Salt River Project could see as many as half its employees walk off the job if the Arizona utility can’t work out a new labor contract for hourly workers.

The International Brotherhood of Electrical Workers Local 266 has turned down two contracts offered by SRP management. IBEW attorney Jim Abdo said the biggest stumbling block is health insurance costs.

The current contract, which expired Nov. 15 and is operating under its second extension, has SRP covering 100 percent of employee health insurance costs, but the new offer calls for workers to pay as much as 25 percent via premiums. Abdo would not go into specifics about how much SRP’s health plan would cost each worker. SRP spokesman Jeff Lane also declined to comment about the clause in the proposed contract.

Abdo said the contract affects about 3,000 workers at SRP, while the company says the number of hourly workers that would be affected is about 2,300.

Abdo said the contract under negotiation would be for three years. Talks will start again in early January, the union and SRP confirmed. The third deadline to reach a deal is Jan. 31.

Abdo said if there is no movement in the January negotiations, union workers could walk out sometime during the first quarter, though he hopes a deal can reached.

“Nobody really wants to strike,” Abdo said.

The labor agreement covers workers who repair and service SRP utility lines as well as meter readers, electricians, machinists, customer service workers and other hourly employees. SRP, which supplies water and power to 930,000 customers in the Valley, has 4,500 workers statewide. The hourly collective bargaining agreement applies to both aspects of SRP’s business.

How a work stoppage would affect SRP is unclear. Not all of the 2,300 workers SRP says are hourly are in the union, and the state’s right-to-work laws do not allow for “closed shops” that require employees to join the union.

“SRP maintains a work force contingency plan to ensure that we can continue to provide reliable water and power and customer service,” Lane said. “We can’t comment on specific actions, however.”

No federal labor laws would bar workers from striking. The National Labor Relations Board has restrictions only for union workers at hospitals where they must give a 10-day notice of an impending strike, as well as workers in the railroad and airline industries, the latter two covered by the National Mediation Board.

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Other than that, labor restrictions are left up to the state, said Nancy Cleeland, director of public affairs for the NLRB.

Union workers rejected a second proposal by SRP management on Dec. 18 and also voted to strike, if necessary. After each contract rejection, SRP and union officials agreed to extend the current agreement. While SRP officials wouldn’t comment on its offer or sticking points for the workers, Lane said employees would see a 3 percent pay raise in November, followed by a 1.5 percent pay hike by mid-2011. Raises in the third year would be negotiated.

Lane said the utility also won’t comment on the possibility or what it might mean to customers if there is a walk-out.

Health care costs and premiums also were big sticking points in the down-to-the-wire negotiations between United Food & Commercial Workers Union workers and the Fry’s Food Stores and Safeway supermarket chains. Twenty-five thousands grocery workers were poised to strike before a last-minute compromise in November over pay and health insurance.

In Los Angeles earlier this year, a last-minute deal averted a strike between Southern California Gas and members of the Utility Workers Union of America, which clashed about the economy and compensation.

SRP, like other utilities in the state, has been hit financially with a drop in Arizona’s growth rate resulting in a decline of new customers.

This week, the company put forth a new proposal for a rate increase to take affect this spring that is about half the initial request of last summer. The proposed rate increase is about 4.9 percent, or about $5.95 per month on an average home, officials said.

The request to temper the increase came from the SRP board of directors, which sought to lessen the impact on ratepayers. The board also asked the company’s management to look for cost savings. With less money for growth and the prospect of cutting back on infrastructure, SRP could hold off on employee raises, as well as cut up to 100 positions through attrition or even call for layoffs by the end of its fiscal year in April.

Lane said the labor negotiations and the rate requests are viewed as separate processes by the utility.v

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