"Some of our board members were concerned there was a free-enterprise problem," said Norm Story, assistant general manager for the Homer [Electric] cooperative. But Story said the board went along after being assured the agreement was not a legally binding document. "This is sort of new, but then these are new times," he said.

Sunday, February 25,1990, The Anchorage Times
Electric Utilities, union join to raid Railbelt fund
By Todd Bensman, Times Writer

A coalition of four electric utilities and a powerful state labor union have joined in an attempt to grab more than half the $230 million Railbelt Energy Fund for a power line project.

Anchorage Municipal Light & Power refused to sign the unusual agreement, citing potential anti-trust law violations.

The International Brotherhood of Electrical Workers Local No. 1547 agreed last month to use its political clout to persuade legislators to appropriate $125 million from the fund for two proposed interties from Soldotna to Anchorage and from Healy to Fairbanks.

The participating utilities include Chugach Electric Association, Golden Valley Electric Association, Homer Electric Association and Matanuska Electric Association.

The private utilities in exchange promised to use exclusively construction companies that promise to hire only union members. The IBEW promised to give concessions to the construction companies so they could bid low.

If the coalition succeeds, the utilities say the project would allow them to expand and up-grade their services among the Railbelt communities far into the next century. The union says the agreement could increase its odds of winning the kinds of state contracts won in recent years by contractors from outside Alaska.

But the legislature first must appropriate the money and decide who will build the project: the Alaska Energy Authority or the coalition of electric utilities.

If the energy authority oversees the project, the agreement calls for the coalition of utilities to use their clout in persuading contractors to hire IBEW members.

"We don't have any control over what the Energy Authority does, but we may have a little influence," said David Hutchins, executive director of the Alaska Rural Electric Cooperative Association.

If the coalition takes charge of building the interties, hiring union labor would be a priority.

The agreement marks a new kind of symbiotic relationship that has raised a few eyebrows.

At least one of the utilities, Homer-Electric, balked before signing.

"Some of our board members were concerned there was a free-enterprise problem," said Norm Story, assistant general manager for the Homer cooperative.

But Story said the board went along after being assured the agreement was not a legally binding document.

"This is sort of new, but then these are new times," he said.

Anchorage's ML&P refused to join after nearly a month of negotiations with the union and other utilities.

"It has been a long-standing thing to get IBEW's support. IBEW gives lots of money to candidates and is able to influence people who might otherwise be opposed to something like this," said Tom Stahr, ML&P general manager. "But I think it was felt this probably wasn’t a legal thing to do."

Anti-trust questions about the agreement are complicated because labor unions are exempt from such laws, as are state-regulated utilities.

When the two join in an apparent attempt to exclude certain private businesses from the bidding process, even anti-trust authorities are left scratching their heads.

Dick Monkman, a former Alaska assistant attorney general who handled anti-trust cases for seven years, said the exemption question is a legal gray area. "The laws are so foggy on that, the chance of anyone coming after you are very thin," he said. "It isn't a clear case at all. It's t like you could walk into a grocery store and just pick and choose."

Bill Ingladson, another former assistant attorney general, worked for I4 months on anti-trust cases. "If there were just two companies that said, ‘Look, if you use your political pull to get this government contract; we'll use you for the contract,’ then that would clearly violate the anti-trust laws," he said. "But when you' deal with labor .unions and you get into a lot of labor law issues, it's a real mess.

The current assistant attorney general who handles anti-trust issues, Jan DeYoung said last week she was unfamiliar with the complicated issues addressed by her predecessors. She has held the post for two months:.

The coalition agreement has, not been challenged in court, but contains a provision that anticipates that possibility. If a court or regulatory agency invalidates the agreement, "the parties shall in good faith meet promptly to negotiate lawful amendments or modifications to this ... that will effectuate the original intent."

Gary Brooks, IBEW business manager, said there is nothing unethical or illegal about the agreement. It is a business deal struck because tine union wants to ensure local hiring, he said.

Brooks added that there is nothing wrong with using political clout to get exclusive rights to the work.

"We see nothing unusual about it. It has given the union a basis to secure funding and works for everybody," he said.

In recent years, the union was edged out of utility contracts by contractors such as IRBY Construction Co. of Jackson, Miss.

IRBY has worked on Alaska projects including the $1.6 million replacement of a power line across Thompson Pass and the Wasilla to Fairbanks electrical intertie six years ago.

Charles Irby, the company's president said swapping political influence for construction contracts will cost consumers by eliminating competition. "I hate to see public business conducted in that manner," Irby said Friday in a telephone interview. "The union has been doing a very effective job at selling the concept of `union only' and convincing people it's to their benefit. I'm against any restriction of free trade and particularly within the United States.

"How the union was able to get respectable boards to cooperate, I don't know."

The Railbelt Energy Fund was set up in 1986 to pool unspent money from the canceled Susitna hydroelectric - project. The money was set aside to finance power projects in the Railbelt region, from Homer to Fairbanks.

State legislators have been inundated by requests for more than $1 billion from a fund of just over $230 million.

A disputed study commissioned this year by the Alaska Rural Electric Cooperative Association, which represents seven Railbelt utilities, concluded the Soldotna to Anchorage intertie will cost about $65.6 million to build. It would yield $114 million in 1994, the study said. That amount would increase to $131 million by 2043, it estimated.

The Healy to Fairbanks line is estimated by the study to cost about $58.7 million and produce $82 million in revenues by 1984. It should provide $127 million in 2043, the study concludes.

But the conclusion of studies completed since then, by the consumer group Analysis North and the Legislative Affairs Agency contradict the utilities study. The later studies contend the cost of building both interties exceed the most optimistic benefits forecast by the utilities in their study.

Brooks, the electrical workers union leader, said his lobbying efforts will focus on Anchorage area Democrats.

Rep. Ron Larsen, D-Fairbanks, who is on the House Finance Committee, said he has been hearing from intertie proponents.

"The interties are basically the only ones that are lobbying us at this point," Larson said.