Corps and Reclamation Operations and Maintenance · Corps and Reclamation Operations and...
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Corps and Reclamation
Operations and Maintenance Webinar - Dec. 14, 2016
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B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• The Federal Columbia River Power System is one of the lowest cost generation systems in North America.
• Labor cost increases account for the largest portion of cost growth for operations and maintenance expenses.
• The Wage Grade and Trades and Crafts pay systems have increased much more than the General Schedule pay system.
Summary
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B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• The FCRPS is among the lowest cost hydropower fleets in EUCG. – The EUCG database contains nearly half of all North American hydro capacity.
– Mitigation costs, which include fish & wildlife, recreation, and cultural resources, are very high
relative to others in the industry.
Hydropower Benchmarking
*Data from EUCG, Inc. – All 16 North American hydro fleets shown – average fleet is ~ 22 plants and 4,500 MW
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B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• Removing mitigation costs and focusing on operation, maintenance and administrative costs, show
the FCRPS to be one of the lowest-cost fleets in North America.
• This despite our capital re-investment being at one of the lowest rates in the industry for years.
Hydropower Benchmarking
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*Data from EUCG, Inc. – All 16 North American hydro fleets shown – average fleet is ~ 22 plants and 4,500 MW
B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• In the ten years from fiscal year 2005 to FY 2014, Corps labor expenses rose 59 percent.
• Non-labor expenses rose 40 percent in that same period. Non-labor includes supplies, materials and contracts.
US Army Corps of Engineers
Hydropower and Joint Expense
Original Labor
New Labor
Original Non-Labor
New Non-Labor
$-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Corps Expenses 2005 to 2014
Original Labor New Labor Original Non-Labor New Non-Labor
1/3 Non-Labor
2/3 Labor
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B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• Construction/contract services and materials have seen
the largest increase in costs, with materials more than
doubling in ten years.
USACE Non-Labor Costs
Construction & Contract Services,
9,583,855 Materials,
11,555,393
Trap & Haul, 484,758
All Else, 429,214
Non-Labor Cost Increases '05 to '14
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Non-Labor Costs Over Time in $
All Else
Construction &ContractServices
Materials
Trap & Haul
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B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• The total cost for power and joint labor has increased 62 percent in 11 years.
• Of that increase, inflation of wages for the positions that existed in FY 2005 is 54
percent.
• Additional labor hours account for the other 46 percent of the labor cost increase.
USACE Labor Costs
Original Labor cost
Original Wage Inflation
Cost of Additional Labor Hours
$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Corps Labor Costs FY 2005 to 2015
See slide 10
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B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• Wages for T&C and Wage Grade employees are determined by a wage survey of peers in the region.
• The wages have risen at twice the rate of GS employees and even more compared to average wages for all workers in the region.
Wage Inflation for the Pacific Northwest
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Average Annual Income
UPTO Weighted Average Annual Salary
Median Income Washington
Median Income Oregon
General Schedule RUS
31% increase
WA 2%
OR 14%
GS 15%
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B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• 35 percent of all labor costs go to GS employees.
– GS employees get pay increases with the rest of the federal work force by
executive mandate.
• 65 percent of all labor costs go to T&C or Wage Grade employees.
– T&C and WG employees in the region get increases through a survey of
wages for peers in the region.
• Wage rates for GS employees have increased 15 percent since
2005, before the recession, to 2014.
• Wages for T&C and WG have increased an average of 31 percent
in the same period, twice what GS employees received.
General Schedule vs Trades & Crafts and
Wage Grade Pay Systems for USACE
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B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• Of the $53.9 million increase in labor costs, wage increases for existing employees accounts for $28.9 million.
• The remaining $25 million is due to additional labor resources.
USACE Labor Cost Increases ‘05 to ‘15
Added T&C Hours,
$9,436,569 , 18%
Existing T&C Wage Increase, $22,181,649 ,
41%
Added GS Hours,
$15,575,419 , 29%
Existing GS Wage Increase,
$6,706,584 , 12%
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B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
Cultural Resources
2% Dam Safety
3%
Environmental 21%
Joint O&M 31%
Power O&M 32%
Security 7%
All Else 4%
Additional Labor Resources by Program
• The funding required for additional labor resources added in the last ten years is 62 percent GS labor and 38 percent WG/T&C.
• This funding accounts for $25 million in annual costs. Below is the breakout of this $25 million by occupation and by program:
USACE Increases in Labor Hours
GS - All Else 0%
GS - Fish & Wildlife
11%
GS - Engineering & Construction
20%
GS - Plant Management
9% GS -
Administrative 5%
GS - Contracting 5%
GS - Safety & Security
8% TC - Mechanic 3%
TC - Operator 12%
TC - General Labor/
Maintenance 15%
TC - Electronics/ Controls
12%
Additional Labor Resources by Occupation
GS in REDS
T&C in BLUES*
*Not Shown: $1.8M reduction in Electrician expenses 11
B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• In the nine years from FY 2008 to FY 2016, Reclamation labor expenses rose 63 percent.
• Of that total cost growth, additional labor resources from ‘09 to ‘15 account for 56 percent.
• Non-labor expenses account for 44 percent of that growth.
*This graph includes Base, Overtime, and other employees in BOR which charged to the Grand Coulee Base Program.
**The dashed line represents projected expenditures
BOR – Grand Coulee base hydropower
and joint expenses
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-
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
2009 2014 2015 2016
Grand Coulee Base Expenditures FY 2009, 2014 to 2016
Original Labor
New Labor
Original Non-Labor
New Non-Labor
Wage Increase
27% Non-Labor
73% Labor
B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• Additional labor resources have increased due to needs identified in the 2012 independent staffing study and an increased emphasis in safety, WECC/NERC, environmental compliance and IT security.
*This graph includes base, overtime and other employees in BOR which charged to the Grand Coulee base program.
**The dashed line represents projected expenditures.
-
20,000,000
40,000,000
60,000,000
2009 2014 2015 2016
Grand Coulee Base Labor Expenditures FY 2009, 2014 to 2016
Original Labor
Additional Labor Resources
Original Overtime
Additional Overtime
Wage Increase
BOR – Grand Coulee base labor costs
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2009 2014 2015 2016
Original Labor $ 36,176,644 $ 36,176,644 $ 36,176,644 $ 36,176,644
Wage Increase $ - $ 6,348,889 $ 7,900,539 $ 8,615,236
Additional Labor Resources $ - $ 10,437,909 $ 10,058,592 $ 8,419,797
Original Overtime $ 1,892,609 $ 1,892,609 $ 1,892,609 $ 1,892,609
Additional Overtime $ - $ 4,626,236 $ 3,510,737 $ 2,872,636
Total Base Labor $38,071,262 $59,484,301 $59,541,136 $57,978,938
B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• Includes all funding sources – power and non-Power, capital and expense.
BOR – Grand Coulee increase in labor
resources
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158
202
226 217
210
265 266
283
100
120
140
160
180
200
220
240
260
280
300
2009 2014 2015 2016
Emp
loye
es
Grand Coulee T&C and GS Employee Increase
GS TC
Engineer 12%
Mechanic 12%
Operator 1%
Security/Fire 2%
Electrician 25%
All Other 19%
Facility Ops 6%
Admin 13%
IT 5%
Safety/Enviro 3%
Grand Coulee FY09 to FY16 Additional Labor Personnel by Occupation
B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• In FY 2016 at Grand Coulee: – 43 percent of all employees are GS employees and 57 percent are T&C or
WG.
– GS employees are 32 percent of labor costs and T&C or WG are 68 percent of labor costs.
• GS employees get pay increases with the rest of the federal work force.
• T&C and WG employees in the region get increases through a survey of wages.
• Wages for GS employees have increased 7.4 percent since 2009.
• Wages for T&C and WG have increased an average of 25 percent in the same period.
BOR – Grand Coulee General Schedule
and Trades and Crafts pay system
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B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• Construction and contract services as well as materials costs have seen the largest increases.
• Includes base and non-routine costs.
BOR – Grand Coulee non-labor costs
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Construction &
Contracts (BOC 25)
86%
Materials/ Supplies (BOC 26)
11%
All Other Non-Labor
3%
Grand Coulee Non-Labor Cost Increases from '09 to '16
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
2009 2014 2015 2016
Grand Coulee Non-Labor Costs
Construction & Contracts (BOC 25) Materials/Supplies (BOC 26)
All Other Non-Labor
B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• Wage growth for Trades and Crafts employees has far
outpaced inflation, a significant driver for overall O&M
budget increases.
• Although some position types have been eliminated,
additional employees have been brought on to support
critical programs and new work as described in previous
IPR presentations.
• Construction and materials costs have seen significant
growth, particularly as Reclamation’s non-routine
program has ramped up.
Conclusions
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B O N N E V I L L E P O W E R A D M I N I S T R A T I O N
• This information was made publicly available on Dec. 9,
2016, and contains information not sourced directly from
BPA financial statements.
Financial Disclosure
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