CU expenses soar for emergency crews

On Feb. 22, CU announced that the cost of the worst ice storm in Springfield’s history had soared to $28.5 million – almost double the original $15 million estimate.

Springfield Business Journal’s review of CU contracts with companies that came to the rescue offered some insight into the storm’s staggering price tag. And the cost continues to rise.

“The $28.5 million – I’m quite certain – will not be the final estimate, but that’s a good number through Feb. 21,” said CU General Manager John Twitty. “I think it’s the bulk of it.”

Contract review

On Feb. 21, for example, CU received a $6 million change order from Asplundh Tree Service, a regular service provider from Pennsylvania with an existing contract for tree-trimming and line maintenance. The change order was for work performed during the ice storm, according to purchasing documents.

Under the Asplundh contract, CU is required to cover the round-trip cost of crews and equipment traveling “between the bidder’s nearest crews and the Springfield area up to a maximum of four hours per notification.”

Hourly overtime rates for Asplundh employees ranged from $29.77 to $44.64, and hourly double-time rates ranged from $38.87 to $58.28, according to the contract. Employees who worked more than 15 consecutive hours were entitled to double-time pay.

CU also was responsible for paying $12 per meal per employee and $45 per night per employee for lodging, records show. The utility required contract employees to submit proper legible receipts with their name as well as the date and time of the meal or lodging charge. The contract authorizes CU to reject payment of receipts that aren’t submitted properly.

CU also had primary and secondary contracts with electrical contractors PAR Electric of Kansas City and B&L Electric of Clinton, respectively. Both contracts contain a prevailing wage clause for employees performing construction work on electrical transmission and distribution facilities.

Hourly overtime and double-time costs for construction work by electrical crews add up quickly.

PAR’s contract requires overtime pay for all emergency work, and crews on the job between midnight and 6 a.m. earned double time. The contractor’s general foremen earn an hourly overtime rate of $102.37 and a double-time rate of $131.85. On the lower end of the contractual pay scale, a PAR groundman receives an hourly overtime rate of $46.91 and a double-time rate of $59.10.

PAR employees received $16 per meal and $60 per night. B&L charged $17 per meal and $50 per night. CU hasn’t yet received any change orders to its contracts with PAR and B&L for storm-related work, Purchasing Manager John Penrose said.

In the second half of January, CU inked a total of 22 emergency contracts with various electrical contractors and municipal utilities for emergency crews and equipment.

One contract with Hawkeye LLC in Hauppauge, N.Y., required CU to pay employees double-time rates ranging from $78.75 to $179.99 an hour – in line with union standards in the New York region.

Quality over pricing

With tens of thousands of customers without power, Twitty said contract pricing wasn’t subject to typical negotiations. He also noted that hourly rates in the contracts represent the amount paid to contractors to cover each employee’s pay plus benefits.

“Our first effort was to get reputable and safe contractors here as quickly as possible,” he said. “I won’t say that cost was not considered, but cost was certainly secondary because we wanted to get the lights back on. I think it’s safe to say we were happy to have their assistance.”

Twitty said he’s confident CU’s purchasing department – under the leadership of Penrose – protected the utility from price gouging by contractors summoned to respond to the devastating ice storm.

“Our purchasing folks are very thorough and particular about those kind of things to make sure we’re paying for what we ought to have been paying for,” he said. “And at the end of the day, these costs are subject to reimbursement from FEMA and from SEMA.”

State and federal emergency management agencies have indicated that reimbursement for up to 85 percent of storm-related costs is available with proper documentation.

CU has $35.4 million in its disaster, contingency and pollution disaster reserve funds to pay for storm-related costs, said utility spokesman Ern DeCamp. The reserves would be replenished with federal and state reimbursements over a five-year period, DeCamp added.[[In-content Ad]]