Energy prices pinch businesses

Utilities pass on natural gas increases to customers, businesses may do the same

With dropping mercury levels in the winter comes rising energy bills for Northwest businesses, and increased fuel costs will chill power customers even more this year.

The rising cost of natural gas, exasperated by this year’s disastrous hurricane season, has led to price hikes from utilities across the state. Nearly 20 percent of the nation’s electricity is generated by burning natural gas, and more than one third of U.S. industrial and manufacturing plants use natural gas to make products.

Clark Public Utilities produces nearly half of its power supply at its natural-gas-burning River Road Generating Plant. The other half is purchased from the Bonneville Power Administration. According to the utility, the River Road plant produced energy at a lower cost than the BPA when it came online in 1997, but rising gas prices have changed that. As a result, CPU’s three-member commission unanimously voted to raise rates to businesses 2.1 percent to cover a $16 million shortfall.

"If you look at what natural gas prices have been doing," said Mick Shutt, CPU spokesman, "(2.1 percent) is insignificant."

Northwest Natural raised prices for commercial and residential customers more than 12 percent.

CPU serves nearly 12,000 commercial customers, and Northwest Natural provides gas to nearly 5,000 Vancouver-area businesses.

Rising energy prices were the number one concern for business owners in October, according to a survey conducted by PNC Financial Service Group. Forty percent of business owners ranked higher energy prices as the issue expected to have the greatest negative impact on their company’s performance, followed by interest rate increases at 21 percent of those responding. Half of those surveyed planned to pass on cost hikes to consumers through price increases, and more than two- thirds of those raising prices plan to increase prices by 3 percent or more.

Silicon Forest Electronics Inc. in Vancouver is a heavy consumer of energy in its manufacturing of electronic assemblies. With electric and gas costs of more than $100,000 over the past two years, President Frank Nichols said even a small increase is significant. Nichols said rate increases will have a significant impact, as the company will have to absorb higher costs. Silicon Forest is trying to find ways to conserve energy.

"We have done a lot of things already," said Nichols. "But we are a heavy user in terms of our processes. It’s difficult to cut costs, we have to figure out how to control them by being more efficient."

Shutt said there has been limited feedback on the rate increase, but Clark Public Utility is hearing an overall concern about the costs and pressures of running a business.

"Some of the larger customers have expressed more interest in conservation and energy management than they have in the past," said Shutt. "That is a distinct change that has come about in recent months."

Reducing energy consumption isn’t as simple as it is for residential users.

"With commercial customers, there is such a cross section of energy use – lighting, heating and cooling, process efficiency, motors and compressors – many of those can be a point of conservation and efficiency," said Shutt.

Clark Public Utility offers programs and resources to help businesses become more energy efficient. A recent practical energy management training course for commercial users attracted 25 customers – a good turnout, said Shutt, and CPU will make on-site recommendations for businesses.

Total Energy Concepts, a Vancouver company that works with homeowners and businesses to create energy efficient heating and cooling systems, has quadrupled sales since last year. The fifteen-year-old company has trouble keeping up with demand and is hiring any qualified employee it can.

"As soon as the heating oil went to $3 a gallon," said owner John Lower, "our phone has not stopped ringing.

Total Energy Concepts specializes in installing geothermal heating systems and heat recovery ventilation units in commercial and residential buildings.

"For the first time people are calling and saying they want their gas furnace out of their house," said Lower.

He said there is no question higher energy costs are driving new business for the company. Lower said his clients have realized savings of 60 to 80 percent versus natural gas and return on interest is realized within five to seven years, down from seven to 10 years because of higher energy costs.

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