The New Energy Crisis: Power Industry in for a Jolt as About Half of Workforce Readies for Retirement

It’s an energy crisis of a new kind: The energy industry is bracing for a wave of retirements in the next ten years. To meet demand for manpower, educational institutions are revving up new power plant programs – the latest being the University of Cincinnati.

Anyone and everyone with a power plant in the United States – municipalities, states, private-sector utilities, federal power agencies and manufacturers, as well as institutions from schools to hospitals – has a common challenge. The power industry workforce – the technicians, engineers, linemen and maintenance crews that fuel the industry – will be retiring in unprecedented numbers over the next ten years.

The energy industry is one of the first to feel the effect of Baby Boomer retirements. This is partly due to massive hiring freezes and downsizing when the industry deregulated and focused on cost-cutting measures in the 1980s and 90s.

How bad is the problem? Barry Pulskamp, vice president of Regulated Coal Fleet Operations at Duke Energy Co., stated that over 30 percent of his workforce will be eligible for retirement in the next five years and 50 percent will be eligible within ten years.

At left, Mike Costello who will be a part-time student in UC's Power Plant Technology Program lowers an overhead crane to rig a replacement steam pressure-release valve. At right is Ray Miller, superintendent of UC's power plants.

“It’s an employment ‘perfect storm’ for the power industry,” stated the University of Cincinnati’s Ray Miller, former power plant supervisor with the General Electric Company and now superintendent of the university’s power plants. “Anyone who enters and excels in the new university programs starting up in order to fuel the industry will be entering a field with huge longevity,” he added.

A recent study by Krishnan & Associates on the aging workforce trends at U.S. coal-fired power plants, the cornerstone of the nation’s power supply, found that the average age of the workforce at these power plants is 48.  In its nationwide survey from 2005, K&A concluded that an average coal-fired plant will likely lose half its current plant staff in the next decade due to retirement and attrition. The study concludes that the specialized labor to replace this talent pool will likely be in short supply and difficult to recruit.

The Krishnan & Associates survey is echoed by a recent study from the American Public Power Association (APPA) titled “Work Force Planning for the Public Power Utilities: Ensuring Resources to Meet Projected Needs.” The report states that the loss of critical knowledge and the inability to find replacements with utility-specific skills are the two biggest challenges facing the industry. As a result, the utility industry will be hit very hard, very quickly by the shortage of skilled workers. That’s because, according to this report, the average age of utility workers is almost 50, several years older than the national average, and 45 percent of the workforce in electric and natural gas utilities are expected to reach retirement in the next several years.

Due to the recognized need, the University of Cincinnati is the latest school to begin a Power Plant Technology Program to prepare for the coming crisis. It’s among a group of about 12 schools which have recently begun such programs. Many programs have begun since 2003, and more are on the drawing board.

Below, experts from education and industry shed light on the bright job prospects in the energy sector – whether that be for those who obtain training and then go to work for public utilities or private plants.

•  A double whammy: Retirement concerns coupled with expected jump in electricity demand
• Ohio at the center of energy’s education drive
• New Ohio partnership plugging education-industry ties
• Ohio programs receive calls from as far away at Texas
• One student’s experience: Seeking stability and good pay
• "Pay” attention: Overtime can bring salaries of $75,000 or more
• 100-percent job placement for students
• Hiring is way up: From 0 to 100 a year
• Job security: “No one’s using less electricity.”
• A surge of interest from students
• Nature of the work is changing: More automation and technology
• Recipe for recruiting and retention
• Industry reaching down into high schools
• Utilities can now tap into a national clearing house for help with education
• Can I contract that out?
• Will the last Baby Boomer out the door, please turn off the lights?

1. A double whammy: Retirement concerns coupled with expected jump in electricity demand
Mary Miller, vice president of Human Resources with the Edison Electric Institute, an industry association, pointed out that the high percentage of industry workers reaching retirement eligibility is not the only challenge facing utilities. Coupled with those retirement concerns is the industry-wide expectation that electricity demand nationally is expected to grow by about 45 percent in the next 15 to 20 years. “That means,” she said, “that we’ll not only face the current challenge of attrition but that we’ll have huge capacity and appetite to fill new positions as new power-generating facilities are built.”

2. Ohio at the center of energy’s education drive
Look at the recent spate of Power Plant Technology programs starting at colleges and universities, and you’ll find that most of these programs are in Ohio. Ray Miller, UC superintendent of utilities and adjunct assistant professor, stated, “The concentration of new college-based power plant programs here in Ohio is a result of history and of industry drivers. First, Ohio has a lot of coal-burning power plants, many located along the Ohio River. All told, there are about 30 coal-burning, power-generating plants in the state, and Ohio is an exporter of electric energy to the East. Also, Ohio is the headquarters of three of the nation’s largest utilities, FirstEnergy in Akron; Duke Energy in Cincinnati; and American Electric Power in Columbus, which is currently the nation’s largest electricity generator. The need of these companies for workers is the principal driver in the establishment of the colleges’ Power Plant Technology programs.”

3.  New Ohio partnership plugging education-industry ties
Kathy Sommers, assistant director of Career, Technical and Adult Education for the Ohio Department of Education, helped jump start Ohio’s Power Technology Partnership last year to bring education and utilities in the state together around the same table. “The Ohio-Kentucky-West Virginia region is one of the largest power-generating areas in the nation. Other states like New York are big, but we as a region are huge. That’s why we need to do more to support the workforce needs of our energy industry. We’re now seeking to bring all the power plant technology programs in the state together in order to make sure all have a framework that will best serve industry needs and student needs,” she explained.

 
4. Ohio programs get calls from as far away as Texas
Keith Saunders, program advisor for the Power Plant Technology program at Rio Grande Community College in Rio Grande, Ohio, began his program last year with 16 students, both traditional-aged high school graduates and adults seeking retraining. He’s accepted 19 students for entrance into the program this fall.  “When we began our program at the urging of American Electric Power, I received calls from prospective students from as far away at Texas,” he stated, adding, “I expect industry demand for workers will continue to grow. Just in our region alone, two plants are slated to be built within 30 miles of us. One is a coal-fired plant at Letart Falls, Ohio, and one a coal/IGCC (Integrated Gasification, Combined-Cycle) plant in Meigs County, Ohio. Our area is also a finalist location for the FutureGen federal research power plant.”

5. One student’s experience: Seeking stability and good pay
Mike Costello, 36, plans to pursue classes part time in UC’s new Power Plant Technology Program to help him in his position as a stationary engineer in UC’s power plant. Explained Costello, “My father worked as a stationary engineer at corporate power plants like Hudepohl’s and Sun Chemical’s. Now, he’s at Formica Corp. in Evendale. So, I was somewhat familiar with the job, what it required and the stability and pay it offered. I’d also taken classes that would apply toward power plant operations, and that was enough to get me into UC’s plant apprenticeship program. Now, I want to finish my degree.”

Costello might have entered the field because of the stability and pay it offered, but he wants to complete the Power Plant Technology Program because of the edge it would mean for him in industry. He said, “We have so many people here at UC’s plant and elsewhere in the industry who are right at retirement. I just started in the power plant here about two years ago, and in another five years or so, I’ll be quite high on the list in terms of seniority. That’s how quickly the field is being affected by retirements.”

6. “Pay” attention: Overtime can bring salaries to $75,000 or more
Bill Wahlman, director of Online Energy Programs at Bismarck State College reported that starting salaries for students from Power Plant Technology programs vary by geographic region, type of job, union or non-union, and employer. He said, “We have students that go out and earn anything from $15 per hour to $35 per hour starting out. We often have students come back to campus and tell stories how they have made $75,000 to $85,000 per year with overtime. This is a great time for student interested in technical careers who are not afraid to work hard.”

7. 100-percent job placement for students
Ted Bosela, professor in the School of Technology at Youngstown State University, stated that YSU graduated its first class of a dozen Power Plant Technology students in May 2005, and all found work immediately in the industry. The story is the same for the class of seven students who graduated in May 2006.

In May 2007, YSU will graduate about 30 students from its Power Plant Technology program, and Bosela predicted that all of those students will easily find jobs too. “Many companies have contacted us regarding future graduates and are eager to interview students prior to graduation. In essence, the companies come looking for them,” he said.

8. Hiring is way up: From 0 to 100 a year
Brian Wilkins, staff generation specialist with FirstEnergy Corp., an energy provider to consumers in Ohio, Pennsylvania and New Jersey, said that the company is faced with a workforce attrition rate of about 75 percent in the next 10 years. “It’s simple,” he explained, “We, like much of the industry, had a very stable workforce and didn’t hire for about 20 years. That began to turn around in the years around 2000 and 2001. We’re hiring as I speak, about 100 hires a year in my area, which is the Fossil Fuel Generation workforce.”

FirstEnergy is also seeking to retain the Baby Boomers in its operations workforce, according to Wilkins. “Let’s say we want to retain a maintenance crew worker with 30 years experience. We’ll offer him the day shift permanently so that means no more shift rotation. We might also eliminate that person from the draft – the roster of people who can be called in during an emergency situation,” he added.

9. Job security: “No one’s using less electricity.”
What can students entering into a program like the one at the University of Cincinnati expect once they’re working. First, stability. “No one’s using less electricity,” claimed Brian Wilkins, staff generation specialist with FirstEnergy Corp., an energy provider to consumers in Ohio, Pennsylvania and New Jersey. “It’s also a job where, sometimes, you’ll be working on New Year’s Eve, on Christmas morning, on Sunday morning. It’s a job where someone’s got to be there 24-7-365. When customers turn on the light switch, someone’s got to be there to make sure the current flows and the bulb comes on. It’s a job where you might be working in a high-tech, air-conditioned office, or you might be performing maintenance on a coal pulverizer, [a job] where it’s dirty.”

Also, workers can expect good pay since demand is outpacing the supply of workers. “It’s a seller’s market. If you have or can get the technical skills for this work, you can find work anywhere in the country. It’s the field to be in,” stated Wilkins, adding, “About the only better field to be in is human resources and recruiting. As the wave of Baby Boomer retirements hits the nation’s employers, everyone’s going to be recruiting.”

10. A surge of interest from students
Vidal Almanza, student services specialist at Austin Community College in Austin, Texas, said that five students entered the school’s Power Technology Program when it was begun last year at the urging of the local utility company, Austin Energy. He added, “I expect the number of student to quadruple in the next year. Now that word about the program has gotten out, I’m currently getting at least a dozen phone calls a day from interested students.”

11.  Nature of the work is changing: More automation and technology
Sal Piazza, manager, Technical Skills and Process Optimization, with American Electric Power, currently the nation’s largest electricity generator, reported that AEP power plant operators and maintenance staff – as well as supervisory and management staff – are turning over at a rate of 15-to 20-percent a year. So, AEP is actively partnering with colleges and universities to set up education pipelines to prepare new workers for the company and the industry. It is doing so because new workers will be needed to replace workers who choose to retire. In addition, new workers are likewise needed because of the changing nature of power plant operations and because new plant construction is planned in order to meet rising energy demand.

Said Piazza, “The nature of the work itself is changing. More automation and technology is involved. We need people with strong backgrounds in technology, math and science. For instance, we need workers who will be able to understand clean-coal technology wherein coal is transformed into a gas to create electricity. It’s a method that eliminates most emissions, and it differs from the traditional method of pulverizing coal and then burning it to produce electricity… . Finally, we have new plant construction proposals before public utility commissions and state agencies. So, we’ll need workers to operate those plants.”
 

12. Recipe for recruiting and retention
Ravi Krishnan, principal consultant at Krishnan & Associates, an executive and technical recruiting firm focused on the power-generation industry, conducted a 2005 survey of the power-generation industry which confirmed the looming shortage of power-plant workers. Krishnan said it’s critical for utilities to create a workforce environment that recognizes the needs of the next generation and recognizes that market forces now and in the future favor the job candidate (rather than the employer) in the power-generation industry.

He said, “The utilities have to put together more competitive pay packages to retain their talent and recruit. They have a lot of competition because workers can go to other firms, like original equipment manufacturers. The situation is only going to get more attractive for the average worker in the industry. I can even see that perks like signing bonuses and help in locating housing, prevalent among senior management, could become more common down the line of workers.”

Krishnan recommended that utilities be prepared to offer the following benefits:

• Flexible work schedules
• Four-day, ten-hour work weeks
• Educational opportunities
• Career planning
• Stock grants and profit sharing
• Achievable bonus structures
• Spousal employment assistance programs
• Retirement and pension programs
• Cost-of-living adjustments

13. Industry reaching down into high schools
While many utilities are seeking to partner with appropriate colleges and universities to meet their workforce needs, Gulf Power Company, a regional utility in Florida (part of the larger Southern Company), partnered with West Florida High School of Advanced Technology in Pensacola to establish the Gulf Power Academy in 2001. (The academy is an option within the high school.)

Within the academy, high school students engage in a college-level industrial electricity curriculum and other rigorous technical and academic courses while also getting substantial on-the-job experience with Gulf Power along with intense mentoring from Gulf Power employees. The academy graduated its first class of 14 students in June 2005. Seven of those students opted to go to work for Gulf Power, five went on to college, and one joined the military. In the second graduating class of 18 students in 2006, six are now employees of Gulf Power and two are competing for positions, with the rest opting to go on to two- or four-year colleges.

“It’s been a fabulous success, so much so that the newly formed Florida Energy Workforce Consortium is considering replicating our program elsewhere in the state,” according to Jennifer Grove, Gulf Power workforce development coordinator. However, Gulf Power isn’t waiting for other utilities to catch up and copy its program. In 2005, the company opened two more Gulf Power Institutes in rural Laurel Hill, Fla. – one with the same college-level industrial electricity curriculum offered in Pensacola.

14. Utilities can now tap into a national clearinghouse for help
Professional groups within the energy industry also recognize the national need to recruit and retain power plant operators, line workers, maintenance/repair workers and pipe fitters. That’s why, in May 2006, the Edison Electric Institute, the Nuclear Energy Institute and the American Gas Association joined forces to form the online Center for Energy Workforce Development.

Mary Miller, EEI vice president of Human Resources, explained that surveys of EEI members found that the crafts and skilled laborer positions were of greatest concern for utilities and electric power plants. “So, we created the center so that these individual utilities across the nation would not have to reinvent the wheel in terms of education or work-based training programs to retrain current workers or provide training for new workers. The center showcases the ‘best of class’ education programs,” said Miller, adding, “It also seeks to increase awareness that our industry has great jobs with good pay.”

15. Can I contract that out?
Penny Manuel, vice president of power generation for Gulf Power Company, a regional utility in Florida, said Gulf Power anticipates losing 50 percent of its workforce to attrition in the next ten years. She added that power plants and utilities across the nation are already feeling the pinch in terms of hiring contract workers for plant maintenance. “A key part of utility maintenance strategy nationwide is to meet peak maintenance needs with qualified contractors. The construction boom is putting pressure on our contractors to find skilled labor. Right now, that would be Katrina-related clean up and rebuilding. In the future, as new power-generating plants are built and as current plants are made environmentally compliant, contractors will opt to work in new construction of or compliance readiness of plants, not in the maintenance and service areas. They’ll do so because the new plant construction work is long-term and steady. Couple that with a decreasing number of young people choosing skilled labor careers, and utility industry executives nationwide are concerned about the availability of skilled workers to keep the lights on.”

16. Will the last Baby Boomer out the door, please turn off the lights?
Regulated industries like utilities and energy are the first to feel the effects of the graying of the workforce as the first wave of Baby Boomers turn 60 this year. The knowledge drain to soon hit the energy industry will catch up to other industries later. It’s estimated that by 2010, 30 percent of the U.S. workforce will be over age 65, and 52 percent will be between the ages of 55 and 64. As the Baby Boomers retire, the next two generations following behind them are about 15 percent smaller. There will simply not be enough workers to replace the retiring Boomers.

“Without a doubt, the talent crunch is acute for electric and power utilities. The industry once had massive hiring freezes and downsizing in the 1990s because of deregulation and cost-cutting measures to make operations leaner. In addition, there was little turn over in the industry as a whole. People have spent decades on the job. In the ‘70s and ‘80s, all the nuclear plants came on line, which is why all the operators are about the same age,” said Ed Cohen, chief technology officer of Plateau Systems, a Virginia firm specializing in helping utilities and other firms use technology to track and manage workforce knowledge, preserving and passing on that knowledge to future workers. 

“What’s facing the energy industry is not unlike what’s happening with air-traffic controllers. In both industries, a large number of people were hired all at one time, and now, they’re all getting ready to retire. This is the problem facing everyone in the power-generation and distribution industries – everyone from utilities and to contactors who specialize in meeting the outsourcing needs of the industry,” he added.