Maine Cities’ Power Grab aimed at Keeping Business
1.19.2011 – After Brewer, Maine, lost a manufacturer due to high electricity costs, it became obvious how a new business park in town could be made “indispensable.”
“The immediate thing that came to mind was energy,” said D’arcy Main-Boyington, director of economic development for the City of Brewer.
The cities of Brewer and Old Town, Maine, are exploring ways to reduce the electricity costs for potential tenants in new business parks that include light industrial enterprises. With attractive electricity rates, Main-Boyington said she hopes to diversify the economy of the city and bring in employers that can establish high-precision manufacturing into the area – calling it the “holy grail” of industries.
New Brunswick is also no stranger to the challenges posed to business by high energy costs.
In December, 2009, the New Brunswick Business Council, the Canadian Manufacturers and Exporters and the New Brunswick Forest Products Association produced a glossy, eight-page brochure communicating their position on the proposal to sell NB Power to Hydro-Québec, deeming the rates of the province not to be competitive.
In the brochure, Maine was given as an example of a jurisdiction where, as industrial power rates doubled between 1991 and 2008, employment in the goods-producing sector was nearly halved, with 42,000 jobs lost.
Main-Boyington said high electricity costs hit the Brewer in a personal way, when Lemforder Corp. shut down its manufacturing plant in the town.
The plant employed more than 400 people at its peak and provided steady jobs with good benefits. “They left … entirely because of electricity rates,” said Main-Boyington.
Maine cannot compete with the rates offered in other parts of North America, such as in Mexico, where the company could purchase electricity at the quarter of the cost, said Main-Boyington.
However, Main-Boyington said she believes if Lemforder Corp. could have cut its electricity costs by 20 per cent, it would have kept the Brewer plant open.
Brewer didn’t let Lemforder Corp. go without a fight. The city worked with the company to explore different ways to cut its energy costs, such as self-generation and co-operating with other businesses to generate power. However, none of the options worked out, said Main-Boyington.
After the plant closed, the city looked to build a new business park with the utilities needed to run a manufacturing business. In order to offer tenants low-cost electricity, Main-Boyington said, the city is exploring options such as purchasing power from sources other than Bangor Hydro Electric Company, or municipal self-generation.
Since all-new infrastructure will be needed for the park, it would be possible for the city to run its own power to businesses in the park, said Main-Boyington Any city-lead initiatives to provide businesses with lower-cost electricity would have to be approved by the Maine Public Utilities Commission, said Main-Boyington.
The actual construction of the US$12.8-million park won’t begin until spring 2012, with the first tenant slated to be Maine Liquid Methane Fuels. The park will be backed by city funding and grants, said Main-Boyington.
Despite the steep cost of the project, Main-Boyington stressed the need to foster value-added business in the city.
“We don’t want to be stuck with just becoming a retail centre,” said Main-Boyington. The City of Old Town is in the process of planning a similar business park that could offer tenants reduced electricity rates.
“If we can produce cheap power for the tenants, that’s certainly a draw that other parks do not have,” said David Wight, project specialist for the city. The 160-acre Energy and Enterprise Park could offer tenants electricity at a reduced rate by using methane gas produced by a nearby landfill. A nearby mill also generates its own electricity and biogas, said Wight, which could also be used by tenants in the new business park.
Wight said the $7-million development provides an opportunity to further economic development in the area, and could help keep taxes at a reasonable rate.
“We need to bring more business in to help with that tax base,” said Wight.
Mark Arsenault, the CEO and president of the New Brunswick Forest Products Association, said the rural nature of New Brunswick’s mills would not make them good candidates for generating electricity that could be shared.
However, he did note the industry has looked at mills’ ability to generate energy, through the processing materials such as sawdust, bark and wood chips.
“There are ways of thinking outside the box,” said Arsenault.
David Plante, New Brunswick vice-president of Canadian Manufacturers and Exporters, said the projects of Brewer and Old Town are “a clear case of the impact of rising energy prices on the industrial sector and jobs.”
However, he said such a model would not apply to New Brunswick.
“That’s primarily due to the fact that in New Brunswick, we have a vertically integrated public utility. Whereas in Maine, it’s a competitive marketplace that has competition between electricity generators,” said Plante.
In addition, current regulations create barriers for anyone who wants to get off the grid, said Plante, such as exit fees.
Plante did note, however, that there may be some utility in applying a similar concept to New Brunswick.
“There is some validity in the concept as far as creating areas in the province that … utilize the natural advantages of certain areas of the province.”
A copyright article from the New Brunswick Business Journal, Wednesday, January 19, 2011 – with files from the Bangor Daily News.