CUPE Local One – Who are we ?
CUPE Local One represents 1500 women and men at the newly amalgamated Toronto Hydro. Our Union represents skilled trade workers including linepersons, substations personnel and meter mechanics as well as inside workers such as call centre employees, designers, technicians and clerical workers. Toronto Hydro was first unionized in 1915 under the International Brotherhood of Electrical Workers umbrella.
What is Toronto Hydro ?
In 1998 provincial legislation was enacted which forced the City of Toronto to amalgamate with its 5 neighbouring municipalities. This same legislation also forced the amalgamation of the 6 Municipal Utilities which existed under the control of each local government. The amalgamation of the City of Toronto created the single largest metropolis in Canada. By default, the new Toronto Hydro became the single largest municipal utility in the country.
Toronto Hydro presently services over 650,000 customers, has a peak load of over 4,500 mega watts and is responsible for distributing one-quarter of Ontario Power Generations (formerly Ontario Hydro) output. Toronto Hydro is the second largest municipal utility in North America, it is second only to the City of Los Angeles Department of Water and Power. Toronto Hydro generates no electricity and transmits no power of high voltage to date.
Downsizing
The amalgamation of Toronto Hydro with the surrounding municipal utilities was challenging for the membership and leadership of Local One. The pre-amalgamation population of unionized workers numbered over 1,850. The utility’s management decided to downsize the workforce with the introduction of a buyout – severance package. This resulted in over 350 unionized workers (20%) voluntarily quitting the employ of Toronto Hydro. The employer initially stated that some of these positions would be replaced and lead to upward mobility for our members. Two years later, workers have not witnessed any of this upward mobility. Instead, our outside workers have noticed an influx of contractors working on our electrical distribution plant. Our inside workers, have experienced an enormous shift by the employer to utilize temporary – contingent workers.
Utility amalgamation led to many concerns in the area of worker safety. Particularly involving the « cross bordering » of workers from one former utility company to another. Each former utility has its own unique distribution system. Toronto Hydro management was caught off guard by the huge number of skilled trades workers that left the utility via the buy out – severance package. To cope with the workload in Toronto’s booming economy, management began to relocate workers with little or no regard for workers safety. Fortunately to date no worker has been seriously injured, and Local One continues to push for worker training prior to worker relocation.
Provincial Government
The Ontario provincial government, elected in June of 1995 and which remains in power today has been the main proponent of electricity deregulation in the province. This government has claimed that the liberalization of Ontario’s electricity market to competition would lead to lower electricity rates for all consumers while also introducing customer choice up to and including the retail level. The real reason, as we see it today, for electricity deregulation was to create an avenue for the provincial government to remove itself as the guarantor of the former Ontario Hydro’s debt, reported to be some 20$ Billion Canadian dollars.
The government has also let it be known that to achieve greater effeciencies and economies of scale, the municipal electrical utility sector in Ontario must be rationalized. Prior the Electricity Competion Act becoming law in 1998, there were over 300 publicly owned municipal electrical utilities in Ontario. These utilities were structured to meet the local citizens’ concerns and be directly accountable to them. Today there are slightly over 200 municipal utilities and experts predict that in 5 to 7 years time the optimum number of electrical utilities will be down to 10 to 15 large municipal utilities, some which will be owned in whole or in part by the private sector.
The government has also directed the Ontario Energy Board (the regulator) to introduce a Performance Based Regulation (PBR) regime to drive efficiencies into the « sires » or distribution sector. Local utilities will soon have to meet or exceed defined performance critiria or else risk loosing their distribution licences.
The road to electricity competition in Ontario has not been without troubles. In June of this year the Provincial Government announced a delay in the opening of the electricity market, scheduled for November 2000, for at least 6 to 9 months. The « official » reasons form the government included that the independent system market operator are not yet operational and most municipal utilities have not determined wether to restructure their utilities and compete in the marketplace of sell them outright.
The government has also been surprised by municipalities and their utilities taking advantage of the new electricity legislation to week drastic electricity rate increases. Some municipalities are using their local utilities to generate profits which will be used to pay for much needed infrastructure improvements such as roads, parks, water and sewer works projects. Moreover, the electricity rate increases sought be municipalities are being used to recover the cost associated with the restructuring of local utilities to comply with the government legislation and to help pay down expensive computer hardware and software required to track costs and to manage the multitude of transactions necessary to cope with customer and electricity retailer requests.
The electricity rate increase poses an interesting dilema for labour. On the one hand, Unions are generally opposed to higher electricity rates as they will be traditionally align themselves with. On the other hand, if the rate increases are rejected by the regulator, this could lead to some local utilities not achieving there expected rates of return for the shareholder, namely the local municipality. The message to some councils and townships will then be to sell off their utilities to the private sector. In August of this year municipalities and their utilities appeared before the Ontario Energy Board (the regulator) to express concerns over the governments directive to intervene on any proposed rate increase. It appears that a political compromise has been struck. Local utilities will be allowed to phase in rate increases over a three year period.
Toronto Hydro and deregulation
The electricity deregulation frame works have begun to take shape at Toronto Hydro. The utility has been structured on a business format. This is to say that a holding company has been set up called the Toronto Hydro Corporation. All of the shares of this corporation belong to the City of Toronto, it’s sole initial shareholder. Toronto Hydro is expected to deliver to the municipality over 100$ million Cdn. dollars per year. The public utility commission has been replaced by a Board of Directors. This holding company has beneath it two affiliate companies as required by law. This is to avoid cross subsidization between the wires or monopoly business and the retail or competitive business and vice versa. The wires company, known as Toronto Hydro Electric System Limited is responsible for the distribution of electricity in the amalgamated City of Toronto. The competitive company is known as Toronto Hydro Energy Services Incorporated and is responsible for sales and marketing of electricity and gas among other things. Just recently Toronto Hydro established another affiliated company called Toronto Hydro Telecommunication and Fiber Obtic Incoporated and is active in the area of fibre optic networks in the downtown core of Toronto.
Toronto Hydro has also entered into a number of private – public partnerships. Most recently with the manufacturer of combined cycle gas turbine and a green power project involving wind energy. Furthermore, Toronto Hydro Energy Services has recently made it’s initial foray into the electricity retail market by soliciting customers throughout the province to switch energy service providers. This will lead to union members within CUPE competing against each other. Unfortunately, all of the above joint ventures have not led to prosperity for unionized workers. In fact, all of these joint ventures are being performed with Toronto Hydro merely investing in the projects financially and the private sector completing the work. Toronto Hydro management has also been conspicuously silent on the issue of privatization. CUPE Local One strongly suspects that senior management is supportive of the government’s agenda to ultimately privatize municipal utilities. The Union’s suspicion is based on the fact that senior management and the Board of Directors at Toronto Hydro have been strong supporters of governments initiatives to deregulate the electrical industry. The Union can only surmise that the Employer’s silence on the privatization issue is in fact tacit approval of the sell of Canada’s largest municipal utility.
CUPE Local One and electricity deregulation
Electricity deregulation has been and continues to play a very destructive role in our members lives. Specifically, deregulation has impacted our workers in three ways :
- The workplace – The workplace at Toronto Hydro was a very stable and predictable environment. A natural monopoly company lends itself to this sort of environment. However, with the introduction of deregulation and the emphasis to return a profit to our shareholder the City of Toronto, has led to ever increasing demands on our members. The employer continues to use the threat of deregulation and looming competition to push members to do more with less.
- Collective bargaining – At the bargaining table the Employer and the Union continue to be opposite ends of the spectrum. The Employer continues to push for flexibility and mobility while the Union seeks stability and protection for our members.
Also, the Employer continues to push multi-skilling of workers duties with little or no regard for training.
Despite the Employer’s attempts to gut our collective agreements, the Local has been successful in maintaining and improving our collective agreements. Our wages remain among the highest in the province for utility workers and we continue to hold the line on benefits.
- Possible privatization of Toronto Hydro – In November of 1999, the Mayor of the City of Toronto mused about the selling off of Toronto Hydro. The sale of Toronto Hydro could raise as much as 3.5$ Billion Canadian dollars. The City of Toronto is in desparate need of funds to offset provincial downloading.
Our Union quickly struck a committee to fight the Mayor’s proposal to privatize Toronto Hydro. Public opinion polls showed that over 90% of the Toronto public were opposed to its privatization. Our committee’s strategy to contest privatization dealt with a two pronged approach :
- An internal campaign to deal with the education and mobilization of our members.
- An external campaign which would focus on our primary target. – City Councillors.
Our Union also felt that it was very important to have an independent academic report commissioned to show the ramifications of the privatization of Toronto Hydro on electricity rates. A copy of this report is available outside the hall. The report clearly shows that under private ownership, electricity rates would increase much more than under public or continued city ownership.
To date our campaign has been successful as Toronto Hydro remains a public entity. However, our Union continues to monitor the situation on a daily basis.
Thank you.