Proposed electric rate hike raises ire from area manufacturers
by Matt Shinall
Feb 17, 2012 | 3267 views | 0 0 comments | 13 13 recommendations | email to a friend | print
A proposed electric rate increase drew attention from some of the area's largest manufacturers as representatives attended Thursday's meeting of the Cartersville City Council from as far as Missouri and New Jersey.

During its first reading, the proposed ordinance garnered attention from both locally owned and national manufacturers. Those in opposition took their turn at the podium for nearly 45 minutes, expressing to the council their disapproval of the motion.

The proposed rate increase stems from a recommendation made following a cost of service study conducted in 2011 and presented in December as a result of increasing energy costs.

"Our wholesale electric costs have continued to increase as a result of environmental costs at our coal plants, increases in nuclear fuel and reduced off-system sales. This required that we adjust our retail rates. In 2011, we had a cost of service study completed to reapportion costs across the rate classes. This study was performed by an independent, outside firm using a methodology consistent with electric municipalities across the state of Georgia," said City Electric Department Director David Myers.

In addition to corporations and their representatives, Thursday's meeting also brought attention from the Georgia Association of Manufacturers voicing advocacy for local member businesses.

"I think we've reached a point where there's a great concern from your manufacturing members here in this city about what the future is going to hold in terms of their electric rates and their ability to compete," said Clay Jones, GAM vice president and general counsel. "Manufacturers pay close attention to these decisions, particularly on energy. ... We just ask that in making your decision, proceed with caution and be careful not to adopt rates or rate increases that place an unfair portion of what you need to recover on the manufacturing class."

A complaint heard several times from business representatives was the timing of this proposed rate increase when revenues are down across all industries. Speaking out of concern for already diminished profit margins, John Wittenburg, principal of Southern Yarn Dyers, asked for consideration to postpone the rate increase.

"I'm here speaking about an increase of any kind. Our business, like so many others in the area is volume driven and economic conditions in this city, state, county, United States are such now that we are suffering and we are basically in a survival mode. So we don't need any downward pressure on our margins, which are paper thin already. I would ask you to postpone this rate increase to a better time after we have enticed other businesses and brought more jobs to the city of Cartersville. In my opinion as a citizen, we need to assert ourselves as the place to be for business," Wittenburg said.

Echoing the concerns of Wittenburg about the current economic situation, Charles Chapman, Shaw Industries group manager for energy and reliability, cited corporate energy rate comparisons placing the city of Cartersville among the company's most expensive electricity providers.

"As we looked at your rates, from a national prospective you are probably our fourth or fifth highest electric provider nationally," Chapman said. "As you look at north Georgia and the Southeast, your rates are consistently in the top two or three. ... You are considerably higher than what we pay on average.

"It's in a range within north Georgia 10 [percent] to 15 percent higher than we pay to other utility providers in north Georgia. When you look in the Southeast, it's 20 [percent] to 30 percent higher -- and that's without this proposed increase. We obviously are still in a downturn, our business is still considerably down from where it was and we would ask that you would please give consideration to further reviewing more details and more facts regarding the increase."

These comparison numbers were before Thursday unknown to the council and both Councilmen Kari Hodge and Jayce Stepp requested further comparisons from Shaw and other manufacturers presenting. Such comparison figures had previously been requested by the city but were not provided by the manufacturers before the first reading.

A professional consultant, Jay Pollack of St. Louis, hired by Anheuser Busch, Linde and Shaw to review the cost of service study was also present Thursday. Pollack argued the city's proposed rate change was disproportionate, placing too large of a demand on manufacturing.

Following the public hearing, Cartersville Mayor Matt Santini thanked all those speaking at the meeting in addition to the city's electrical staff.

"To all the manufacturers that have taken time to come here and all the customers of the city of Cartersville, we thank you for bringing jobs and investment here. And I applaud David Meyers and the city staff for putting in an awful lot of time, energy, resources, blood, sweat and tears, on both sides, trying to get into a position where things can move forward for the best of everybody," Santini said. "We don't take your business lightly at all."

If approved, the proposed rates will take effect in March.

Another item of importance to manufacturing and warehousing, the issue of freeport, was on the agenda but was removed during the meeting due to further necessary conversations with the school board. Freeport is a tax on inventoried goods benefiting local schools, however, many communities across the state and nation have approved an exemption of freeport as an incentive for affected businesses. Santini called the matter "one of the most important things we can do" in regard to economic development.

Also on the agenda Thursday were several other items:

* First reading of an amendment for language modification to the utilities ordinance regarding electric rate/rider.

* Reappointments to both the planning commission and Etowah Area Consolidated Housing Authority were all recommended and approved.

* The council approved a contract with Southland Engineering for engineering services in the construction of a canoe/kayak launch site on the Etowah River at the Leake Mounds. This budgeted item of $7,450 is in coordination with a Georgia Department of Natural Resources grant and a cash donation from the Coosa River Basin Initiative for the projects completion.

* An insurance settlement was approved in the amount of $10,565 for personal injury sustained during an automobile accident involving a city employee at which the city was determined to be at fault.

* A change order was approved for the installation of cables during the Main Street Gateway project.

* The acquisition of a property on Douglas Street was approved for the amount of $17,123, but not to exceed $20,000 in case of unexpected costs during closing. The property and improvement costs are covered under the Community Development Block Grant Program for the construction of affordable housing.

* A contract with low bidder C.W. Matthews for the resurfacing of three streets was approved for the amount of $351,675.75. The project will be funded from a Georgia Department of Transportation grant, a claim on a bond and from Special Purpose Local Option Sales Tax funds.

* Water department repair sleeves were approved at a cost $9,226.

* The December 2011 monthly financial statement was approved.