STATE OF NEW YORK BEFORE THE PUBLIC SERVICE COMMISSION Proceeding on the Motion of the Commission as to the Rates, Charges, Rules and Regulations of Consolidated Edison Company of New York, Inc. for Electric Service PSC Case No. 13-E-0030 Proceeding on Motion of the Commission as to the Rates, Charges, Rules and Regulations of Consolidated Edison Company of New York, Inc. for Gas Service PSC Case No. 13-G-0031 Proceeding on the Motion of the Commission as to the Rates, Charges, Rules and Regulations of Consolidated Edison Company of New York, Inc. for Steam Service PSC Case No. 13-S-0032 DIRECT TESTIMONY OF ROBERT VUONO AND RICHARD J. KODA ON BEHALF OF LOCAL 1-2, UTILITY WORKERS UNION OF AMERICA, AFL-CIO 1 Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. 2 A. (Vuono) My name is Robert Vuono. My business address is 222 First Street, 3rd 3 Avenue Yard, Brooklyn, New York. 4 (Koda) My name is Richard J. Koda and my business address is 409 Main Street, 5 Ridgefield, Connecticut 06877-4511. 6 Q. BY WHOM ARE YOU EMPLOYED? 7 A. (Vuono) I am employed by the Consolidated Edison Company of New York, Inc. 8 (-Con Edison?). I am also a member of Local 1-2, Utility Workers Union of 9 America, AFL-CIO. CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 2 of 39 1 (Koda) I am a principal of KODA CONSULTING, Inc., which I established in 2 February 1999. 3 Q. WHAT IS UWUA LOCAL 1-2? 4 A. The Utility Workers Union of America, AFL-CIO, Local 1-2 (-Union? or -Local 5 1-2?), is a labor organization that represents the nearly 8,000 field and operations 6 employees of Consolidated Edison Company of New York, Inc. (-Con Edison? or 7 -the Company?). Our members are responsible for the day-to-day operation and 8 maintenance of the Con Edison systems that provide electric, gas, and steam 9 services to millions of customers in New York City and Westchester County. 10 Q. PLEASE DESCRIBE KODA CONSULTING. 11 A. KODA CONSULTING, Inc. offers services in financial and management 12 consulting, principally in the area of utility regulation. As a principal of my firm, I 13 have performed analyses and evaluations of utility company and commercial entity 14 testimonies, reports, and other submissions, and have presented comments, 15 recommendations, and testimonies on behalf of a variety of clients. 16 Q. PLEASE DESCRIBE YOUR EMPLOYMENT HISTORY. 17 A. (Vuono) I am employed by Con Edison and my current job title is Splicer. As of 18 December 2013, I will have been a Con Edison employee for 40 years. I began 19 my career with the Company as what is now called a -general utility worker,? and 20 advanced up the ranks to B-Mechanic, A-Mechanic, and Splicer, a position I have 21 held since 1994. I am also Union Safety Chairman for Brooklyn and Queens, and 22 have been in that position for two years. In addition, I am a member of the 23 Executive Board of Local 1-2. 24 25 (Koda) Prior to the establishment of KODA CONSULTING, Inc., I was employed 26 by Georgetown Consulting Group, Inc. (-Georgetown?) from July 1979 through 27 January 1999. I began my consulting career at Georgetown in 1979 as a Staff 28 Consultant, primarily assisting in financial analyses and the preparation of 29 testimony in a variety of utility rate cases. I was promoted to Senior Consultant in CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 3 of 39 1 1981. As a Senior Consultant with Georgetown, I continued assisting in preparing 2 financial analyses and testimony and began testifying on limited issues in rate 3 cases, primarily in the telecommunication area. 4 analyses and testimony responsibilities and became a Project Manager in 1987. As 5 a Project Manager, I was in charge of individual projects, which I ran from start to 6 finish regarding a variety of utility services. 7 While at Georgetown, I sponsored testimony in approximately 60 rate proceedings 8 in a variety of jurisdictions and on a variety of subjects. I provided testimony to 9 commissions and boards in regulatory cases primarily involving electric, gas, 10 telephone, and water utility companies, as well as testimony involving enterprises 11 such as insurance companies and steam operations. Ex. No. 1 contains a record of 12 my testimony in other proceedings. 13 I earned an MBA degree from the University of Connecticut in 1980 and a B.S. in 14 Business Administration (with a major in Accounting) from Seton Hall University 15 in 1969. I continued expanding my 16 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? 17 A. Our testimony provides the perspective of Con Edison's Union-represented 18 workforce on the current state of the Company's operation and maintenance of its 19 electric, gas, and steam infrastructure. 20 We will testify that the Company is understaffed and, at current staffing levels, 21 cannot reasonably assert that it can conduct all needed and appropriate operations 22 and maintenance activities. Right now, important maintenance activities are not 23 being conducted, nor were they conducted in connection with the expedited efforts 24 to restore service following Super Storm Sandy. Con Edison's electric distribution 25 system was in a weakened condition leading up to the Storm because of the 26 Company's July 2012 lockout of the members of Local 1-2, and was in an even 27 weaker condition following the Storm. There is reason for concern going forward. 28 Significant service safety and reliability problems can arise when the salt water 29 damage inflicted by Sandy is combined with the heavy demands placed on the CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 4 of 39 1 system in connection with the arrival of summer heat. The potential for such a 2 combination of circumstances is now at hand. 3 Our recommendations as to how best to address the concerns raised here are 4 presented at the conclusion of this testimony. They are aimed at ensuring that Con 5 Edison has a sufficient number of in-house trained and experienced employees and 6 that the Company has properly analyzed and is monitoring its staffing and O&M 7 needs. 8 Q. PLEASE PROVIDE A SUMMARY OF YOUR TESTIMONY. 9 A. Con Edison is responsible for providing safe, reliable, and essential utility services 10 to millions of customers throughout the New York metropolitan area. Based on 11 our experiences in the field, the Union is concerned that the Company lacks 12 sufficient full-time employee staff to meet its day-to-day obligations to both 13 customers and employees. The data produced by the Company supports this 14 assertion: in the last four years, Con Edison has cut nearly 17 % of its full-time 15 workforce. At the same time, Con Edison has informed the Commission that the 16 Company's loads have grown, and that loads are projected to continue to grow in 17 the years to come. 18 The result is an understaffed workforce that is unable to keep up with necessary 19 operations and maintenance or to adequately address emergency situations. And 20 correspondingly, Con Edison has shifted from a company that performed 21 preventive maintenance on a timely basis, to one in which equipment is run until it 22 fails. This strategy is costly for customers, who may save maintenance costs in the 23 short-term, only to experience service disruptions (and costly capital projects) 24 down the line. 25 potentially dangerous system conditions, which may be harmful to customers and 26 employees. 27 Meanwhile, contract labor, which the Company says it uses to fill staffing gaps 28 from time-to-time, has become a permanent part of the workforce. Contractors are 29 now operating in virtually every area of Company operations and performing even Moreover, failing to do inspection and maintenance leads to CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 5 of 39 1 routine operations. This has significant downsides, including a loss of the 2 institutional knowledge and experience that comes with relying on permanent 3 employees that have career-long investments in the Company, its customers, and 4 the unique characteristics of its distribution systems. Contractor labor can be 5 subject to safety and other standards that are less stringent than those to which 6 full-time Company employees are held, and is not subject to the stringent training 7 requirements that apply to full-time Con Edison personnel. The Company appears 8 to have done no analyses regarding where and when contractors can be used safely 9 or effectively; indeed, Con Edison does not even appear to be carefully tracking 10 the extent of their use. 11 The Company seeks approval of proposals for certain -storm hardening? 12 improvements that Con Edison asserts are needed to make the system more 13 resilient in the event that the region experiences another storm on the scale of 14 Super Storm Sandy. While there are many physical infrastructure improvements 15 that can and should be made to the Con Edison system, one of the most important 16 -storm hardening? measures that the Company should implement is to upgrade its 17 -human infrastructure? by hiring, training, and retaining sufficient staff. With 18 sufficient staff, the Company can operate and maintain its existing physical 19 infrastructure properly, and thus keep the system in a state of readiness when 20 emergencies arise. 21 Likewise, with sufficient staff, the Company will be more able to restore service in 22 a timely manner after a storm hits. Instead, the Company has increasingly relied 23 on mutual aid arrangements for storm restoration. 24 become so prevalent that more than a dozen of such workers have remained on 25 Con Edison's properties as of late May 2013--six months after Super Storm 26 Sandy. Some reliance on mutual aid assistance is unavoidable; there will always 27 be a need to call on other utilities for assistance in times of severe weather. 28 However, the ability to ask for such help is not a substitute for being properly 29 staffed on a day-to-day basis. This is especially true given that Con Edison has, in 30 many respects, a unique system. Most mutual aid workers will not be experienced Mutual aid workers have CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 6 of 39 1 with operating an extensive undergrounded electric system like that located in 2 large portions of New York City and its environs. As such, full-time staff often 3 finds that mutual aid workers are unable to provide assistance with critically 4 needed tasks. When they try, mutual aid workers can actually create more work 5 for in-house staff, who may be called upon to act to ensure their safety. By 6 maintaining appropriate internal staffing levels, the inefficiencies, expenses, and 7 uncertainties associated with mutual aid can be minimized and the Company can 8 place mutual aid workers where they can be a help rather than a hindrance. 9 The Union urges that any rate relief provided in this proceeding be conditioned to 10 ensure that the Company's internal, full-time workforce is sufficient to meet Con 11 Edison's normal, day-to-day needs. 12 Q. 13 14 WAS THIS TESTIMONY PREPARED BY YOU OR UNDER YOUR SUPERVISION? A. 15 Yes, it was. THE CON EDISON SYSTEM OPERATING ENVIRONMENT 16 17 Q. 18 19 PLEASE DESCRIBE CON EDISON'S SYSTEM AND ITS CURRENT CONDITION. A. Con Edison's system is located in the congested, urban environment of Manhattan, 20 its surrounding boroughs, and Westchester County. Much of the system is 21 underground, and portions of the infrastructure are ancient--some system 22 components date back a century, and some of the aluminum cabling on the system 23 dates to the 1950s (or before). This creates attendant risks: if the aluminum 24 cabling catches fire, it can lead to a hydrogen gas explosion that can literally lift 25 sections of the sidewalk. 26 Likewise, our members have worked on cable so old that it has paper insulation 27 (such cable still exists in portions of Con Edison's system), and on utility poles 28 that were installed in the 1930s and remain in service today. It is not unusual to 29 see double pole arrangements on the Con Edison system where another utility has CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 7 of 39 1 erected its own replacement pole rather than rely on an aging and suspect Con 2 Edison pole. There are poles whose wooden -cross-arms? (to which electrical 3 wires are attached) are rotting. 4 The sheer size of Con Edison's system is also unique. Con Edison's system 5 includes 94,000 miles of underground cable. As the system's manholes were 6 rarely expanded, the underground system is likely both the most extensive and the 7 most congested system of its kind in the world. Con Edison plans to -de-congest? 8 structures where the Company can do so, but that is much easier said than done. 9 In addition, the Company operates 36,000 miles of overhead cables and 4,200 10 miles of gas mains. 11 While most electric distribution systems feature radial feeds, Con Edison's electric 12 system is unique in that loads are fed in both directions (by substations at either 13 end). While this configuration makes service disruptions less likely, it also means 14 that when there are problems our workers are required to work on -live? 15 equipment, which is more challenging and potentially dangerous, and requires 16 significant training and experience. This is an inevitable result of the system 17 configuration absent the installation of switches to allow for system 18 -sectionalizing?. While this configuration makes outage less likely, it also means 19 that any outages that do occur may well be of longer duration. 20 Q. 21 22 IS CON EDISON PROPERLY STAFFED TO CONDUCT NEEDED OPERATION AND MAINTENANCE ACTIVITIES? A. No. Especially given the age and deteriorating condition of portions of the 23 facilities discussed above, regular system maintenance is extremely important. 24 However, conducting maintenance is difficult, if not impossible, at the Company's 25 present staffing levels. 26 Q. WHAT IS THE BASIS FOR YOUR ASSERTION? 27 A. Con Edison's full-time workforce has been reduced substantially in the past few 28 years. Company data produced in this case shows that as of February 2009 the 29 Company had 9,355 weekly (or full-time) employees. Ex. No. 2. As of February CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 8 of 39 1 2013, that number was 7,793, a full-time workforce reduction of roughly 16.7%. 2 (At that time, the Company also employed 328 people on a part-time basis, 3 resulting in a total staff of 8,121.) Ex. No. 3. 4 The last year appears to be representative of recent years. 5 provided detailed staffing breakdowns for 2010, 2011, and mid-year 2012. Ex. 6 No. 4. Those data likewise show a continual downward trend. For example, the 7 data indicate that: ? 8 9 Con Edison has the number of weekly (full-time) employees in -electric operations? in Manhattan went from 889 in 2010 to 715 in 2012, a reduction of 19.5%; ? 10 11 the number of weekly (full-time) employees in -substation operations? went from 856 in 2010 to 767 in 2012, a reduction of 10.4 %; ? 12 13 the number of weekly (full-time) employees in -steam operations? went from 463 in 2010 to 420 in 2012, a reduction of 9.2%; ? 14 15 the number of weekly (full-time) employees in -electric operations? in Brooklyn/Queens went from 1,101 to 938 in 2012, a reduction of 14.8%; ? 16 17 the number of weekly (full-time) employees in -gas operations? went from 504 to 411 in 2012, a reduction of 18.4%. 18 The Union is aware that there have also been significant cuts in, for example, the 19 Bronx/Westchester Overhead department. The group used to have as many as 75 20 people, but now has just 30 people. 21 In the meantime, the workload for the Company's remaining employees has not 22 diminished. 23 Q. WHY DO YOU SAY THAT? 24 A. There has been a tremendous growth in construction within Manhattan (including 25 new high-rise buildings) as well as in particular sections of the -outer? boroughs, 26 including Greenpoint, Williamsburg, and Long Island City. Similarly, Con Edison 27 has testified in this proceeding that, -[c]ustomer demand continues to grow,? and 28 the Company -hit a system peak on July 22, 2011.? Electric Infrastructure and 29 Operators Panel Testimony, Jan. 25, 2013 at 8:12-13. This trend is not abating. CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 9 of 39 1 Instead, Con Edison is forecasting -1.3% growth per year over the next five 2 years.? Id. at 8:17. It is generally the case that our workload increases as demand 3 grows. 4 In addition, our workload has increased due to the extra tasks associated with the 5 post-Super Storm cleanup and restoration. In fact, the Company recently received 6 PSC approval to delay completion of required inspections because of the impact of 7 Super Storm Sandy. 8 Q. 9 10 DOES THE COMPANY AGREE WITH YOUR ASSESSMENT OF THE WORKLOAD? A. Not exactly. The Company states that the workload has decreased due to a 11 decrease in electric construction work, which allows employees to be redeployed 12 to O&M work and thus that -the need to replace employees lost, for example, 13 through attrition is mitigated.? Ex. No. 5. 14 Q. DO YOU AGREE? 15 A. No. This is not consistent with the Union's experience which, if anything, has 16 been the other way around. We've seen Union personnel redeployed from O&M 17 to capital projects (which, as noted above, become larger and more difficult as a 18 result of deferred maintenance). More broadly, as the growth in construction 19 continues throughout the New York City metropolitan area, there is no basis for 20 the assertion that the need for employees has gone down. -New business? needs 21 have grown, and with it the need for utility workers to do the work. Moreover, if 22 the workload had in fact decreased, Con Edison would presumably not have 23 needed an extension to complete required facility inspections. 24 Q. 25 26 WHAT HAS HAPPENED TO THE LEVEL OF MANAGEMENT EMPLOYEES DURING THE 2010-2012 TIME PERIOD? A. While the size of the workforce has decreased overall, the number of management 27 employees has gone up. The Con Edison data included in Ex. No. 4 show that as 28 of 2010, there were 4,973 employees under the heading -Management.? As of 29 mid-2012, there were 4,987 such employees. More recent data indicates that as of CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 10 of 39 1 March 2013, the number of management employees had jumped to 5,012. Ex. No. 2 3. We do not understand why there would be any increase in the number of 3 management personnel when there have been substantial cuts in the weekly staff 4 whom they manage. 5 Q. HAS THE COMPANY PROVIDED A FORECAST OF WEEKLY 6 EMPLOYEE LEVELS DURING THE TIME WHEN THE NEW RATES 7 WILL BE IN EFFECT? 8 A. The Company has provided a forecast of staffing levels that is used for the purpose 9 of setting salary levels in rates. The document has been offered by the Company 10 in its direct testimony and is Ex. No. AP-5, Schedule 3. That Schedule indicates 11 that the Company anticipates that the average number of weekly employees for the 12 period December 2013 through December 2014 will be 8,487. These figures are 13 derived after application of a -productivity adjustment.? If that adjustment is 14 removed, the weekly number would be increased by 215 employees, resulting in 15 an overall average weekly employee level of 8,702 persons. That level would be 16 consistent with the weekly employee level as of October 2010. While the Union 17 regards this number as insufficient, it would still be an obvious and substantial 18 improvement over the status quo, both for employees and customers. 19 Q. WHAT HAS THE COMPANY SAID ABOUT THIS FORECAST? 20 A. The Company has taken the position that this schedule is not a -staffing plan,? and 21 that its purpose is simply to apply the productivity adjustment. Con Edison says 22 that this is done by applying the productivity adjustment to average levels of 23 personnel for the historical period. The Union's position is that if the customers 24 are paying rates based on these employment levels, then Con Edison should be 25 required to staff to at least these levels. 26 Q. 27 28 29 HAS THE COMPANY PROVIDED ANY OTHER STAFFING PLAN DOCUMENTS? A. Yes. Following a ruling on a discovery dispute, the Company produced a single document concerning anticipated staffing levels for 2013. CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 11 of 39 1 Q. PLEASE DESCRIBE THAT DOCUMENT. 2 A. The document, dated December 20, 2012, is entitled -Workforce Metrics: Staffing 3 Plan Based on 2012 Budget Preparation Process.? Ex. No. 6. That document 4 shows that as of the end of last year, the Company was considering significant 5 increases in both Union and Management personnel. 6 Q. WHAT DOES THE DOCUMENT SHOW? 7 A. The -Plan? shows an intention on the part of Con Edison to make significant 8 increases in -Union? staffing levels in Electric Operations, Central Operations 9 (which includes steam operations) and Gas Operations. For example, and as 10 compared to the actual staffing data provided by the Company for 2012, if 11 implemented, Con Edison's -Plan? would increase -Union? personnel from 8,143 12 (Ex. No. 6) to 8,471, which is still below the level on which the Company bases its 13 revenue requirements request in this proceeding. 14 following Union staffing changes: That figure includes the 15 ? Electric Operations: increase Union personnel from 2,848 to 2,935 16 ? Central Operations: increase Union personnel from 2,117 to 2,187 17 ? Steam Operations: increase Union personnel from 420 to 451 18 ? Substation Operations: increase Union personnel from 767 to 805 19 Q. WHAT HAS THE COMPANY SAID ABOUT THIS DOCUMENT? 20 A. The Company has sought to disown the document, claiming, among other things, 21 that it is a draft that was not reviewed or approved by senior management. 22 However, Con Edison has also explained that the forecasted employee numbers 23 included in the document were developed by canvassing various departments 24 within the Company. Ex. No. 7. 25 Q. DO YOU HAVE COMMENTS ON THESE NUMBERS? 26 A. Yes. Even if the numbers in this -Draft? are implemented as written, there will 27 still be insufficient in-house personnel to cover all existing work schedules and 28 shifts. As of now, the only way in which existing schedules are met is through 29 unorthodox scheduling, including having personnel covering shifts beginning at CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 12 of 39 1 midnight. If an employee or two are out sick, then coverage is impossible even 2 with graveyard shifts. The result is that all the Union workers can do is respond to 3 pressing emergencies; employees act only when something fails, which is an 4 inefficient and costly way to run an electric system. 5 Q. PLEASE CONTINUE. 6 A. A knowledgeable and experienced workforce is key to the efficient operation of an 7 electric utility. Reduced levels of knowledgeable and experienced internal 8 employees threaten the safety and reliability of the electric system and hinder the 9 smooth transference of the knowledge base to new employees who will operate the 10 system in the future. There has been a tendency in the electric industry to apply 11 cross-training and cross-location strategies in an attempt to compensate for job 12 reductions. Time and again, this has been shown to be an inferior solution when 13 compared to having a sufficient internal work force. This is particularly apparent 14 in times of crisis, such as a major outage. During such crises, having sufficient 15 personnel, trained and knowledgeable in the local systems, becomes critical. As 16 was shown by the duration of Con Edison's Long Island City Outage in 2006, as 17 well as the recent storms, there were insufficient internal workers knowledgeable 18 about the Company's underground and overhead systems to restore service to 19 customers in a timeframe acceptable to customers and the Commission. 20 Based on reports from Local 1-2-represented employees at the Company's 21 Emergency Service Bureau, the number of trouble-shooters that Con Edison 22 presently has available to respond to all contingencies in the underground system, 23 including repair of secondary system failures, is inadequate to provide safe, 24 adequate, and reliable service to its electric customers. 25 reflected in the reduction in the number of Con Edison internal trouble-shooters, 26 resulting in extremely small crews being available. An information response from 27 the Company regarding this issue has confirmed this concern. 28 Additional Con Edison electric operations employees need to be hired in adequate 29 numbers to install, maintain, and repair electric distribution equipment. This inadequacy is Ex. No. 8. CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 13 of 39 1 Q. WHAT HAS BEEN THE IMPACT OF REDUCING WEEKLY STAFF? 2 A. During the months leading up to Super Storm Sandy's arrival, important 3 maintenance and related activities were either being ignored or performed on a 4 reduced basis because of a lack of manpower. Those months included the period 5 after the July 2012 lockout, following which Union members were playing 6 -catch-up? to address maintenance work that was simply not done during the 27 7 days in which the Company attempted to run the system without its trained 8 workforce. 9 The staffing decreases have led to--or are the result of--the adoption of a -run it 10 until it breaks? mentality, in which ongoing maintenance has been replaced by 11 emergency repairs conducted only when equipment fails. 12 Q. 13 14 WHAT ACTIVITIES ARE BEING IMPACTED BY THE REDUCED STAFFING? A. For one thing, reduced staffing has impacted routine equipment inspections, cable 15 replacements, and pole replacements. The conduct of these activities is critical to 16 system reliability and safety. 17 structural integrity of underground vaults and bus tables, which are a common 18 feature of ConEd's urban system. In utility terms, some of these facilities are 19 ancient, yet they are not being inspected, maintained, or repaired on a regular 20 basis. 21 Parts of Con Edison's system (e.g., Williamsburg, Brooklyn) are plagued by -open 22 mains,? which are unconnected circuits and phases. Connecting those mains is 23 essential to ensuring that there are redundant or -network? backup sources in the 24 event of cable outages. Yet, absent needed manpower, these activities cannot be 25 completed. 26 Q. 27 28 29 Similarly, the Union is concerned about the ARE THERE SPECIFIC STAFFING ISSUES ASSOCIATED WITH AGING INFRASTRUCTURE? A. Yes. As previously mentioned, many of Con Edison's facilities are seriously aging; the age of Con Edison's facilities is an important factor because problems CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 14 of 39 1 may occur in connection with disintegrating structures within the distribution 2 system, and those problems can (in the wrong circumstances) lead to hazardous 3 conditions and customer outages. Con Edison has long had a department known 4 as -Subsurface Construction? or -SSC.? Maintaining the integrity of underground 5 structures (such as manholes, service boxes, and transformer vaults) is essential to 6 safe system operation and enormously challenging in the context of Con Edison's 7 aged and congested underground system. 8 For example, an underground manhole will have circuits running through it that 9 are configured along a wall in a manner that promotes safe operation. As that wall 10 deteriorates over time, the circuits may collapse on one another, which can lead to 11 serious safety and reliability challenges. 12 transformer vaults are of even more potential significance. 13 suspended underground through the use of -I-Beams.? If the I-Beam support 14 collapses, the transformer will drop to the ground, and may result in a very 15 significant and damaging explosion. The Union is aware that this has occurred a 16 few times during the past year. 17 Q. 18 19 The problems for deteriorating Transformers are HOW MANY "SSC" EMPLOYEES DOES CON EDISON HAVE ON STAFF? A. At one time, there were something on the order of 124 SSC employees in 20 Brooklyn alone. These workers would complete needed structural repairs, 21 including patching and resurfacing structures, laying duct work, and bracing and 22 re-cementing structure walls. Today, there are 28 SSC employees who cover both 23 Brooklyn and Queens. 24 Information Request, an excerpt from which is Ex. No. 9, Con Edison provided a 25 summary of where transformer vault modernization is planned. This summary 26 includes 336 Level I and 786 Level III conditions. That is a significant work 27 backlog. The integrity of the structures in which utility facilities are placed can be 28 as important as what is in the structure, yet Con Edison is not maintaining these 29 structures properly, because the Company lacks the people needed to do the job. This is insufficient. In response to a City of NY CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 15 of 39 1 Q. 2 3 DO YOU HAVE OTHER EXAMPLES OF CONCERNS RAISED BY STAFFING SHORTAGES? A. Yes. It is often the case that the Company will address a service problem by 4 implementing a temporary repair. This is an action taken to restore service 5 quickly, but one that needs to be followed shortly thereafter by the implementation 6 of a -permanent? fix. For instance, when wires go down during a storm, a quick 7 fix is sometimes implemented that restores service, but which is not suitable as a 8 permanent solution. Temporary fixes are just that--service arrangements that are 9 neither intended to be in place for very long nor acceptable as longer-term 10 solutions because, in the long term, they pose risks of significant harm to 11 customers or impairment to service. For most of the last 30 years (at least), any 12 temporary fix would be replaced within no more than 3-5 days by a permanent fix 13 that met the applicable Company specifications. 14 Q. IS THAT THE CASE TODAY? 15 A. No. Under current staffing arrangements, Con Edison lacks the manpower to turn 16 temporary repairs into permanent fixes within this short time frame. 17 Company has implemented new timeframes for making such changes. Instead of 18 3-5 days, customers have recently been informed that a temporary fix will be 19 followed by a permanent repair in 4-6 weeks. Ex. No. 10. That is a substantial 20 change in past practice, and an unfortunate byproduct of the absence of sufficient 21 Con Edison personnel. 22 Q. The ARE THERE RISKS ASSOCIATED WITH EXTENDING THE TIME 23 PERIOD TO FIX TEMPORARY REPAIRS FROM THREE-FIVE DAYS 24 TO FOUR-SIX WEEKS? 25 A. Yes. For example, the Company may implement a temporary repair that keeps the 26 lights on, but involves the provision of lower voltage service. Operating for 27 extended time periods at lower voltages can damage appliances, computers, and air 28 conditioners, including in ways that may not be readily apparent to customers. It 29 can also lead to cables overheating and possibly result in fires, especially if 30 customers are not informed of the need to lower their loads while the temporary CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 16 of 39 1 repair is in place. This is of especial concern where temporary repairs are not 2 home-specific but undertaken to restore service to a wider area. 3 Lower voltage service also means that the customer meter literally runs faster. As 4 such, during lower voltage conditions, customers pay more for the lesser quality 5 service they receive. 6 Q. 7 8 IS THE PROVISION OF LOWER VOLTAGE SERVICE AN INDICATION OF INSUFFICIENT STAFFING? A. It certainly can be. Con Edison will sometimes be required to issue alerts during 9 heat wave conditions, advising customers that due to undefined system 10 -problems,? voltage is being reduced and customers are advised not to use 11 energy-intensive equipment (such as clothes dryers). 12 instances may well be that the existing cabling and related infrastructure in the 13 affected part of the Con Edison system is inadequate to handle the load. In turn, 14 that situation may be the result of a failure to install additional cabling in an area, 15 which may itself be the result of not having the people on staff to do the work in a 16 timely manner. The problem in such 17 18 Q. 19 20 HAVE CONCERNS BEEN RAISED ABOUT THE RELIABLITY OF SERVICE PROVIDED BY CON EDISION? A. Yes. The -2011 Electric Reliability Performance Report,? issued in June 2012 by 21 the New York State Department of Public Service, notes with respect to the 22 reliability of Con Edison's radial system: 23 Staff acknowledges that Con Edison invested in multiple reliability and 24 load relief programs to improve its radial system performance, but has not 25 noted a corresponding reduction in outages caused by equipment failures. 26 The Company should continue to improve the reliability of its system by 27 installing switches and other rapid restoration technologies, and reassessing 28 its auto loop system. Better analytical systems should be implemented to 29 reduce equipment failures and to improve equipment performance. Con CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 17 of 39 1 Edison should also improve its preemptive maintenance and physical 2 inspection of distribution equipment in order to make necessary repairs 3 before failures occur. 4 Report at 13-14 (emphasis added). Along the same lines, the Staff Report notes 5 concerns with the duration of outages on the Con Edison system: 6 Duration performance is something we and the Company are monitoring 7 closely. Con Edison developed and implemented duration improvement 8 strategies for both its radial and network system in 2009. Changes were 9 made to improve crewing efficiency and to reduce outage duration by 10 augmenting the Company's use of first responder staffing, improving the 11 ability to mobile dispatch work to crews, and developing better training 12 resources. In 2010, in a response to a self-assessment recommended by 13 Staff, Con Edison stated that enhancements had been made to the process 14 utilized for its outage management system to flag large outage jobs, and 15 that it employed an automatic call out process for additional crews. Staff is 16 concerned that even with all the changes implemented in the previous 17 years, the Company still failed to achieve its radial duration metric in 2011 18 and its radial duration performance is worse than the previous four years. 19 Staff will continue to monitor the effectiveness of these programs in future 20 reports. 21 Report at 14-15 (emphasis added). All of these problems must be addressed, in 22 part, by addressing Con Edison's inadequate workforce. 23 Q. 24 25 HAS CON EDISION PRODUCED INFORMATION IN THIS PROCEEDING THAT BEARS ON THESE CONCERNS? A. Yes, evidence has been produced that indicates that the Company is aware that 26 needed maintenance activities are not being conducted, and that it intends to step 27 up maintenance in certain areas. CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 18 of 39 1 In response to a Department of Public Service Commission Information Request, 2 the Company provided data showing an intention to make changes in the Electric 3 Operations department. In describing certain of the program changes, Con Edison 4 notes that -preventative maintenance is essential to increase the longevity of the 5 equipment.? Ex. No. 11 at 15. The changes include modifications to both the 6 underground and overhead inspection programs. 7 include (over a five-year period) a visual inspection of all of the roughly 282,000 8 owned or joint use wooden poles on the Con Edison system. The underground 9 program will cover the inspection (again on a five-year cycle) of the 280,000 The overhead program will 10 required inspection sites in the system. Id at 11. 11 Con Edison also describes changes to its transformer inspection/maintenance 12 activities, noting that -transformers represent a key component of the underground 13 secondary network distribution system. Replacing failed transformer units and 14 those that require replacement as a result of defects found during inspection is a 15 critical function of ensuring the integrity of the network system.? Id. at 6. There 16 are also proposed changes in, among other things, tree trimming, streetlight repair, 17 and inspection of relay protection systems at substations. 18 The Union supports the Company's proposed changes to the O&M programs to 19 expand preventative activities that have been curtailed in the past few years. 20 However, absent changes in current staffing levels, we do not see how the 21 Company will be able to conduct these new or enhanced programs. 22 discussed above, the Company's level of operations support personnel is dropping, 23 even as the Company promises that its maintenance program workload will be 24 expanded. 25 Q. WHAT IS YOUR VIEW OF THE PRODUCTIVITY ADJUSTMENT THAT IS APPLIED TO CON EDISON'S LABOR EXPENDITURES? 26 27 As we A. We continue to believe that the productivity adjustment is misplaced, 28 counterproductive, and should be eliminated. It has threatened and continues to 29 threaten the provision of safe and reliable service to Con Edison's customers. The CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 19 of 39 1 weakened state of the Con Edison system prior to Super Storm Sandy as well as 2 the Summer 2006 outage experienced in Long Island City continues to 3 demonstrate the validity of the concerns expressed by Local 1-2 both here and in 4 prior Con Edison proceedings (Case Nos. 04-E-0572 and 07-E-0523). Given the 5 reductions historically made by Con Edison to its internal weekly workforce and 6 the age and state of the Company's infrastructure, the request by the Department 7 of Public Service Staff to require the use of a productivity adjustment--whatever 8 its value when originally proposed--is misplaced and counter-productive. It is 9 misplaced because after continual years of internal weekly workforce reductions, 10 Con Edison's internal labor pool has been cut beyond the point of safe and reliable 11 system operations. It is counter-productive because the adjustment places undue 12 pressure on the Company to continue to cut weekly employees who are providing 13 critical operation and maintenance services. And it is without basis in fact: given 14 the Company's deteriorating system, there is no evidence that it can achieve 15 productivity adjustments year after year, at least not without unprecedented capital 16 expenditures (which would, themselves, need staff to implement). 17 Q. 18 19 DOES THE PRODUCTIVITY ADJUSTMENT SAVE CON EDISON CUSTOMERS MONEY? A. No. The productivity adjustment is applied only to internal Company labor and 20 not to contract labor, which incentivizes the Company to increase the services 21 performed by contractors. To the degree that these contractors are working on 22 capital projects, the contractor costs go straight into rate base. To the degree that 23 they are working on operations and maintenance projects, the costs would increase 24 O&M expenses. Thus, the productivity mandate does not necessarily result in any 25 cost savings, only a transfer of the cost from internal, knowledgeable Company 26 labor to outside contractors who are not held to the same performance and safety 27 standards. 28 29 Q. WHAT ROLE DO CONTRACTORS PLAY IN THE CON EDISON WORKFORCE? CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 20 of 39 1 A. In our experience, contractors play a substantial role, though we do not know the 2 precise extent to which they are being used in lieu of in-house staff. In discovery, 3 the Union sought data on the number of contractors working in the Con Edison 4 system. The Company responded that it does not track the number of contractors. 5 Ex. No. 12. While Con Edison could give the total expenditures on contractors in 6 any given month, it could not break down the amount spent on workers, training, 7 equipment, and other costs. Ex. No. 13. We sought to narrow our request to the 8 number of contractors working on the Con Edison properties for longer than 12 9 months, but the Company stated it does not keep that information either. 10 Apparently, Con Edison does not track which contractors it pays for 12 or more 11 consecutive months, nor what they do. See Ex. No. 14. Nonetheless, there is 12 ample information demonstrating that Con Edison's use of contract labor is 13 pervasive and long-standing. 14 Q. WHAT INFORMATION IS THAT? 15 A. The information we were able to obtain includes: (1) a listing of job categories, 16 showing that contractors are involved in virtually all areas of Company operations; 17 and (2) Company data showing that Con Edison has spent more than $700 million 18 in each of the past two years (2011 and 2012) in connection with contract 19 personnel. Ex. No. 13. For 2013, based on annualizing data from the first three 20 months of the year, the spending amount will end up being closer to $1 billion. In 21 addition, Con Edison has stated that it filled 31 positions between the end of the 22 test year and December 2012. Twelve of the 31 positions (or 38.7%) were filled 23 by contract labor; the remaining 19 positions were filled by full-time employees. 24 Q. HAS THE COMPANY IDENTIFIED THE CIRCUMSTANCES IN WHICH 25 IT RELIES UPON CONTRACT LABOR INSTEAD OF INTERNAL 26 STAFF? 27 A. Con Edison addressed the use of contract labor in a discovery request, stating: 28 The Company needs to maintain a well trained and stable work force to 29 respond to emergencies and handle normal day to day operation and 30 maintenance of the system. Contractors on the other hand allow the CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 21 of 39 1 Company the flexibility to supplement its workforce with skilled technicians 2 without the need to retain them when workload decreases. The determination 3 as to whether to use contractors is primarily dependent on the availability of 4 internal staff. The Company's [sic] uses contractors in order to avoid the 5 need to maintain a larger workforce than is required to meet normal operating 6 requirements. 7 8 Ex. No. 5. Q. 9 10 IS CON EDISON'S DESCRIPTION OF HOW IT USES CONTRACTORS CONSISTENT WITH YOUR EXPERIENCE? A. No. In our experience, contractors are not brought in to handle only temporary 11 work fluctuations, or to address situations beyond -emergencies and...normal day 12 to day operation and maintenance of the system.? Instead, the Company lacks a 13 sufficient -well trained and stable work force? to deal with performing both 14 day-to-day work and responding to emergencies and relies upon contractors as 15 permanent staff. Con Edison's statement that it uses contractors to avoid having 16 more employees on staff than -required to meet normal operating requirements? is 17 not consistent with our experience because, from our perspective, the Company 18 lacks sufficient in-house personnel to meet those requirements. For example, our 19 understanding is that at the current time the Queens overhead department has as 20 many contractors as in-house personnel. 21 Company's claim that it hires sufficient personnel in-house to meet -normal 22 operating requirements.? 23 Indeed, the Company has hired an outside contractor to conduct mobile testing and 24 scanning for stray voltage throughout the Con Edison service territory, something 25 that is a core operations task. It is believed that this contactor sub-contracted 26 -pole-sitting? duties (which include safeguarding sites at which stray voltage has 27 been detected until Con Edison repair crews arrive) to -The Executive 28 Transportation Group,? which is a ground transportation service headquartered in 29 Brooklyn, New York, and which has little or no experience in dealing with electric 30 system issues. That is not consistent with the CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 22 of 39 1 Q. THE COMPANY STATES THAT ITS DETERMINATIONS ON 2 WHETHER TO USE CONTRACTORS ARE "PRIMARILY DEPENDENT 3 ON THE AVAILABILITY OF INTERNAL STAFF." DO YOU HAVE A 4 COMMENT ON THIS ASSERTION? 5 A. Yes. The statement may be correct, but it is also misleading. The notion that 6 contractor levels rise and fall with in-house staff -availability? is not consistent 7 with our experience. The data presented earlier show that for at least the past few 8 years the Company has been shrinking its -internal staff.? We assume that the 9 refusal to fill open full-time positions has led to decreased staff -availability,? and 10 an increased need for contract labor. However, this result is entirely within the 11 Company's control. 12 Q. 13 14 DO YOU HAVE OTHER DATA CONCERNING THE COMPANY'S USE OF CONTRACTORS? A. Yes. The Union's assertion that the Company's use of contract labor is pervasive 15 is consistent with the listing provided by Con Edison of the types of contractors 16 used by the Company between 2008 and 2012. Ex. No. 15. Among others, the 17 contractors hired by Con Edison include those providing services that range from 18 vehicle and building maintenance, to janitorial services, to construction, to tree 19 trimming, to trenching, to paving, to substation, steam, gas, and LNG plant 20 services, to all forms of electrical services, to plumbing, to -non-production tools 21 and services,? to pole inspection/treatment, to stray voltage services, and to 22 architectural and environmental services. Based on this list, it is hard to imagine 23 any significant services for which the Company does not currently use contractors. 24 Q. THE COMPANY'S RESPONSE MENTIONS THAT THE CONTRACTORS 25 USED BY CON EDISON ARE "SKILLED TECHNICIANS." IS THAT 26 CONSISTENT WITH THE UNION'S EXPERIENCE? 27 A. No. Based on our experiences in the field, the Union is aware of instances in 28 which contractors hired by Con Edison have done substandard work. But our 29 concern is not based simply on episodic evidence of shoddy work. Our concerns CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 23 of 39 1 are more systemic, in that contractors do not receive anywhere near the training on 2 Con Edison-specific standards as is provided to in-house personnel. 3 Q. 4 5 ARE THERE POTENTIALLY NEGATIVE CONSEQUENCES ASSOCIATED WITH USING CONTRACT LABOR? A. Yes. A knowledgeable and experienced workforce is essential to the safe and 6 efficient operation and delivery of utility services. Reduced levels of 7 knowledgeable and experienced internal employees threaten the safety and 8 reliability of the system, as well as the ability to transfer experienced-based 9 knowledge of the system to younger employees who will operate it in the future. 10 As the Company acknowledges, -full time employees are required to provide 11 stability, experience and...knowledge of the system. The Company strives to find 12 the right balance or optimal mix of employees and contractors in order to maintain 13 safe and reliable service while minimizing costs.? Ex. No. 5. At the moment, no 14 such -balance? has been achieved. We believe that Con Edison relies far too much 15 on contract labor and has failed to staff its operations in accordance with its 16 standard of -maintain[ing] a well trained and stable work force to respond to 17 emergencies and handle normal day to day operation and maintenance of the 18 system.? Ex. No. 5. 19 Worse, we are concerned that the work done by contractors is both substandard 20 and poorly documented. 21 ramifications can occur unpredictably and well after the fact. When Con Edison 22 full-time employees work in the same areas manned by contractors, they have no 23 way of knowing if the contractor work is Con Edison spec-compliant. 24 More generally, contractors are not bound to Con Edison--they are available to 25 the highest bidder. If a severe storm hits the Con Edison service territory, its 26 full-time employees will be on the job, around the clock, engaged in service 27 restoration activities. Contract laborers owe no such allegiance to Con Edison or 28 its customers and have every incentive to follow the money. This is particularly 29 likely to be a problem if a storm is widespread, as Super Storm Sandy was. In that This is not always immediately apparent, and the CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 24 of 39 1 instance, it may be more lucrative for the contractors to work elsewhere and it may 2 be difficult to keep them on the job at Con Edison in such circumstances. 3 Q. 4 5 IN PERFORMING THEIR WORK, ARE CON EDISON CONTRACTORS SUBJECT TO THE SAME STANDARDS AS FULL-TIME EMPLOYEES? A. No. According to a Con Edison data response, both Company personnel and 6 contractors -must comply with applicable federal, state, and local worker safety 7 standards, including OSHA regulations.? Ex. No. 16. However, the Company has 8 its own internal staff work standards that are more stringent than these criteria, and 9 we are not aware that contractors are in fact held to those standards. 10 11 Q. 12 13 WHAT TRAINING DOES CON EDISON PROVIDE TO CONTRACTOR PERSONNEL? A. Contractors working in the same structures as Con Edison staff receive four days 14 of training at the Con Edison -Learning Center.? We are not aware of any other 15 formal training provided to contract workers. 16 Q. HOW DOES THE TRAINING PROVIDED TO CON EDISON FULL-TIME 17 EMPLOYEES 18 COMPANY CONTRACTORS? 19 A. DIFFER FROM THE TRAINING PROVIDED TO There are tremendous differences. A full-time employee begins their career at Con 20 Edison as a -general utility worker.? These individuals receive two weeks of 21 introductory (and relatively generic) training at the Con Edison Learning Center. 22 The employee then goes into the field for at least a full year, following which he 23 will be eligible to become a -B Mechanic.? -B Mechanics? must pass a driving 24 school course for a commercial drivers license, and learn how to operate the 25 equipment that is on any truck the mechanic may be driving. In addition, B 26 Mechanic candidates are required to take a five-day electricity course and to pass 27 an examination administered at the end of the course. 28 After completing that training, successful B Mechanic candidates can become -A 29 Mechanics? following (roughly) three additional years of work. The training to CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 25 of 39 1 reach this level of proficiency can range from two weeks to one month, depending 2 on the department in which the employee plans to work. 3 After another year of work, the employee can move to the level of a -Distribution 4 Splicer.? 5 additional 28 days of training, again at the Con Edison Learning Center. 6 All of these training courses are specific to the unique characteristics of the Con 7 Edison system. 8 Q. 9 10 ARE Employees seeking to reach this highest level must complete an THERE "CERTIFICATION" REQUIREMENTS TO WHICH CONTRACTORS ARE SUBJECT? A. We are not aware of any -certification? requirements. As discussed below, Con 11 Edison has recently created a -simplified certification? process for certain 12 non-Company personnel, but this process is not designed to demonstrate that a 13 contractor is qualified to work on any system, let alone Con Edison's unique 14 system. 15 Q. ARE THERE OTHER ISSUES WITH CONTRACTORS? 16 A. Yes, PSC investigations have shown that the Company and certain contractors 17 have been involved in fraudulent activities. An investigation is currently pending 18 at the Commission in Case 09-M-0114 (-Proceeding on Motion of the 19 Commission to Examine the Prudence of Certain Capital Program and Operation 20 and Maintenance Expenditures by Consolidated Edison Company of New York, 21 Inc.?). This investigation was established after the US Attorney for the Eastern 22 District of New York announced the arrest of eleven Con Edison supervisory 23 employees and raised the specter of imprudence concerning Con Edison's contract 24 expenditures. 25 The individuals arrested were construction managers or supervisors working in 26 three of the five Con Edison regions (Manhattan, Bronx, and Westchester). These 27 individuals may have been supervising work for Con Edison's Electric, Gas, or CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 26 of 39 1 Steam Division. The kick-back schemes they were accused of existed as early as 2 2000 and continued through the time of the arrests. 3 The conduct described in the indictments includes unwarranted payments by the 4 Company to contractors to the detriment of Con Edison's ratepayers. To the 5 extent these payments are found to be illegal and unwarranted, they would be 6 unjust and unreasonable by definition in violation of Public Service Law 7 ?? 65 & 79. There remains an obvious concern that there may be deficiencies in 8 Con Edison's oversight of its construction and bidding process. 9 Q. 10 11 HAS THE COMPANY EVALUATED THE COST-EFFICIENCY OF USING CONTRACT LABOR INSTEAD OF INTERNAL STAFF? A. No. In response to an information request, the Company states that -there is no 12 single cost benefit analysis that can be applied to each situation[,]? and that 13 -management is continually evaluating the benefits of using contractors to 14 supplement the work done by its field forces.? Ex. No. 5. The reference to these 15 evaluations aside, Con Edison has not produced a single cost-benefit analysis with 16 respect to its use of contract labor. 17 In the same discovery response, the Company goes on to state: -The use of 18 contractors eliminates many ancillary costs associated with full time employees 19 (e.g., vacation time, training, sick time).? This statement is not correct. 20 initial matter, vacation and sick time costs, while not paid directly by Con Edison, 21 are presumably built into the labor rates that the Company and its customers pay 22 for contract labor, as is, undoubtedly, some level of profit. And the Company 23 spends a limited (and inadequate) amount of time and effort training contractors, 24 though (as we noted) not nearly at the level associated with full-time employees. 25 However, even if contract labor were less expensive in the near-term, the 26 Company would do well to remember the old adage, -you get what you pay for.? 27 Con Edison holds its full-time employees to very high standards, and this practice 28 has been of tremendous benefit to the Company, its employees, and--most 29 important--its customers. Allowing possibly less expensive workers not subject As an CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 27 of 39 1 to such standards to perform significant system work will be very costly in the 2 long-term, as substandard work will only hold up for so long. Customers may pay 3 relatively less now but far more dearly later. To our knowledge, the Company has 4 done no quantitative analysis determining whether contractors are more cost 5 effective in the long run. 6 SYSTEM READINESS IMMEDIATELY PRIOR TO THE ARRIVAL OF 7 SUPER STORM SANDY 8 Q. THE COMPANY HAS PROPOSED CERTAIN STORM HARDENING 9 IMPROVEMENTS THAT WOULD BE IMPLEMENTED TO MAKE THE 10 CON EDISON SYSTEM MORE RESILIENT IN THE EVENT OF 11 ANOTHER MAJOR WEATHER EVENT. DO YOU HAVE COMMENTS 12 ON THESE PROPOSALS? 13 A. Yes. The Company's Electric Production Panel Testimony discusses (at 40) Con 14 Edison's Storm Hardening Program, which is to involve an investment of 15 approximately $66 million from 2013 to 2016. The program includes a variety of 16 projects, including installation of flood pumps and perimeter walls and flood doors 17 in critical locations. 18 We are concerned that the Company's storm hardening proposals are all physical 19 improvements rather than human infrastructure upgrades. Staffing improvements 20 need to be an ongoing piece of any proposals designed to address both day-to-day 21 operations and storm restoration. 22 One indicator of the need to include staffing upgrades as part of any -hardening? 23 program is the state of the Company's system immediately prior to the arrival of 24 the Super Storm. 25 26 Q. WHAT WAS THE STATE OF CON EDISON'S PHYSICAL SYSTEMS IMMEDIATELY PRIOR TO THE ARRIVAL OF SUPER STORM SANDY? CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 28 of 39 1 A. At the time Super Storm Sandy hit New York, Con Edison's electric distribution 2 systems were in a weakened condition, due in part to the Company's lockout of its 3 field and operations staff during the summer of 2012. 4 Q. WHY WAS THAT THE CASE? 5 A. During the Summer of 2012, Con Edison engaged in a month-long lockout of its 6 union workforce. The Company then attempted to operate its system for 27 days 7 with a makeshift workforce composed of 5,000 managers, retirees, and 8 contractors. Con Edison's -lockout workforce? was not an adequate replacement 9 for the Company's day-to-day skilled and experienced employees. When our 10 members finally returned to their jobs, they found that Con Edison's temporary 11 -workforce? had been dealing exclusively with system emergencies, while 12 essential day-to-day maintenance was not being performed. ConEd has admitted 13 as much. 14 Trying to bring the system -back? from an event like the lockout entails long hours 15 and arduous work. Our efforts to conduct a post-lockout -cleanup? of the Con 16 Edison system were hampered by the Company's implementation of additional 17 staffing reductions. The Company's own data show that as of July 2012, the 18 month in which the lockout occurred, the Company had a full-time staff of 7,873. 19 By the time Super Storm Sandy made landfall, the number of full-time personnel 20 had dropped to 7,821. 21 full-time/weekly employee number was 7,793. Ex. No. 2. 22 Q. 23 24 WHAT OTHER By the following February (as noted above), the ISSUES DID THE EMPLOYEES FACE UPON RETURNING FROM THE LOCKOUT? A. Among other things, our members found upon returning to work that the 25 Company's record-keeping for activities conducted during the lockout was spotty 26 at best. 27 operations. Absent precise records, subsequent activities conducted in any part of 28 the system can be challenging because of an absence of up-to-date information on 29 physical system conditions. The failure to maintain proper documentation while Documentation management is a critical component of sound utility CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 29 of 39 1 dealing with system emergencies and related service restoration is a recurring 2 problem. As a result, we fear that Con Edison has lost -situational awareness,? 3 which will complicate the process of bringing facilities that had been temporarily 4 repaired into a proper state of permanent repair. 5 In short, at the time the Super Storm Sandy hit New York, ConEd faced major 6 -human infrastructure? concerns in the form of a depleted and exhausted 7 workforce, as well as significant and unaddressed physical infrastructure issues. 8 9 10 STORM RESTORATION ISSUES Q. 11 12 WHAT ISSUES WERE EXPERIENCED DURING SERVICE RESTORATION? A. Con Edison's workforce faced significant challenges in restoring service following 13 the Super Storm, including: (1) far too few in-house staff; (2) a number of mutual 14 aid utility workers placed in positions unsuited to their skills and experience, 15 significantly reducing the effectiveness of recovery efforts; (3) restoration 16 protocols that were demonstratively unsafe; (4) the use of inferior materials and 17 the lack of needed materials; and (5) odd staffing deployments. 18 19 Q. WHAT'S WRONG WITH MUTUAL AID? 20 A. In concept, nothing. We obviously welcome and appreciate the assistance. The 21 Company has stated that approximately 4,707 mutual aid utility workers were 22 secured from other systems to assist in Con Edison restoration efforts, Ex. No. 17. 23 According to the Company, all of these workers were assigned to the following 24 aspects of the electric system restoration effort: Damage Assessors, Vegetation 25 Workers, Underground Crews, Base Camp Contractors & Logistics Support Staff 26 and Overhead Line / Service Crews. Id. 27 28 Q. WERE THESE WORKERS WELL-PREPARED TO PERFORM THESE FUNCTIONS? CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 30 of 39 1 A. Not from the Union's perspective. While some of the mutual aid workers may 2 have been able to assist in performing some of the listed functions, our front-line 3 impression is that the majority of the utility workers brought in to help had no 4 training on performing service restoration in the unique urban and underground 5 utility environment in which we operate every day. No two utility systems are 6 identical, and the differences can be very significant. Most notably, Con Edison 7 workers generally work on -live? facilities (i.e., facilities that have not been 8 de-energized), while this is not the case in many other systems across the United 9 States. As a consequence, trained ConEd workers were required to -baby-sit? 10 mutual aid workers to ensure that they conducted their activities in a safe manner 11 rather than conducting activities on their own. There were even more basic issues. 12 For example, California utilities that had their trucks flown into New York City 13 found that their vehicles were too big to navigate the narrow streets of Brooklyn 14 and Queens. Some mutual aid crews arrived with empty trucks, including no 15 worker protective equipment. 16 equipment in order to be able to provide repair services. 17 Q. 18 19 They apparently had to beg, borrow, or steal HOW MUCH MONEY WAS SPENT BY THE COMPANY ON MUTUAL AID PERSONNEL? A. The Company has produced data concerning the dollars expended on mutual aid 20 during the Super Storm, which indicate that the mutual aid workers themselves 21 (independent of related food and lodging costs and equipment/materials costs) was 22 in excess of $106 million. Ex. No. 18. Con Edison spent another $22 million on 23 contract labor. By contrast, the same Con Edison data response shows that the 24 Company spent $18.6 million on -Weekly? labor costs. Id. 25 Q. 26 27 HAS THE COMPANY PERFORMED ANY OTHER ANALYSES OF SUPER STORM SANDY RESTORATION STAFFING EFFORTS? A. [BEGIN CONFIDENTIAL] 28 29 30 CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 31 of 39 1 2 3 4 5 6 Q. 7 A. 8 9 10 11 12 13 14 15 16 17 18 [END 19 CONFIDENTIAL] 20 Q. ARE THERE INEFFICIENCIES ASSOCIATED WITH MUTUAL AID? 21 A. Yes. While cooperation is of course a good thing, our experience with Super 22 Storm Sandy storm restoration is that relying on out-of-state utility workers who 23 are not familiar with the system can be very inefficient. Moreover, and as Con 24 Edison has noted with respect to Super Storm Sandy, it can be difficult to secure 25 mutual aid workers when the storm is wide spread. 26 utilities that might otherwise provide assistance may delay releasing workers until 27 the extent of the storm and its damage is known. 28 In general, reliance on mutual aid should be kept to a minimum, and we believe 29 that this objective can be achieved if the utility's day-to-day field staff is properly In those circumstances, CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 32 of 39 1 trained and sufficient in size to perform ongoing maintenance (including 2 preemptive maintenance) in an efficient manner. The best way to ensure system 3 resiliency is to have sufficient staff on-hand to operate and maintain the system 4 efficiently. As noted, ConEd's full-time, in-house workforce is insufficient to 5 ensure that the system is properly operated and maintained when there are no 6 severe weather events, let alone during storms. 7 Q. 8 9 YOU SAY MUTUAL AID ARRANGEMENTS ARE NOT EFFICIENT. HAS THE COMPANY PERFOMED ANALYSES OF THEIR UTILITY? A. No. While mutual aid arrangements have been in place since 1955, Con Edison 10 stated in response to a discovery request that it has not prepared any -reports, 11 analyses, or related assessments concerning the use of mutual assistance.? Ex. No. 12 19. In addition, the Company has not performed -any cost-benefit analysis on the 13 use of mutual assistance.? Ex. No. 20. 14 Q. WHAT IS THE STATUS OF THE CON EDISION SYSTEM TODAY? 15 A. According to a Company response to an information request: 16 Con Edison anticipates that the electric distribution system will be restored 17 to pre-storm conditions prior to June 1, 2013 except for low priority 18 repairs. All high priority defects, temporary repairs, and reliability issues 19 will be inspected and repaired by June 1, 2013. Lower priority repairs will 20 be placed into our work queue and scheduled along with other routine 21 work. 22 Ex. No. 21. 23 Q. DO YOU AGREE WITH THIS ASSESSMENT? 24 A. No. We do not believe that the June 1 restoration date for all but low priority 25 repairs is achievable. From the Union's perspective, our system work has not been 26 organized to meet this goal and, given current staffing levels, we do not believe it 27 to be a realistic deadline. 28 29 Q. BY WHEN DOES THE UNION ANTICIPATE THAT THE SYSTEM WILL BE "RESTORED TO PRE-STORM CONDITION"? CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 33 of 39 1 A. The Company's electric distribution system sustained tremendous damage as a 2 result of Super Storm Sandy, and the impact of that damage will not be understood 3 for at least the next several months and likely not before the completion of the 4 winter of 2013-2014. 5 Q. WHY DO YOU BELIEVE THAT TO BE THE CASE? 6 A. Significant portions of the system sustained salt water flooding damage. Salt is 7 corrosive and can damage cable insulation. While underground conduits are no 8 longer flooded, not all of the cable that was subject to the flooding has been 9 inspected, assessed for damage, and (where appropriate) replaced. We did not 10 have the time or the manpower to conduct these assessments and replacements in 11 the days after the Storm as we struggled to restore service as quickly as possible. 12 Since the storm waters receded and service was restored, we have not had the staff 13 to go through the system and inspect and replace all damaged cable. In fact, given 14 the expedited schedules under which we operated in restoring service, the Union is 15 uncertain where damaged cable is in fact present in the system, and will be unable 16 to tell without completing a systematic review. 17 In the meantime, we will have a better idea as to the impact of the salt water 18 flooding after the coming summer when summer heat waves will place additional 19 stress on underground cabling. 20 significant, we can expect more service reliability and safety issues this coming 21 summer than would have been the case had Sandy not hit New York. 22 We have related concerns about the overhead system and the coming winter. We 23 are uncertain whether all pole damage has been fully addressed. A rough winter 24 (or an early storm that results in a substantial number of downed trees) may reveal 25 additional Sandy-related system impacts. 26 With respect to the gas operating system, the Company states that it has generally 27 been returned to normal. Ex. No. 21. Again, we are uncertain as to the accuracy of 28 this assessment. Portions of the Con Edison gas system consist of cast iron pipes. As the cable damage may well have been CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 34 of 39 1 Those pipes have no doubt been rusting as a consequence of the flooding 2 associated with the storm. Sandy may also have resulted in some ground shifting, 3 placing unknown levels of stress on underground mains. 4 Q. 5 6 DO YOU HAVE OTHER CONCERNS ABOUT THE SERVICE RESTORATION EFFORT? A. Yes. In an effort to expedite service restoration following Super Storm Sandy, and 7 in contrast to Con Edison's representation that its electric distribution system will 8 generally be restored to pre-Super Storm levels as of June 1, 2013, the Company 9 has created a -simplified certification? process so that building owners who are 10 still without power can certify that their structures can be energized. 11 Q. WHAT IS THE NATURE OF THE CERTIFICATION REQUIREMENTS? 12 A. The certification is a self-certification, which apparently involves a licensed 13 electrician completing an on-line form. Ex. No. 22. 14 Q. WHY IS THIS PROCESS OF CONCERN TO THE UNION? 15 A. It is of concern because there does not appear to be any policing by the Company 16 of the work performed by the persons who are -self-certifying? that a structure is 17 ready to receive electric service. This determination should be made by Company 18 personnel, but has instead been delegated to non-Company personnel who may or 19 may not be up to the task. So far as we can tell, lack of manpower seems to be the 20 sole explanation for this decision. 21 Q. 22 23 ARE YOU AWARE OF OTHER AND MORE RECENT CONCERNS THAT HAVE ARISEN THAT RELATE TO SUPER STORM SANDY? A. Yes. Last week, feeder cables into -460? distribution transformers located on 24 Roosevelt Island failed, and a crew was dispatched to inspect and resolve the 25 problem. Upon opening the transformer vault, the crew discovered that the vault 26 area had been flooded as a result of Super Storm Sandy, and the flooding had 27 apparently not previously been inspected, nor had the situation been corrected. CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 35 of 39 1 Worse, the vault at issue is (in utility terms) ancient, and the crew reported that the 2 transformer itself is so old that it was almost unrecognizable. Upon inspection, it 3 appeared that the I-Beam structure supporting the transformer had been weakened 4 by water damage, and that it was rusting. Had the situation not been discovered, 5 the transformer could have collapsed, potentially resulting in an explosion. 6 In order to rectify the problem, it was necessary to implement lower voltage 7 service in both Roosevelt Island and parts of Manhattan. 8 Given the advanced age of the facilities (the transformer and related cabling), the 9 Union believes that they should have been replaced perhaps a decade ago. At a 10 minimum, the facilities should have been inspected following the storm. Our 11 understanding is that these facilities were last inspected in 2010. We fear that the 12 failure to do so is, again, the result of a lack of sufficient and trained personnel. 13 Q. 14 15 ARE THERE ANY OTHER INDICATIONS THAT CON EDISON STAFF IS INSUFFICIENT? A. Yes. During the first five months of 2013, Con Edison has held two -stand down? 16 meetings. These involve a brief (one hour or less) cessation of all Company field 17 work, and are convened because of a concern that -operational errors? have 18 occurred that could have had serious and adverse consequences. The meetings are 19 an opportunity for Con Edison management to emphasize the need for compliance 20 with Company work standards. Our understanding is that so far this year, there 21 have been 18 operational errors, at least one of which could have involved a 22 fatality. 23 Q. 24 25 IS THE CONVENING OF TWO SUCH MEETINGS IN JUST UNDER SIX MONTHS UNUSUAL? A. In our experience, it is very unusual. In his nearly 40 years with the Company, 26 Mr. Vuono cannot remember a time in which there were two stand down meetings 27 in a single year. 28 Q. PLEASE CONTINUE. CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 36 of 39 1 A. We are fearful that the apparent increase in operational errors (and the related need 2 for additional meetings) is a consequence of the failure to adequately staff the 3 Company. Employees who are rushed because they have too much work to do, 4 and too little support to get it done, are more likely to make mistakes. We are also 5 concerned that in cutting staff, the Company may be shedding important 6 institutional knowledge and system-specific experience that new entry hires do not 7 have. These concerns will remain absent programs to ensure the transfer of that 8 knowledge from retiring baby-boomers to new hires, and the maintenance and 9 retention by the Company of a sufficient and well-trained cadre of utility workers. 10 11 Q. ARE THERE STORM HARDENING PROPOSALS OTHER THAN THOSE 12 OFFERED 13 IMPLEMENTED? 14 A. BY THE COMPANY THAT YOU SUGGEST BE Yes. The most important -storm hardening? proposal that the Company could 15 implement would be to hire more in-house staff. As we have explained throughout 16 this testimony, Con Edison is understaffed. 17 insufficient to get necessary, day-to-day work completed, and even the Company 18 acknowledges that this work should not be performed by contractors. Staffing cuts 19 over the past few years, and some that have occurred since the arrival of Super 20 Storm Sandy, have compromised Con Edison's ability to ensure safe and reliable 21 service to customers. We address below how best to implement this suggestion. 22 In addition, during times of service restoration our members function as first 23 responders but do not have that official status. As a result, workers responding to 24 the emergency were stuck on the same long gas lines as other City residents. They 25 were also turned away when they were trying to get to work locations due to 26 vehicle restrictions imposed by the Mayor. Actions should be taken to ensure that 27 when our members are engaged in addressing a power emergency, including 28 during storm restoration activities, they are treated as first responders, which will 29 facilitate entrance into and movement through the five boroughs. Its existing in-house staff is 30 CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 37 of 39 1 2 RECOMMENDATIONS Q. 3 4 WHAT SHOULD THE COMMISSION DO IN THIS PROCEEDING TO ADDRESS THE PROBLEMS THAT YOU HAVE RAISED? A. 5 We recommend that the Commission implement several conditions upon the approval in this proceeding of any rate increase. 6 Q. WHAT IS THE UNION'S FIRST RECOMMENDED CONDITION? 7 A. As described in detail above, the Company's staffing practices over the past few 8 years have left Con Edison without a sufficient complement of trained and 9 experienced in-house staff. The Union recommends that the Commission initiate a 10 generic proceeding to establish minimum in-house employees levels for Con 11 Edison's electric, gas, and steam utilities. In accordance with the Company's own 12 statements, the Commission should consider what would constitute -a sufficient, 13 well-trained and stable work force to respond to emergencies and handle normal 14 day to day operation and maintenance of the system.? Ex. No. 5. In addition, once 15 minimum staffing levels are established, the Company should be obligated to 16 submit to the Commission, on a quarterly basis, a report showing authorized and 17 actual employee levels and providing estimated dates by which any staffing 18 shortfalls will be addressed. 19 Commission to hold Con Edison accountable for compliance with its staffing 20 commitment. 21 Alternatively, if the Commission declines to implement this condition, it should at 22 a minimum condition any rate relief on a requirement that the Company maintain 23 an internal weekly workforce at a level at least equal to the employee level on 24 which the Company is basing its rate relief request. The reporting requirement will enable the 25 Q. WHAT IS THE UNION'S SECOND RECOMMENDED CONDITION? 26 A. The Union is concerned that Con Edison's decision to lengthen the interval 27 between temporary and permanent repairs to 4-6 weeks is unsafe for workers and 28 customers alike. We ask that the Commission require the Company to reduce the 29 time to implement a permanent fix to a service disruption that had been CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 38 of 39 1 temporarily fixed from a period of 4-6 weeks to not more than one week. The 2 Company should be required to have sufficient in-house staff to fulfill this 3 commitment. 4 Q. WHAT IS THE UNION'S THIRD RECOMMENDED CONDITION? 5 A. The Union has expressed concern that repair work performed on the system by 6 contract labor and mutual aid workers has not been adequately documented, which 7 results in unsafe working conditions for the Company's employees (and makes the 8 possibility of service disruptions for customers more likely). We ask that the 9 Commission condition any rate relief on a requirement that the Company record 10 and maintain specific documentation of work performed at all specific facility 11 locations, and that the documentation provided by contactors or mutual aid 12 workers meet the same standards as required of the Company's workforce. 13 Q. WHAT IS THE UNION'S FOURTH RECOMMENDED CONDITION? 14 A. Data produced in this proceeding show that the Company is spending on the order 15 of $700 million-$1 billion annually on contract labor, yet seems to lack even the 16 most basic records about the number of contractors and the time period during 17 which they are performing work for Con Edison. The Union urges that the 18 Commission condition any rate relief afforded in this proceeding upon a 19 requirement that Con Edison record and maintain detailed records regarding its use 20 of contractors, including, but not limited to, the identification of each of the 21 contractors working on Company property or facilities. For each such contractor, 22 Con Edison should be required to maintain on a monthly-or certainly not less than 23 a quarterly-basis: (a) the total number of contractor employees working on 24 Company property and facilities; (b) the total dollars paid by Con Edison each 25 month; and (c) the categories of work performed by contractors on Con Edison's 26 property and facilities. 27 Q. WHAT IS THE UNION'S FIFTH RECOMMENDED CONDITION? 28 A. The Union believes that the Company's use of mutual aid is excessive and 29 inefficient. We urge that the Commission condition any rate relief afforded Con CONFIDENTIAL INFORMATION REDACTED Direct Testimony of Robert Vuono and Richard J. Koda Page 39 of 39 1 Edison on the initiation of a proceeding to establish the appropriate levels of 2 mutual aid assistance to be used by Con Edison, which will be based on 3 cost-benefit analyses, the parameters of which are to be set by the Commission. 4 Q. WHAT IS THE UNION'S SIXTH RECOMMENDED CONDITION? 5 A. Whether or not any rate relief is granted to Con Edison, the UWUA asks that the 6 Commission issue a formal request to the Governor that utility workers be 7 designated as -First Responders? to storms and emergencies when they are 8 conducting service restoration activities. 9 Q. DOES THIS COMPLETE YOUR TESTIMONY. 10 A. Yes. CONFIDENTIAL INFORMATION REDACTED