The Electric Utility's Aging Workforce

Utility Aging Workforce Part I – How did this happen?

There has been lots of hype about the aging baby boomer workforce across industries, and the electric utility industry has been particularly hard hit. Walk into any investor-owned or public utility these days and you're likely to find lots of grey hair. That's great from the standpoint that utilities are chock full of people with a wealth of experience. There are the guys that can look at an old transformer from 40 feet away and tell you what's probably wrong with it (because he knew who installed it 20 years ago and what that guy was doing the night before - or maybe he knows that there is a family of squirrels nearby that developed a taste for electrical insulation). Following the oil embargo, electric utilities were a pretty good place to work. For the bell-bottom clad recent engineering grad or returning vet, the utility was the place where their parents (or uncle) worked. Utilities offered decent stock dividends, a pension, and offered the excitement of participating in an unprecedented wave of nuclear plant construction. The stability and optimism associated with producing energy "too cheap to meter" was an appealing and soft place to land for a generation just coming down from a 5-year trip to wherever people went during the late 60’s and early 70’s. The 1970's nuclear construction boom was also lucrative. Young engineers and ex-navy nuclear submarine officers were earning very nice per-diem expense packages, on top of attractive salaries and benefits. That all melted down, literally, one day in 1979. Nuclear plant construction came to a screeching halt, and was followed by a general downturn in the energy industry.

Throughout the 80's, engineers shifted their sights towards opportunities with exciting new companies like HP, Xerox, National Semiconductor, and Atari. Top math and finance majors flocked toward Wall Street (thanks to the likes of “Gordon Gecko”). Meanwhile, not much was happening at electric utilities, then flush with nuclear power and operating a fairly reliable grid that underwent some new coordination rules after the blackout of '65. During the late early 90's, the conversation shifted towards utility deregulation. Having just watched telecom deregulation of the 1980's, utilities anticipated smaller workforces and dreaded the thought that their relatively cush jobs might start not be as secure as they once thought. Hiring slowed, and vendors to the industry (such as my since bankrupt employer Stone & Webster) felt the pain of a construction downturn. By the late 1990's three significant events kept new talent away from utilities: first, deregulation created in energy trading and IPP development. Given a choice to work at TXU or Enron, people chose Enron. Second, incoming employees during the 90's were members of the small and notoriously independent Generation X. X’ers were outnumbered by both the boomers, and their millennial children, and they had little interest in the lame utility industry when they had more exciting options Third, dot com. Given a choice between Pacific Gas & Electric or JustAboutAnyFunnyName.com (complete with a foosball table in the conference room), 20-somethings with a pulse and a college degree chose the latter. It was a no-brainer.Dot com not only attracted the new engineers, it also recruited people, especially much needed electrical and computer engineers, away from utilities. (I was completely guilty of this myself. After having worked in power for 7 years, I put aside my expertise in generation, project finance, and T&D design to do what? Work for an email marketing company. When it became clear to me that not everyone who works for a dot com could retire at the ripe old age of 32, I humbly, (but at least voluntarily), went back to energy. Nonetheless, I had a great time doing it, and the skills I learned as a product manager at a dot com serve me very well today.)During the short window after the dot com bust and 9/11, there were some reasons to get into the energy business (IPPs, for one), followed by a dozen reasons not to go into energy industry (most of those – Enron and IPPs that got burned by Enron). Just as the post-Enron energy industry was showing some signs of being an ok place to work, 9/11 hit. A good number of technically savvy new grads that would be attracted to utilities were instead drawn in to lucrative jobs with defense contractors. Perhaps they figured that either way, there's no foosball table, and you have to take a drug test, so why not Lockheed Martin rather than Dominion or Con Ed? Today, all those guys (and I do mean predominantly men) who were hired around 1975 to support the nuclear boom are in their 50’s now. They accumulated nice 401Ks and pension packages, and are likely to not only retire, but many can afford to retire early. Given phenomenal runs in energy share prices during the past couple of years, I expect the exodus will begin even sooner than expected.
So what’s next?