Area manufacturers: Raising electric rates may harm local industry

Sunday, April 19, 2015

By DONNA FARLEY

Staff Writer

Area manufacturers believe a proposed increase to industrial electric rates could endanger Poplar Bluff's ability to retain jobs and attract new business.

Plant managers met last week with members of Municipal Utilities to discuss the matter.

The city has proposed a 6.63 percent increase to industrial rates as part of a plan that would also raise residential, commercial and other electric rates.

The increase would result in a combined cost of $500,000 annually for manufacturers in the Poplar Bluff industrial park, said Greater Poplar Bluff Area Chamber of Commerce President Steve Halter, who attended the meeting.

The current industrial electric rates are already higher than the state average, Halter said.

"We need to be looking at long term solutions to reduce that rate to not only retain what we have, but to recruit future manufacturing jobs," Halter said.

Electric rates are among the top seven questions for companies which are considering relocating to the area, Halter said.

The city of Poplar Bluff has a current industrial electric rate of 7.23 cents per kilowatt hour. It would increase to 7.71 cents per kilowatt hour under the proposal, which is expected to go before the city council in May.

The state average was 5.52 cents per kilowatt hour in January for industrial rates, according to the U.S. Energy Information Administration.

"Any type of increase in industrial rates makes it more challenging for our manufacturing base to operate and compete and it also makes it more challenging to recruit someone to come into the soon to be vacant NORDYNE building," Halter said.

Among Missouri's electric cooperatives and city-operated electric companies and, Poplar Bluff's industrial rate would go from the 31st highest in the state to the 24th highest out of 58 companies. This information was presented to the Municipal Utilities Advisory Board this month.

The increase would put Southeast Missouri at a substantial disadvantage, according to Brandon Richardson, plant manager of Gates.

"My concern from a business perspective, is that it is a significant amount of money that the Gates Corporation is going to have to absorb," Richardson. It makes it harder for us to compete because we cannot pass those cost increases on to our customers. It puts us in a very unfavorable position."

The manufacturers have to compete on a global scale to remain viable as a business, Richardson said. Their competitors in China, for instance, will not have the same problems, he said.

"Any time a rate increase for manufacturers is considered, it needs to be proceeded with very cautiously," Richardson said. "Gates is not in support of this."

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