Some businesses may pay thousands more thanks to biomass plant


Published: Sunday, November 4, 2012 at 6:01 a.m.
Last Modified: Saturday, November 3, 2012 at 7:01 p.m.

The political debate over the biomass plant has focused largely on the costs to residential customers and the additional $10 and change they would pay on each month's bill. But for commercial users with large facilities or lots of machinery, the added costs could be in the thousands of dollars a month.

With Gainesville's commercial rates already among the highest in the state, business leaders are concerned about the effects on businesses at a time when many are still struggling to climb out of the recession.

In 2009, the Gainesville City Commission approved a 30-year contract to buy all of the electricity from American Renewables' 100-megawatt biomass plant expected to come online in late 2013 for $130 per megawatt hour. Gainesville Regional Utilities estimated that the average customer's bill would increase more than 8 percent — or an additional $10.56 a month.

That's about a penny per kilowatt hour, which adds up to a pretty penny for facilities that use hundreds of thousands of kilowatt hours per month.

A comparison by the Florida Municipal Electrical Association showed that in August, Gainesville had the highest commercial rate of 33 municipal utilities for users at 1,500 kWh or less a month and was among the highest three in the state for users of as much as 30,000 kWh.

Gainesville rates were a better deal comparatively at higher levels of power use, but never below the eighth highest.

Many local businesses are also about to lose their Business Partners program discount, which locked in savings of 7 percent to 13 percent a month on the base rate, which makes up roughly 60 percent of their total bill.

The program was created in 1997, when there was talk of deregulating the electrical industry, and offered commercial customers 10-year contracts to buy energy from GRU. The program was updated in 2002 when most current participants signed on. GRU stopped signing new contracts in 2006. Most of the contracts expired or will expire this year, though 384 commercial customers remain in the program.

Florida Food Service, a restaurant supply company, received its last discount in May. The company saved $1,187 and was charged $21,903 a month for electricity on a 100,000-square-foot facility with about 40,000 square feet of refrigerated space.

Without the discount and with an additional penny per kWh, the cost to the business would be nearly $2,800 more a month for the same power use. Company President Joel Islam said the added expense would hurt “at a time when we are basically trying to cut and stay competitive and do everything we can to keep everybody employed.”

GRU has developed conservation programs to help customers find ways to save energy and offers rebates that help pay half the cost of energy-efficient upgrades.

“Those programs really take the place (of the Business Partners program) and allow businesses to get back the same percentages or more, much more in savings, which is a great long-term investment,” said Lewis Walton, energy and business services manager for GRU.

By way of example, he said the Malcom Randall Veterans Affairs Medical Center saves about $240,000 a year in utility costs because of upgrades, while the Alachua County Library District saves $17,000 a year just by turning off lights at certain times.

“We want to do everything we can to help businesses thrive and stay here, and we've got many resources to help them look at expenses and help them manage expenses,” he said.

Walton found himself answering questions from the City Commission last month in response to a rumor that Ball Corp. was closing its Gainesville factory that makes tops and bottoms for cans because of its energy costs.

Ball announced on Aug. 15 that it would be closing the plant by the end of the year, affecting 127 employees.

Walton said GRU gave Ball Corp. $111,000 in rebates for energy upgrades that saved the plant $227,000 a year.

Asked about the rumor, Ball spokesman Scott McCarty reiterated that the decision was made because of declining use of standard 12-ounce cans and the fact that Ball's other lid plants had lower freight costs because they are closer to customers. “There are always other factors ranging from local tax rates to the labor pool to the cost of energy to any number of things,” he wrote. “They were not as important as the two factors above.”

Since then, two Gainesville manufacturers have decided to move. Heat Pipe Technology, with about 35 employees, announced that it would be leaving Gainesville for Tampa in November. The company declined to answer questions about its energy costs but said previously it was moving to be close to two interstates, an airport and ports, and a larger labor pool.

Realtor Beau Beery of Coldwell Banker M.M. Parrish Realtors is marketing Heat Pipe's building and said the energy costs would have been minimal. Of 38,000 square feet, 32,000 feet of the space is not air-conditioned, and solar panels covering most of the roof reflect the sun, making the air-conditioned portion easier to cool.

The other manufacturer, Entertainment Metals, closed its Gainesville shop on Aug. 23 to move to Fort Myers, taking 12 employees with it.

The company, which makes metal racks for the audio-visual industry and cabling for concert tours, had been looking for a larger building in Gainesville.

Owner Kevin Kirchner said the business found a building in the Northwest Industrial Park that fit its space needs and was zoned for manufacturing, but it would have cost $80,000 to upgrade to the three-phase power the business needed for a building it didn't own. That was the main reason he said the business decided to look around the state.

The company decided to move to Fort Myers because Lee County offered as much as $35,000 over five years based on the number of jobs Entertainment Metals creates, Kirchner said.

As a commercial Realtor, Beery said no business has ever told him it won't come here because of utility costs.

“I certainly hear other factors — how hard it is to do business here with zoning and building permits. I hear that at least twice a day, but it seems to be getting better,” he said.

David Ramsey is director of economic development for the Council for Economic Outreach. He said the biggest questions expanding or relocating companies have are about the availability and costs of talent and real estate.

Businesses such as distribution centers, manufacturers and light assembly operations do ask about electric or natural gas prices, he said, adding that the costs here have not been deal-breakers.

Also, the state offers tax exemptions on electricity costs to manufacturers.

City Commissioner Todd Chase said the issue of whether the city's energy policies are putting pressure on businesses came up during the city's recent strategic planning retreat. “I'm hoping to try to lead a discussion. We have one of the most progressive energy policies in the country, and it's expensive,” he said.

Islam said his interest is the bottom line to Florida Food Service.

“They can blame some things on the biomass plant. All that really matters is the amount of the check I have to write each month, and this is a bad time for that stuff to be going up,” Islam said. “We're doing all we can do to try to save energy.”

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