National Agreement Helps American Electric Power Keep a Grip on Labor Contracts

by Steve Lindauer, Association of Union Constructors

American Electric Power (AEP) is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Connection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada. In the South, AEP serves approximately 11 percent of the electricity demand to the Electric Reliability Council of Texas’ (ERCOT) transmission system. Overall, AEP ranks among the nation’s largest generators of electricity, owning nearly 38,000 MW of generating capacity. Impressive as that seems, meeting the energy needs of its customers is a constant challenge.

AEP is working to meet the demand for electricity and comply with all federal and state environmental requirements. Specifically, AEP is building new generating facilities to meet growth and investing in equipment to improve the environmental performance of its existing generating facilities. According to Engineering News Record, in 2007 AEP’s overall construction program was the largest in the utility industry and the nation’s second-largest program overall. The size and complexity of AEP’s programs demand adherence to schedules and budgets.

Tom Householder, AEP’s director of construction labor relations, investigated several approaches and found the easiest way to deliver the many skilled crafts and contractors needed to tackle these massive jobs is under a single, simplified contract. The answer is a national maintenance agreement (NMA) offered by the National Maintenance Agreement Policy Committee (NMAPC). AEP began using the NMA in the early 1980s and made the NMA its exclusive maintenance labor agreement in 1987.

“We make a product–electricity–that is not storable,” Householder said. “So when a generation unit goes down, we must return it to service as quickly as possible. We need the trade unions to get that unit back up and running as quickly as possible. The NMA provides a roughly 15 percent benefit for us over a typical local agreement for returning an electricity-generating unit to service safely and productively.”

What makes a national maintenance agreement work

An NMA is a labor-management system in which more than 2,500 contractors and up to 14 building trades work under one set of rules and regulations. Having an NMA ensures that, from a labor perspective, construction projects are completed on time, on budget and without union disagreements.

The NMA concept works so well because of a highly effective, common-sense communication technique called the tripartite committee. That is, owners, signatory contractors and local labor unions work together forging strong relationships and developing deeper understanding of the other parties’ needs and constraints, then jointly solve any sticking points before work begins. Labor shows its willingness to work cooperatively with owners and contractors to bring maintenance jobs in on time and under budget. Contractors man discuss with owners and labor concerns that affect job performance and completion. Owners help labor understand the issues they face. The process brings the three groups together instead of placing them as combatants in a battle of misunderstanding.

The NMA document differs in several respects from typical local agreements, and those differences yield important benefits and cost savings to owners:

  • Flexibility in scheduling,
  • Savings from standardized rules and holiday observations,
  • Option to exclude from the agreement some locally mandated contributions, and
  • Owner is not a signatory, unlike many project labor agreements.

Householder says the NMA is the most consistent labor agreement, and in addition to being economical, is respected and accepted by trade unions and contractors alike.

“Without the NMA, we’d have inconsistencies among various agreements, possible disagreements among trade unions, potential for work stoppage and delays and safety issues,” Householder said. “Because we’ve put the NMA in place, people are working together under common guidelines. They care about each other and work as a team on these major projects. In addition, we have the structure to manage projects more efficiently under a single agreement.”

Safety first

On-the-job injuries cost Americans more than $200 billion a year in lost wages, medical bills, employers’ costs and property damage. Construction labor ranks among the most hazardous occupations. Research conducted by the Construction Industry Institute, however, indicates that the more owners who are involved with safety, the safer their jobs are. An NMA puts safety first with continuous safety training resulting in more than 20 million injury-free hours worked in 2007 alone.

Additional provisions

The utility industry has a long record of concern for the safety of its workers, and one of the ways the industry ensures safety is through rigorous drug-testing programs. Owners and contractors concerned that an NMA will hobble their efforts to enforce a drug-free workplace can put those fears to rest. The NMA recognizes and requires compliance with any drug-testing programs an owner or contractor has put in place. All parties must abide by the rules and provisions of in-force substance-abuse programs, including testing before employment, on reasonable suspicion, after a drug-related incident and randomly where allowed by law. Discriminatory practices are subject to the grievance procedure.

Looking forward

During the next few years, AEP plans about $2 billion in new generation projects. That demands, among other things, attention to superior customer service – something the NMAPC has won high points for, Householder said. For example, he requested a contract for a gas-turbine project at 4 p.m. one day, and by 10 a.m. the next day he had a contract in his hand. Instead of putting the project on hold for a month or more while he negotiated separate contracts with the various trade unions, he got work started the following day.

Bill Sigmon, AEP senior vice president of engineering, projects and field services, recognizes the value of the NMA agreement to AEP’s ability to meet its goals.

“With the support of thousands of contractors, we have been able to successfully pursue our largest construction programs in decades,” Sigmon said. “With the agreement in place, we are able to proceed with confidence that we will meet our program goals for schedule and budget.”

AEP will continue to implement the NMA for its 2008 projects that include further emissions-reduction equipment investments and new generation projects. AEP’s work will continue to grow during the next decade, according to Sigmon, with a number of major projects including nitrous and sulfur oxide reduction, boiler rebuilds, new generation construction, turbine overhauls and landfill modifications.

For more information about this project or to learn more about the NMA or the NMAPC, logon to


Steve Lindauer is CEO of The Association of Union Constructors and impartial secretary/CEO of the National Maintenance Agreements Policy Committee Inc. He serves on the Joint Administrative Committee of the Plan for Settlement of Jurisdictional Disputes. Lindauer has a bachelor’s degree in political science and a master’s degree in industrial relations and human resource management.

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