Hydro One union to trade pension perks for wage hike

Strikes me as very, very strange the way this is working out

TORONTO • Members of the Power Workers Union will trade pension concessions for a wage hike and shares in a newly public Hydro One if they ratify a tentative labour agreement.

The bargaining committee is unanimously recommending that members vote to ratify a deal that would see workers pay more and work longer for their pensions in the future, in exchange for a raise and Hydro One shares, according to a summary of the agreement between Hydro One and the Power Workers Union.

Energy consultant Tom Adams obtained the summary and supplied it to the Financial Post.

If members vote to ratify the agreement, the earnings used to calculate their pension payments will be based on the average of their highest-paid three years of service, rather than five, beginning March 31 of 2025. Additionally, after that date, workers will need to accumulate three more points in the age-plus-years-of-service formula used to calculate their eligibility to receive a full pension. Their pension contributions would also increase, effective April 1 of this year.

“This is a big money deal,” Adams said. “It strikes me as very, very strange, the way this is turning out.”

On the one hand, the agreement is “a step toward a more responsible pension liability for the ratepayer,” Adams said. A report commissioned by the government last year found pensions in the provincial energy sector are not sustainable.

On the other hand, Adams said, the share program is an expensive way to gain the union’s support for the Hydro One privatization.

Under the agreement, Hydro One employees would receive shares in the newly public company company equivalent to 2.7 per cent of their salaries annually for 12 years. They would also receive a three per cent raise over three years and two lumpsum payments totalling three per cent of their salaries.

Ontario Power Generation employees have also been cut into the deal to receive stock options, according to a report.

In an emailed statement, Jennifer Beaudry, spokeswoman for Ontario Minister of Energy Bob Chiarelli, said the tentative agreement is “net zero,” meaning the pension concessions offset the wage increases and share program.

“We’re excited that the Power Workers Union leadership expressed support for our plan to strengthen Hydro One and that workers are interested in becoming owners in the new Hydro One,” she said. “Subject to ratification, we see this as further demonstration that the workers see a stronger Hydro One, a company that will grow.”

Spokesmen for Hydro One and the Power Workers Union declined to comment.