Rate hike fails to faze county firms
Electricity bill a small part of bottom line for some companies
Thursday, August 26, 2010
Clark County businesses appear to be taking an upcoming electricity rate hike in stride, though it will increase costs by thousands of dollars each month for some.
Companies will pay an extra 3 to 4.7 percent for their electricity starting Sept. 1, the result of a recent rate hike by Clark Public Utilities. Higher rates will show up on October bills.
The exact increase businesses will pay varies according to how much electricity they use and whether they’re charged for demand — when power consumption spikes for short periods. Some 14,500 business customers pay a commercial rate, while 26 of the county’s largest power users, including SEH America, WaferTech and Linde Gas, fall under the industrial customer rate, according to the utility.
Commercial customers that use 3,000 kWh per month — about twice what a typical household uses — will pay $11.30 more per month, a 4.7 percent increase that would result in a $253.30 bill, according to Clark Public Utilities.
Rate schedules are more complex for larger commercial customers that pay to be able to demand more power at irregular times.
Those that use 20,000 kWh face a 3 percent rate hike, or an extra $42 on a typical $1,427 monthly bill.
Small industrial customers that use 1.3 million kWh per month will pay an extra 3.3 percent, or $2,602 per month on a typical $81,365 bill.
Rates will rise 3.7 percent for the handful of large industrial firms that use 6.2 million kWh monthly, resulting in $12,402 more on a $346,465 monthly bill.
Vancouver-based Rex Plastics fits into the commercial class of customers. The plastic injection molding company runs 11 power-hungry hydrologic presses with heated barrels for melting plastic at 400 to 600 degrees. But its power costs are only 2 percent of gross revenues, said President Rich Clark.
“To be honest, I’m not too concerned about (the rate increase),” Clark said. “From what I understand, we have relatively inexpensive power in this area and CPU (Clark Public Utilities) is run pretty well.”
WaferTech, which pays Clark Public Utilities about $650,000 per month, is facing a $24,000 per month increase in its electricity bill — or about the cost of hiring a few more employees. About 60 percent of its energy consumption goes toward cooling the Camas plant’s two football field-sized clean rooms, while the rest is used in the manufacturing of semiconductors, said Jim Short, the company’s plant manager. The rate increase is a drop in the bucket compared to the company’s total operating costs.
“We don’t like to have rate increases,” Short said, “but it’s not devastating for us.”
Even after the increase, Clark Public Utilities’ commercial rates will average less than 7 cents per kilowatt-hour. Businesses pay an average of 7.26 cents per kWh statewide and 10.19 cents per kWh nationwide, according to the U.S. Energy Information Administration.
Still, rising electricity bills erode the competitive advantage companies gain from operating here, said Bart Phillips, chief executive officer of the Columbia River Economic Development Council.
“Our companies are competing globally against other plants and suppliers who have different cost structures,” Phillips said. “The costs for local plants are increasing, so their competitiveness for selling into global markets will be reduced.”
Local business owners have yet to sound the alarm, however. Electricity costs comprise a small portion of overall costs for most businesses in the county.
“We’re drawing a lot of power into our building because we run large capital equipment, so the rate increase does effect us on our cost of manufacturing,” said Jay Schmidt, vice president of business development for Silicon Forest Electronics in Vancouver. “But it’s not a key driver for our business.”
Clark Public Utilities has raised business rates three times since April 2003, when it passed a 5 percent across-the-board increase for homes and businesses. Rates increased by 2 percent in October 2005, and in January 2009 by 5 percent.
This time, businesses face a smaller rate hike than residential customers, who will be paying 5.7 percent more, because the cost to the utility of serving business customers is different than for residential customers, said Mick Shutt, spokesman for Clark Public Utilities.
“If you don’t have that, you end up with one class subsidizing another,” Shutt said. “It’s just fair that costs be allocated appropriately.”