layers of companies have been put into the system – and each one expects to make a big profit. Second, this system is becoming so complicated that no regulatory agency can keep track of all the ties between companies – even if it wanted to do it.

The real competition going on between the different companies is to see which one can gobble up the most plants in other states and which one can make the most profits in this whole mad race. So called competition is simply leading where it always does under capitalism – to greater monopolization and higher prices.

Now the people of Illinois, just like those in a number of other states, are about to be put through the same wringer as Californians were last year. The main difference between California and the rest of the states is that California deregulated its electric utility industry first – it got a jump on the rest of us.

What this strike demonstrates is that electric deregulation is also providing the companies with a great big mallet with which to hammer down wages, benefits and working conditions of its workforce.

When Midwest Generation bought up Commonwealth Edison’s plants, it also assumed the last contract that the IBEW (International Brotherhood of Electrical Workers) had signed with Commonwealth Edison.

But on March 31 of this year, that contract expired and Midwest Generation made it clear that everything is up for grabs – and it intends to grab back a lot of what the workers had. When the union simply proposed to extend all the provisions of the current contract along with the current work practices and discipline policy, the company refused even to discuss the union proposal. A company executive recently commented, “The union has failed to recognize that it no longer works in a utility environment, but in a competitive environment.”

This is just talk – and of no importance whatsoever unless the workers fall for it. Not only are these big electric power conglomerates NOT in a poor position – they are making more money than every before. Southern California Edison was able to show that it was losing money only because it transferred all the parts of the company that were making big profits over to other companies set up by its parent company. This is nothing but a sleight-of-hand con game – just like three-card monte, only a little more complicated.

The problem is that union officials seem to have fallen for it. William Starr, the president and business manager of IBEW Local 15, commented at the end of June, “We understand, given the fact that Midwest Generation is part of a financially troubled California power corporation, that there are concerns about Midwest Generation’s ability to operate and maintain its Illinois operations. However, during the course of our negotiations, Midwest Generation representatives informed Local 15 that there was nothing in the union’s proposal that would hurt the company’s revenues or profitability in today’s competitive marketplace.”

If the workers start thinking that way – putting the needs of the bosses first – there’s no place to go but down. There is no reason that workers can’t insist that their needs be met – just as consumers have every right to expect that they can continue to get electric power at reasonable prices. And if these companies aren’t able to give decent wages, benefits and working conditions while providing cheap electric power to consumers, then take their power producing plants and their electric power lines away from them.