Utilities

Power Costs in Kentucky, West Virginia Lowest in South

The U.S. Department of Energy released its annual ranking of energy costs and it showed that Kentucky has the lowest costs of electric power in the U.S. Kentucky's average cost of electricity is just over 3 cents per kilowatt-hour. The national average is 5.04 cents per kilowatt-hour. West Virginia followed Kentucky as the Southern state with the second-lowest electric power costs.

Duke/Fluor Daniel Joint Venture Powering Down

Since 1989, the partnership between Duke and Fluor Daniel has flourished in the building of new power plants. That partnership, commonly named Duke/Fluor Daniel, is being dissolved. Officials with Fluor Daniel cited the lack of demand for new power plants as the reason the joint venture is being shelved.

Duke Power Economic Development Team Ramping Up

Duke Power wasn't the only electric or gas utility that backed off economic development efforts in the face of deregulation. But it certainly is one of the first to ramp back up in the economic development game. Duke has launched a number of initiatives designed to make the utility a major economic development player in Carolina region. One initiative includes a 50 percent reduction in electric rates for qualifying companies that take one or more of Carolina's expanding list of vacant buildings. Duke has also set aside $1 million in incentives that can be used as a deal-closer for smaller economic development projects in North Carolina.

EDITORIAL

Utilities are Ramping Up -- That Means One of Your Best Southern Site Searching Friends is Back

By Mike Randle

For decades, the South's utilities were the second-most powerful economic development entities at creating jobs in the region. Some folks would argue that their utilities were more powerful than their state economic development agencies at making your deal a reality during that time. Regardless, one thing is for certain: when the prospect of deregulation -- not the passing of deregulation by state lawmakers -- swept the region in the 1990s, many economic development departments of major utilities in the South were gutted, if not dismantled altogether.

Why did many of the South's utilities feel such a sense of urgency in the mid-to-late 1990s to get out of the business of treating site searchers like royalty, while never admitting or announcing that they were moving in that direction? Well, the primary reason must have centered on the assumption that under deregulation, major utilities in the South would sell their product outside of their designated territories -- or outside the state they represented -- therefore, there would no longer be allegiances to their historical territories. If that were the case, what's the utility's motivation to operate a very expensive department of economic development professionals designed to bring business to their state, when much of their product -- presumably -- would be sold out of state?

By the way, the reason utilities in the South never announced a downsizing of their economic development departments had to do with one thing: a little chance scenario where deregulation was not passed by state lawmakers in the time frame that it was supposed to pass. If you read articles on the subject and the debate surrounding it back in the mid-1990s, we were all supposed to be enjoying lower utility rates by now as a result of dereg. Uh, someone missed that deadline.

I witnessed the gutting of utility economic development departments over the years personally. I recall visiting Florida Power in 1992. There, Ed Schons showed me the first computer disc I had ever seen that was chock-full of data any site searcher would need. At the time -- pre-Internet -- it was cutting edge marketing. Schons' economic development department, I would estimate, had about 30 employees in 1992. By the end of the '90s, Schons was the only one left in the department.

The close-the-hatch mentality of utility economic development groups in the '90s wasn't exclusive to Florida Power (now Progress Energy). In fact, nearly every major utility in the South downsized their ED departments. There were some exceptions. Mississippi Power and SCANA come to mind. With dereg looming, those two continued to get their hands dirty working deals. But Southern Company cousins of Mississippi Power, such as Alabama Power and Georgia Power, reduced their departments dramatically. That's changing.

Now it's 2003 going on 2004. Interestingly, economic development departments of utilities in the South are ramping up to assist your deal like they did for decades before the prospect of dereg blew their minds. Even TVA is back in the game. The expansion of utility economic development groups is a strong indication that the prospect of deregulation has dimmed in many states in the South. That's probably a good thing for site searchers.

At any rate, it's very encouraging to see economic development departments of utilities throughout the region figure out that what they did for more than nine decades wasn't such a bad thing after all. It's also a secure feeling that the folks charged with delivering one of the most basic and important products in our daily lives -- energy -- is apparently out of entrepreneurial endeavors, something they failed at miserably in the trading sector.