3 - Conceptual Issues and Criticisms of the Study

Abstract

This chapter focuses on broad conceptual issues, many of which have implications that go far beyond the New York Telephone (NYT) proceedings, raised by the interested parties in the case. Among the issues considered is that of the conflict between an industrial relations policy that seeks to promote collective bargaining in regulated industries, a target-rate-of-return pricing policy in these industries, and the goal of providing the services of public utilities to consumers at the lowest possible cost. The chapter considers whether regulatory commissions can legally take any action that may even indirectly influence the size of the wage settlements in the industries they regulate. The first critical issue discussed in the chapter is the conflict that exists among public policies that seek to promote collective bargaining and the rights of workers and a regulatory policy that strives to provide the services produced by regulated industries at the least possible cost to consumers. The second issue concerns whether regulatory commissions can legally take any action that may even indirectly influence the wage settlements obtained by unions representing utilities' employees. Commissions have the right to evaluate whether utilities' labor costs are just and reasonable, and it considers issues that relate to the criteria commissions should use. The chapter discusses the issues, such as the treatment of nonwage employee benefits, turnover, and strike costs; whether union representation of a utility's employees should affect the standard; whether state commission review of utilities' labor costs is limited by collective bargaining negotiations that occur at the national level; what the appropriate comparison groups are; and what the role of productivity growth should be.