December 3, 2012

CT puzzled by NU's post-merger layoffs

Connecticut's attorney general and consumer counsel on Monday demanded Hartford's Northeast Utilities answer questions about its 319 employees who left the company since merged with NStar, especially whether the reductions in Connecticut are fair compared to those in Massachusetts.

Attorney General George Jepsen and Consumer Counsel Elin Swanson Katz said their March 15 agreement with NU approving the merger requires the utility to give 30 days notice about any layoffs or facility closing, including demonstrating Connecticut reductions are equitable and proportional to the other states where NU operates, such as Massachusetts and New Hampshire.

"Part of the agreement over the merger is to make sure layoffs are proportionate in Connecticut and Massachusetts, both in number and in salary level," Jepsen said.

NU spokesman Al Lara said the company has worked to make sure the job impacts in Connecticut and Massachusetts are not disproportionate for either state.

"Regulators in both states have directed that neither state should be impacted disproportionately," Lara said.

When NU merged with NStar last April, the company's board and executive leadership was split between NU and NStar executives; however, the president and chief executive is Tom May, the former NStar president, CEO and chairman.

The March 15 merger agreement with Connecticut specifically included clauses to ensure NU maintained a strong corporate and community presence in the state. Following the merger, the company went from being solely headquartered in Hartford to sharing its corporate headquarters with Boston.

Over the summer, Jepsen and Swanson Katz did not object when NU started laying off Connecticut employees, particularly the long-time economic development team, saying the layoffs were anticipated as the company looked to save $780 million in redundancies following the merger.

On Monday, however, Jepsen and Swanson Katz, said the utility is not providing the necessary information about the layoffs.

Jepsen and Swanson Katz said NU officials assured them Sept. 24 that they would provide information about whether equal layoffs were occurring in Massachusetts, and the Connecticut Public Utilities Regulatory Authority also asked for similar information on Oct. 25.

On Nov. 16, NU said it was not required to provide the information about the layoffs because they were anticipated in advance of the merger. Jepsen and Swanson Katz disagreed with NU's assertion in a filing to PURA on Monday.

"The plain language is that we are required to be notified of planned layoffs," Jepsen said. "Simply saying, 'Over the next year, there will be layoffs,' is not adequate notice."

Lara said NU has complied with PURA and disagrees with Jepsen and Swanson Katz.

"This is a merger of great significance and has been carefully reviewed," Lara said. "As we have said before, our merger does not include plans for broad layoffs."

The 319 people who left NU since the merger -- some voluntarily -- is consistent with what NU reported it expected in its merger integration study completed in April 2011. The study predicted not only the number of layoffs, but the positions that would be eliminated, said NU spokesman Al Lara. Discounting for new hires, NU has 155 fewer positions than it did before the merger.

"The elimination of redundant positions existing in both companies in our corporate functions was expected and is required to achieve efficiencies and savings for our customers as a result of our merger," Lara said.

When NStar and NU merged in April, they created New England's largest utility parent company with six natural gas and electric utilities in Connecticut, Massachusetts, and New Hampshire, including Berlin-based Yankee Gas and Connecticut Light & Power.

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