Tuesday, September 18, 2018

Ohio Nuclear Plant Faces Tough Questions in Bankruptcy Court

In Ohio, the bankrupt FirstEnergy Solutions and the FirstEnergy Nuclear Operating Co. have been okayed by their creditors to spend another $100 million over the course of the next three years. The companies say that this is so that it will be able to provide generous bonuses to certain nuclear power plant employees.

Must Convince U.S. Bankruptcy Judge

It is not enough that the companies convinced their creditors of the extra funds; the companies must also convince U.S. Bankruptcy Judge Alan Koschik that the bonus meets bankruptcy legal standards and that the company will be able to operate the plants safely until 2020 and 2021 when they are shut down. The Judge asked many questions over four hours of closing arguments but has not yet made a decision.

Creditors Concerned with Spending Extra Money

Since mid-April the FirstEnergy Nuclear Operating Co. has been pushing back on its creditors, who originally opposed the plan, to approve of the extra money. Their concern was that spending the extra money would leave less money for those creditors whom were owed money. The bonus plan excludes all of the power plants’ unionized workers.

An Exclusion of Union Workers?

The judge’s main concern was that the companies had not intentionally excluded union workers and that those who were chosen would be capable of operating the plant until it closes it down. “Unless I missed it or forgotten, there is no testimony as to what the black box … is with respect to criteria for who is critical so as to be included … or not.”

The unions have filed complaints with the court asking the judge to force the company to explain how it had chosen the people that it believes will leave the company if not paid more. The unions are requesting that the company make a new selection of people with the input from union representatives. FirstEnergy Nuclear Operating Company’s approach to the proposed bonus program has been to have the company’s top executives (with assistance from outside consultants) choose employees. However, the consultants never had any say in the final decision.

Methodology or Discrimination

The judge was curious as to how the company came to the conclusion of who to select – he asked whether there was an existing algorithm or methodology for choosing. Abid Qureshi, one of the attorneys representing the company, explained that the company looked at each employee’s job function. He claimed that the company held no discriminatory feelings for the union workers.

A Crucial Role

Paul Harden, the senior vice president and COO had previously explained that another consideration for the bonus plan was to consider whether an employee was likely to be able to find another job before shutdown, whether the position they filled was crucial to the operation of the company, and whether there were other qualified employees who would be able to fulfill the other employee’s job responsibilities until closure.

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