‘What ifs' worry utility retirees

By Leslie McCartney of The Montana Standard

NorthWestern Energy retiree Jerry Harpster shows off his new veteran's benefits card he recently signed up for in case he loses his medical insurance through NorthWestern. That step will help him, but not his wife who is diabetic. Harpster has already considered selling his 20-year-old boat to help pay off his house and prepare to live frugally. (Derek Pruitt/The Montana Standard)

Bankruptcy talk has former NorthWestern workers on edge

When Gary Staudinger took NorthWestern Corp. up on its early retirement offer in 2002, he weighed his options carefully. The promise of a lifetime pension and medical benefits until he was 65 cemented his decision.

Now retirement is anything but tranquil since the utility was purchased by the South Dakota-based NorthWestern. The company's finances are unstable, with the word "bankruptcy" mentioned by top officials. A bankruptcy could substantially change the economic position of retirees, especially if their health benefits are axed as a cost-cutting measure.

Staudinger is one of hundreds of employees from both NorthWestern and Montana Power Co. — which offered early retirement in 2000 — who could see those benefits change as the company struggles for survival. Overall, 1,143 company retirees live in Montana with 395 of those residing in Butte-Silver Bow,

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according to NorthWestern spokeswoman Claudia Rapkoch.

Nothing in federal law requires private sector employers to promise health benefits. Furthermore, nothing prevents those employers from cutting or eliminating those benefits, unless of course a specific promise has been made to maintain those benefits.

" A lot of retirees don't realize the situation they are in," Staudinger said.

In fact, Staudinger has been scouring Web sites and consulting lawyers. Staudinger retired as director of treasury services after 29 years of service.

"You bet, in fact I'm seeking legal counsel," Staudinger replied when asked if he was worried about his future payments.

Even the big guns in the former Montana Power have been hit by an unpleasant development with a change in what is called the "benefit restoration plan." That is basically a supplemental retirement plan which restores their retirement income to about 95 percent of what they made while working. The plan, which was not funded by ratepayers and is not a qualified plan, is subject to creditors if bankruptcy is filed.

"The Montana Power Benefits Restoration Plan for senior management executives of the former Montana Power Co., has been amended," said Rapkoch.

Those executives or their widows — of which about 44 are affected — can either take a lump sum payout, at its net present value, or take their chances with bankruptcy court where they are just another group in line for payment — none of which makes those executives happy.

And what makes Staudinger equally unhappy is that NorthWestern is willing to deal with those top employees, but may not protect the "little guys" who could be hurt by a bankruptcy filing and may see their much-needed medical benefits disappear.

"The ones you don't hear about are the ones working odd little jobs trying to keep their heads above water," Staudinger said.

What exactly could happen is a complicated mix, but experts generally agree that Montana Power pension benefits are secure since the Department of Labor will spring into action when the company files bankruptcy. That department administers the Employee Retirement Income Security Act, which governs pension and welfare plans. Traditional pension plans, like MPC's, are insured by the Pension Benefit Guarantee Corp., a federal agency, that insures benefits up to federal limits. (See related story.)

But what has most retirees worried is the health benefits, which could be shakier, if bankruptcy is declared.

"If there's no plan and no successor company I'm not sure," said Sharon Morrissey, a program information specialist with the Department of Labor in Washington, D.C., when asked about health insurance benefits.

Morrissey explained that a bankruptcy filing has many twists and nuances in the law so it is impossible to know if health benefits are safe or not. In some cases, where a company has gone belly-up and no longer has a plan, employees are simply out of luck, unless they can secure insurance through other government plans or on their own — which could be cost prohibitive.

The most important thing is for employees and retirees to contact the department as soon as possible if a bankruptcy filing is made to ensure they are protected, Morrissey said.

NorthWestern said it could not speculate on what could happen to benefits if bankruptcy is declared.

"The Montana utility retiree benefits and pension have not changed. We continue to provide updated information to our employees and retirees," the company said in a statement. "We cannot speculate on issues that may be affected by a possible bankruptcy."

Retirees who took an early retirement offered by the companies in both 2000 and 2002 say that the promise of medical benefits until they qualified for federal coverage was a definite deal-maker in taking the offer.

"It's the only reason I took the retirement," said Byron Mazurek, who worked for the company nearly 22 years. Not only was Mazurek given coverage until he was 65, so was his wife. Mazurek said that if the health benefits are erased or severely curtailed, he would have to go back to work to get health coverage.

"I sure hate to see what it would cost," Mazurek said. In fact, some retirees say that a private health plan could cost hundreds of dollars a month if they could obtain it at all.

Fellow retiree Jerry Harpster said that losing health insurance would be a disaster for him because his wife is a diabetic, requiring monthly medications and care.

"I'm beginning to worry about what might happen if it does (file bankruptcy)," he said. In fact, Harpster has already taken steps to get care at a veterans' hospital — the first time he's ever used the service for his health care.

All retirees who spoke with The Standard expressed outrage with the managements of the former Montana Power Co. and NorthWestern with those at the top paid millions to either stay at the companies or go away when things got sour.

"The chairman got $3.5 million to leave and the president/chief operating officer has been dismissed and NorthWestern Corp. is negotiating with him," Staudinger said. "It's a sad state of affairs ... the unfortunate part is that the people — ratepayers, employees and retirees — in Montana are getting hurt."

Reporter Leslie McCartney may be reached via e-mail at leslie.mccartney@mtstandard.com.

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For more info ...

For those seeking more information about their pension rights and insured coverage, two Web sites may help.

The Department of Labor offers information on the Employee Retirement Income Security Act. Its Web site is found at www.dol.gov/ebsa or call the toll-free employee and employer hotline at 1-866-275-7922.

Also helpful is the the Pension Benefit Guaranty Corp.'s Web site at www.pbgc.gov for information on the agency and its duties, if it is needed in the event of an private employer's bankruptcy.