First Energy Offers Buyout to 600 Employees
YOUNGSTOWN, Ohio — FirstEnergy Corp. says about 600 eligible employees at its corporate locations in Akron, and Greensburg and Reading, Pa. have until today to accept a buyout that would sever their employment with the utility.
“It’s a voluntary enhanced retirement program,” First Energy spokeswoman Diane Francis told The Business Journal Tuesday. Those affected are part of the company’s shared services division and work in such areas as information technology, legal, human resources and communications, she said.
About 2,400 are employed in FirstEnergy’s shared services department, Francis said. These support employees handled both the regulated and the deregulated side of the business.
However, FirstEnergy is in the process of transitioning to a fully regulated company and is moving out of the competitive electrical generation business, thereby requiring it to reduce its support staff, Francis said. “We’re realigning the shared services division to support a regulated only company.”
That means those employees engaged in dispatching and power line work are not impacted by the buyouts, and no one in the Youngstown area should be affected, Francis said. There would be no disruption in customer service, either, she added.
Employees age 58 or over are eligible for the buyout, Francis said. Under the terms of the package, an employee would receive a lump sum payment that equals one and a half week of base pay for every year of service. So, if an employee worked at the company for 30 years, then that employee would receive a lump payment equal to 45 weeks of base pay. Health care and medical coverage would also be calculated based on the employee’s severance period, so that same employee with 30 years would receive 45 weeks of medical coverage.
Employees would also receive an enhancement of $1,500 per month in addition to their monthly pension, which they can collect until they are 65, Francis said.
“For those employees who opt to participate, they would begin exiting Aug. 1,” Francis said. Some, however, might be asked to stay on until the end of the year, she said. Just how many employees will accept won’t be known until after today, she said, noting that employees have five days to change their mind and opt out of the package.
In April, FirstEnergy Solutions, the electrical-generation subsidiary of FirstEnergy, filed for Chapter 11 Bankruptcy. The subsidiary intends to close three of its nuclear power plants – the Davis-Besse and Perry operations in Ohio, and the Beaver Valley Power Station in Pennsylvania – over the next three years.
Analysts have argued that these older power plants are too costly to operate and are antiquated. Instead, smaller, more energy-efficient plants that operate on natural gas and steam are much more competitive and can deliver electricity at a lower rate than the traditional utilities.
In November 2016, FirstEnergy Corp. announced it would exit competitive, non-regulated, generation business because of weak power prices, insufficient results from capacity auctions and weak demand forecasts.
Francis said that it’s been “a few years” since First Energy offered attrition packages to its employees.
“As we realign our support organization, we want to reduce the impact for these employees as much as possible, especially for those who have had a long service for us,” Francis said.
Copyright 2023 The Business Journal, Youngstown, Ohio.