|Energy Giant's Financial Mismanagement Leaves N.Y. Workers, Community On the Hook
Striking utility workers in New York State's Hudson River Valley agreed to return to work Dec. 14, ending their five week walkout against Dynegy.
But for the 60 Poughkeepsie Local 320 members who work at the Danskammer Generating Station — one of the two plants on strike — there won't be a job to return to. On Dec. 10 the troubled Houston-based energy giant — which filed for Chapter 11 bankruptcy protection last spring — announced that it had successfully auctioned off both stations as part of a court-supervised restructuring deal. New owner ICS NY Holdings LLC plans to tear down the 60-year-old Danskammer plant and sell it off for parts. The Roseton station will continue operations.
Workers went on strike Nov. 8 after rejecting Dynegy management's last and final contract offer. The company demanded a pension freeze and elimination of retiree benefits, jeopardizing the economic security of current and retired employees.
"We had made a lot of concessions already," says Local 320 Business Manager John Kaiser. "But this would have gutted our entire retirement plan. It was too much."
The company, which emerged from bankruptcy in October, refused to budge on its demands, although the union agreed to extend a two-year wage freeze. The local also offered to extend the current contract until after bankruptcy proceedings were completed. Dynegy declined.
While Kaiser says he understands the constraints faced by the company, he contends Dynegy's financial woes were largely the product of its top executives' mismanagement, many of whom will walk away with their jobs and bonuses intact.
"Dynegy isn't some mom and pop business," says Kaiser. "This is a structured bankruptcy which means investors will make money off of this no matter what. But it's my people who will pay the price."
Dynegy has a history of financial transgressions. In 2002 several executives were convicted on numerous counts of mail and wire fraud, resulting from their role in the company's near-collapse.
And it was sketchy accounting practices that helped push the company toward insolvency last year.
Dynegy had transferred most of its corporate debt to a subsidiary corporation, Dynegy Holdings, which filed for bankruptcy last year. But in March, a court-appointed examiner found the parent company guilty of making fraudulent transfers, putting Dynegy Inc. on the hook for much of its subsidiary's debts.
In 2002, it was accused, along with the now-infamous Enron, of price manipulation during the California electricity crisis of 2001, which caused massive black- and brownouts across the state soon after the deregulation of the utility industry.
Approximately 693 employees at workplaces owned by Dynegy are covered by IBEW agreements.
The local community — home to the Danskammer and Roseton plants — is owed $23.4 million in back taxes by the company. This represents approximately 40 percent of the town's school budget, says Kaiser.
Joel Kleiman, the county's commissioner of finance, wrote last May that "Dynegy's failure to pay their 2012 taxes will have devastating effects on local government services and programs."
Danskammer workers have already received their 90-day layoff notice as required under the Worker Adjustment and Retraining Notification Act, which meant a difficult holiday season.
"This is a company straight out of the Enron playbook, a real bottom feeder of corporate America," Kaiser says. "They protect their bottom line on the backs of workers and the community. We had to stand up and at least raise the issue."