Pay Rates Have Changed DRAMATICALLY
We have seen a dramatic change in pay rates that the utilities are willing to pay for temporary or contract employees working on an assignment at our nuclear utility plants – you may have notice this, as well.
In keeping with our standard of keeping YOU informed – we will try to help you understand WHY – there are several reasons for the change!
Foremost is the competition that the major utilities are facing with energy being produced by others who sell power at rates of $20-25 per MWhr – far below the typical $50-60 per MWhr of the past. In fact, we have seen power sell at near $0 per MWhr, knowing that current subsidies and tax breaks for their renewables would still provide $20-25 per MWhr. Our nuclear units cannot do this without sacrifice!
This competition forced the major utilities to install their own renewables along with replacement of coal-fired plants with natural gas plants. In order to build these renewable and natural gas plants cash flow was dramatically affected! Do you recall Duke-Energy purchasing Piedmont Natural Gas for $5 billion in cash in order to assure them a source of natural gas? The most recent purchase of SCANA by Dominion was centered around the gain in natural gas availability for the future, as well.
In order for the utilities to sell electricity at reduced costs and meet the customer needs they have to reduce their overhead to provide the cash flow! The low hanging fruit, to accomplish this, is the reduction of employees (especially those who are most costly) and replace them with lower cost temporary employees, until the employees in the affected work group that suffered the loss of employee(s), can make up the difference.
Another factor in the move toward renewables is growth. Since the current electricity demand is somewhat stagnant and, in some regions, even declining, core business needs a boost. Due to various incentives – renewable projects aren’t totally reliant on a growing customer demand because they usually come with a long-term contract to sell the energy, they produce to either a commercial customer(s) or to some other utility. So, in a sense, buying renewable energy projects is like purchasing a bond for the utility. If they can finance the purchase, which they usually can, due to the relatively low cost of capital, they can generate financial benefits which result in strong returns from these projects, satisfying their stock holders.
In addition, many of our nuclear plants have been shuttered with plans to shutdown many others – reducing the number of plants operating to 98 – down from the 106 we had operating only a few years ago. This has provided a multitude of seasoned, experienced employees available for either direct hire or temporary positions and the utility interested in pursuing these candidates has the advantage, due to the numbers of people available, in obtaining the BEST candidate at a much-reduced salary or hourly rate. Capitalizing on the fact that reduced wages is much better than zero wages, due to no job.
When you couple with that the expenses associated with incorporation of modifications due to the Fukushima event, cyber security, grid hardening, and the Nuclear Promise – this too – added to cash flow concerns and helped to accelerate these changes.
By now, you should understand and trust, that GTTSi will always be looking out for your best interest, because our success is directly coupled to YOU and your success. Keeping you foremost on our minds it something we strive to do each and every day. Please believe us, when we recommend a certain rate – it is based on recent experience and the latest information we have available.