DukeEmployees.com - Duke Energy Employee Advocate
News - June 2001
L. A. times - By JERRY HIRSCH - June 15, 2001
Fund officials are concerned about charges of price gouging and the firms' growth prospects.
The California Public Employees' Retirement System's $544-million investment in power industry stocks will come under scrutiny Monday when the fund's influential investment committee meets to review the holdings.
CalPERS has sizable investments in AES Corp., Dynegy Inc., Duke Energy Co., Enron Corp., NRG Energy Inc. and Reliant Energy Inc., unregulated electricity and natural gas providers whose stocks have fallen between 17% and 42% in value since the beginning of the year as various state and federal agencies investigate alleged price gouging in California.
"There is the danger that [the companies] have killed the goose that laid the golden egg," said Michael Flaherman, chairman of CalPERS' investment committee. Flaherman, a Bay Area Rapid Transit District economist, is one of the 13 members of the CalPERS board, which also serves as the fund's investment committee.
With assets totaling $151.8 billion, including nearly $60 billion invested in U.S. stocks, CalPERS is the nation's largest public pension fund. Its investment committee is unlikely to take any action Monday, but CalPERS' scrutiny of companies and industries often serves as an important bellwether for other large public investment funds.
"Corporate behavior that leads to investigations and enough public anger where people are talking about referendums and re-regulation has to be of concern to shareholders," said state Treasurer Phil Angelides, also a CalPERS board member.
CalPERS' energy holdings amount to less than 1% of its stock investments. The once red-hot stocks are under pressure amid the ongoing government probes and investors' fears that a political solution to the state's energy crisis could hinder future growth rates.
CalPERS historically has been sensitive to how political controversy puts certain investments at risk. In October, the CalPERS Fund to Scrutinize board voted 7 to 5 to divest about $525 million in tobacco stocks, saying an "unprecedented amount" of litigation and regulation made owning those stocks a bad investment. Angelides, who backed the tobacco stock divestiture, requested Monday's meeting, saying it is in keeping with CalPERS' activism on corporate issues. Angelides also is on the board of the $105-billion California State Teachers Retirement System. He is chairman of CalSTRS' corporate governance committee, which will review its energy holdings July 11.
Flaherman said he is concerned that the eagerness by managers of the energy companies to collect high profits will push the industry back into regulation, a development he said would hurt the long-term value of CalPERS' investments in the industry.
"I think there may a real conflict between the shorter-term interests of management of these companies and our long-term interest as a large shareholder," Flaherman said.
Angelides said issues that deserve scrutiny at these companies range from the level of independence exercised by their board members to the pay packages of corporate executives.
The top executives and directors at many of the large power companies that California officials accuse of profiteering from the energy crisis have collected tens and even hundreds of millions of dollars through stock sales over the last 18 months.
One of the biggest recipients is Enron Chairman Kenneth L. Lay, who netted $123 million in option transactions last year, according to a filing with the Securities and Exchange Commission. That was nearly three times his gains the previous year and nearly 10 times what he made in 1998.
CalPERS owns 2.6 million shares of Enron that were worth $137.6 million at the end of May.
Angelides said it will be up to the CalPERS board to decide whether it wants to take any action. In the past, the fund has used its clout to influence the makeup of corporate boards.
"Perhaps most importantly, we can have direct and frank discussions with the management of these corporations," Angelides said.
Yet even if they were to work in concert, it's not clear what influence the state's big public retirement funds can exert on energy companies. Together, CalPERS and the teacher's fund own about 1% of Enron--a large block of stock. But their combined holdings are dwarfed by the largest holder--Janus Capital, which owns nearly 7% as of March 1, according to SEC filings. More than a dozen funds and investment houses hold at least 1% of Enron's shares.
The same holds true for Duke Energy, of which the state retirement funds combined control comes to just under 1%. Money manager State Street Corp., by comparison, has a 8% stake.
Moreover, no one at this point has suggested that CalPERS divest itself of energy company stocks as it has tobacco stocks. Because of its size and the effect its investment might can have on an individual stock, CalPERS relies on a passive investment strategy in which it attempts to replicate the Wilshire 1,500 index of stocks, absent tobacco companies.
Nonetheless, it makes sense for CalPERS to take a look at its energy holdings now, said Andre Meade, a power industry analyst with Commerzbank Securities in New York.
The threat of federal price caps, lawsuits and the probes into these companies' business practices present risks that investors need to consider, Meade said.
"The energy sector has changed dramatically over the last few years and has a much different risk factor compared to the old, regulated utilities," Meade said.
Though Meade believes that issues confronting California and the West were created by a combination of high natural gas prices and a shortage of hydroelectric power generators, he said CalPERS board members' concerns that the industry would be re-regulated are valid.
"They are smart to look into that," Meade said.
Associated Press - June 14, 2001
While the Bush administration cites the lack of refineries for energy shortages, internal oil industry documents show that five years ago companies were looking for ways to cut refinery output to boost profits.
It takes about four years to build a large refinery so any substantial additional new capacity from new plants would have had to begin by the mid-1990s, energy expert acknowledge.
But some internal industry documents obtained by Sen. Ron Wyden, D-Ore., suggest that in the mid-1990s oil companies had no interest in building new refineries because of low profit margins and, in fact, were discussing the need to curtail refinery output to boost profits.
"If the U.S. petroleum industry doesn't reduce its refining capacity, it will never see any substantial increase in refinery margins (profits)," said an internal Chevron document in November 1995.
The memo cited warnings given about refinery profits by a senior analyst from the American Petroleum Institute, the industry trade group, at an industry conference that year.
API spokesman Jim Craig, reached Wednesday evening, said he knew nothing about the memo or its reference to an API conference.
A year later, an official at Texaco, in a memo marked "highly confidential," called concerns about too much refinery capacity "the most critical factor" facing the refinery industry - resulting in "very poor refining financial results."
The Texaco memo, written in March, 1996, concluded that "significant events" were required to deal with the excess refinery capacity problem and suggested one solution might be to get the government to lift clean air requirements for an oxygenate in gasoline. Removal of the additive would require more gasoline to be used in each gallon of fuel, tightening supplies.
While refinery capacity now has become tight, the oil industry is still pressing for an end to the federal requirement for an oxygenate in gasoline, arguing new blends of gasoline can meet the same clean air requirements.
"The documents suggest that major oil companies pursued efforts to curtail refinery capacity as a strategy for improving profit margins," said Wyden, who was releasing the papers at a news conference today…
Wyden said the documents he obtained - including the internal Texaco and Chevron memos - suggest that oil companies in the '90s "sought to eliminate excess capacity to improve profits.
He said some of the refineries that were closed may have been shuttered "specifically to tighten supply and drive up costs" to consumers, although he provided no specific documentation of this.
But Wyden obtained a confidential 1996 e-mail from Mobil Corp., which has since merged with Exxon, that suggests major oil companies were not reluctant during the 1990s to try to force smaller independents out of business.
A California refinery owned by Powerine Oil Co., had ceased operation in 1995, but was trying to start up again a year later hoping to compete in production of a special, cleaner gasoline required by the state.
This gas was selling at a premium and Powerine's reentry into the market could cause the price to drop as much as 3 cents a gallon, a Mobil executive warned in the internal e-mail.
"Needless to say, we would all like to see Powerine stay down," the memo continued. "Full court press is warranted in this case." The refinery remained closed.
Duke Energy Employee Advocate - June 14, 2001
The Bartell Drug Company lost the first ruling in a class-action lawsuit charging discrimination, per The New York Times. The lawsuit was filed because Bartell refused to cover contraceptives under its health plan.
The Equal Employment Opportunity Commission has also ruled in the favor of employees in two similar cases.
OK, let’s go over the basics:
Why were contraceptives not covered in the first place?
Because, many employers are squeezing benefits (money) from employees in any way that they can. Most of these chiseling employers prefer stealth cutbacks. If the employees do not catch on to the bleeding, they will not squawk. By bleeding only a few drops of blood from the employees at a time, they can keep them alive longer, and drain the maximum amount of blood from them. But rest assured, you can be bled to death a few drops at a time!
Why did the employees get a favorable ruling?
Was it because they suffered in silence?
Was it because they said: “There is nothing we can do about it.”?
Was it because they were completely subservient to the company’s every whim?
No, no, and NO!
These employees stand a good change of getting at least a small part of their benefits back because they took action - the only type that corporations can understand. The company got whacked by a bigger hammer.
To put this health care lawsuit in perspective with the cash balance pension switcheroo, consider this: These employees sued because they lost about $300 per year in health insurance coverage. Employees at some companies have lost over 300 THOUSAND DOLLARS in pension benefits, due to cash balance plan conversions!
The EEOC has a hammer. 1-800-669-4000.
L. A. Times - Associated Press Writer - June 7, 2001
ORLANDO, Fla. - After almost two months at the negotiating table, the workers who play characters such as Mickey Mouse and Cinderella at Walt Disney World have won an important concession: clean undergarments. Under a tentative contract between Disney and the Teamsters union, the workers will be assigned individual undergarments, which they can take home each night to clean themselves instead of relying on Disney launderers.
Some workers had complained about getting pubic lice and scabies.
"Things have been passed around," said Gary Steverson, a stilt walker at Animal Kingdom. "I know I don't want to share my tights and I don't want to share my underwear."
Many of the characters have to wear Disney-issued jock straps, tights or bike shorts underneath their costumes because regular underwear bunches up and is noticeable. Each night, they turn in the undergarments with the rest of their costume before going home. They then pick up a different set the next day. Disney officials had told the workers that they use hot water to clean the undergarments, but they apparently weren't doing so, said Steverson, a shop steward with the Teamsters, which represents workers who portray such figures as Goofy, Pluto, Minnie Mouse and Donald Duck.
Some workers complained about receiving undergarments that were stained or smelly. Steverson said there have been three cases of costumed workers at the Magic Kingdom getting pubic lice or scabies during the past two years. Disney spokeswoman Rena Callahan refused to comment on the new contract provisions because "we don't conduct our negotiations with the media, only at the negotiating table."
But Callahan said workers are expected to wear underpants underneath their tights and bike shorts, and the garments are immediately laundered after they've been worn.
"If cast members aren't happy with the condition of an item, they can turn them back in and they will be issued another costume," she said. "We want our cast members to be happy with their costumes."
Other concessions the costumed characters won include more time to put on their costumes and a weather clause that includes air pollution as a factor in determining how long costumed characters have to be outside. Recently, smoke from a nearby brush fire has irritated singers' vocal cords and made it difficult for stilt walkers to breathe, employees said.
"People are feeling nauseous, they have itchy eyes, are dizzy and have headaches," said Calon Webb, a union shop steward at Animal Kingdom.
The costumed characters and Disney workers from five other unions vote next week on the new contract, which covers about 25,000 of Disney World's 55,000 workers.
The Charlotte Observer - By ANNE GEARAN, AP - June 5, 2001
Court allows no limit on cash for mistreated workers
Victims of on-the-job mistreatment may collect unlimited cash awards to make up for what they would have earned if they had been treated fairly and stayed on the job, the Supreme Court ruled Monday.
The 8-0 ruling was a victory for workers' rights and civil liberties groups and a setback for employers who hoped to harness jury awards that can often run into the hundreds of thousands of dollars.
The court ruled in the case of a woman whose male co-workers at a DuPont plant in Tennessee harassed and demeaned her, including refusing to associate with her after she was chosen to speak to girls visiting the plant for Take Your Daughters to Work Day.
Lower courts ruled for Sharon Pollard and agreed she deserved to be compensated for money she presumably would have made if working conditions had not forced her to leave the plant.
But the lower courts also ruled that a 1991 law capped her compensation at $300,000, instead of the $800,000 she sought.
Other federal courts have not applied the 1991 cap to the "front pay" that Pollard sought, and the Supreme Court found the limit unjustified.
Congress left the door open for front pay awards by authorizing "such affirmative action as may be appropriate," Justice Clarence Thomas wrote for the court.
Further, unlimited front pay should be available both to workers who stay on the job and those who leave, Thomas wrote.
"I would hope that employers would take from this 8-0 decision the clear message that they have nothing to gain by making life unpleasant and difficult for those whom they have discriminated against," said Marcia Greenberger, co-president of the National Women's Law Center, one of more than a dozen organizations that signed friend-of-the-court briefs supporting Pollard.
Justice Sandra Day O'Connor did not participate in the case, presumably because she owns DuPont stock. Pollard's case now returns to the 6th U.S. Circuit Court of Appeals for a final accounting of her damage award. "It's a strong, strong decision which is going to stand the test of time," said Pollard's lawyer, Kathleen Caldwell. Pollard, Caldwell said, "has been laughing and crying all at the same time."
Pollard said she endured years of mounting abuse that left her traumatized and unable to continue work. The company knew about the abuse and looked the other way, she said.
The harassment began in 1987, Pollard said, when a male co-worker opened a Bible on her desk to the passage: "I do not permit a woman to teach or have authority over man. She must be silent."
The overwhelmingly male work force allied to undermine her, including staging false alarms on the shop floor when she was in charge and making it appear she could not handle her duties, she said.
Co-workers waited until she went on break to pull some of the stunts, then burned her dinner when she went to fix the problem, she claimed.
Her co-workers systematically shunned her for her participation in Take Your Daughters to Work Day in 1994 and held a fish fry to celebrate when she left in 1996, she said.
The U.S. Chamber of Commerce and other business groups argued that front pay awards can be arbitrary and out of proportion to a worker's true losses.
"I thought we had a good argument. I was surprised to see it 8-0," said Steve Bokat, chief counsel for the National Chamber Litigation Center.
"We thought it was important to limit these awards, which can easily reach hundreds of thousands of dollars," depending on the worker's age, salary and other factors, Bokat said.
The Justice Department supported Pollard, although the government was not technically part of the case. The case turned on what Congress did and did not do when it tweaked the 1964 Civil Rights Act.
Pollard and her supporters argued that 1991 amendments to the civil rights law were designed to expand, not contract, worker rights in cases like hers.
The Cincinnati-based appeals court had ruled in another case in 1998 that front pay amounts to compensatory damages, and is thus subject to a $300,000 cap set by Congress as part of the 1991 amendments.
The appeals court then applied the same reasoning to Pollard's case.
Duke Energy Employee Advocate - June 2, 2001
For some time, the government has been allowing foreigners to work in America for cheap wages on special visas. Employers love the prospect of a supply of cheap workers. The endless supply of cheap workers tends to put downward pressure on the wages and benefits of American workers.
The New York Times reports that the visas will now be processed faster – for an extra thousand dollars. The article leads one to believe that the company pays this fee. Maybe, but if there is any way, you can be sure the fee will be channeled by to the immigrant, who is already willing to work cheaply. And, what a deal it would be. For a thousand dollar “tip,” the immigrant would get the opportunity to work cheaply approved faster!