f you think your company faces tough times these days, imagine being an electric utility.
Confronted with record demand for energy, rising fuel prices and global competition, North American power companies must build new business models if they are to thrive.
Consider the latest test for the U.S. power grid, a series of three interconnected grids spanning 3,500 utility companies and serving 283 million people. A massive summer heat wave pushed electric consumption to its brink.
For the week ending August 5, Americans and U.S.- based companies used more electricity than in any other week in history – 98,583 gigawatt hours of power – breaking the previous record, which had been set just two weeks earlier. The new record was roughly double what Americans consumed during that week in 1982. In California, energy demand this summer crested at 40 percent above the peak reached during the West Coast energy crisis of 2001.
Records also were set this summer in New York, Texas, the Midwest and the mid- Atlantic region, even as the cost of electricity continued to rise throughout the nation.
In April, the average cost of a kilowatt- hour in the U.S. was 10.31 cents for residential users, up from 9.21 cents the same month a year ago. For industrial users, the average U.S. rate went up from 5.17 cents in April 2005 to 5.78 cents a year later.
Given these cost increases, it’s not surprising that the vast majority of Site Selection‘s Top Utilities of the Year are offering some of the lowest rates in the country. In fact, most of the winning utilities have priced their industrial power well below the national average, led by South Carolina’s rate of 4.5 cents and Arkansas’ 4.54 cents.
Attractive utility rates, combined with some of the fastest job- growth markets in the nation, contributed to a central and southern tilt to this year’s rankings. Eight of the winners are clustered between the Ohio River and the Gulf of Mexico, a region known for its abundant supply of inexpensive energy.
But don’t think that this year’s winners received their crowns based on price. Rather, they competed for industrial projects and jobs by adopting innovative strategies to meet the needs of power- hungry businesses and keep their factories humming.
Winning business strategies included new sites and buildings databases; smart growth policies; life science initiatives; programs to create certified sites; alternative energy investments; regional collaboration and innovative worker training.
Site Selection’s Top Utilities used these strategies to outgain competitors in the four territorial benchmarks that determine our rankings: total capital investment; investment per capita; total jobs created; and jobs created per capita. Based upon those criteria, here are the winning utilities, listed in alphabetical order:
Duke Energy (formerly Cinergy)
Plainfield, Indiana
When Duke Energy of North Carolina merged with Cinergy Corp. in April, two electric utility juggernauts became one. But that didn’t detract from Cinergy’s outstanding 2005 performance, which merited it a return trip to the podium as a top utility.
Still operating as an independent utility last year, Cinergy racked up 7,979 new jobs and US$975 million in capital investment from firms the utility helped grow. The largest project serviced by Cinergy was Caterpillar‘s $170- million engine plant in Lafayette, Ind., creating 52 jobs in Tippecanoe County.
Other major projects facilitated by Cinergy included Fidelity Investments‘ $115 million, 1,500- job financial services complex in Covington, Ky.; Cincinnati Financial Corp.‘s $100- million, 505- job headquarters in Fairfield, Ohio; and DADC‘s $50- million, 60- job manufacturing plant in Terre Haute, Ind.
Among the programs that fueled Cinergy’s success were the Indiana Properties Sites and Buildings Database, Community Growth Partnership Program, Permits to Projects (a virtual building site program), Gold Star Marketing Assistance and the Life Sciences Map.
Duke Energy (Carolinas)
Charlotte, North Carolina
With a service territory spanning two states and stretching from the Appalachian chain through the Piedmont, North Carolina- based Duke Energy qualified for yet another top utility award even before merging with Cinergy.
In 2005, Duke helped create 5,416 jobs and $1.15 billion in capital investment in the Carolinas. Topping the list of projects were Cree‘s 300- job, $300- million plant investment in Durham County, N.C.; Dell Computer‘s 1,700- job, $100- million investment in Forsyth County, N.C.; and Benteler Automotive‘s $30- million plant project in Spartanburg County, S.C.
Winston R. Kelley, vice president of economic development for Duke, said that innovative programs contributed to his company’s success. “Duke Energy Carolinas is providing up to $3 million annually for four years to North Carolina community colleges’ manufacturing training programs,” he said. “A similar arrangement is in place in South Carolina through Advance SC … So far, 17 educations grants have been awarded in the Carolinas directed to many innovative initiatives.”
Kelley also cited Duke’s Site Evaluation Project, the utility’s ConsiderTheCarolinas.com Web site, and the CAPEX Predictive Model developed by Lockwood Greene to help identify firms most apt to invest capital in Duke’s 2.2- million customer service territory.
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| Cardinal Health’s investment in Sherwood, Ark., was one of the year’s high points for Entergy Arkansas. |
Entergy Arkansas
Little Rock, Arkansas
Serving 1.42 million people, Entergy Arkansas has long been a statewide leader in economic development. Further evidence came in 2005, when the utility helped Arkansas secure $436 million in capital investment and 2,754 new jobs.
The biggest industrial project of the year came from Atlas Tube Inc., which invested $55 million in establishing a new plant in Blytheville and creating 70 jobs. In other large deals, ITT Koni America LLC announced a $34- million new plant in Searcy and Great Lakes Chemical Corp. announced a $32- million expansion in El Dorado.
Also creating jobs and investing dollars in Arkansas last year were projects from Cardinal Health and FTD.com in Sherwood, Tyson Poultry and ConAgra in Russellville, K- Tops in Colt and Dassault Falcon in Little Rock.
In 2005, Entergy Arkansas’ Office of Economic Development launched a new program, Select Site, in response to advice from site consultants and prospects. The result was a program developed with recommendations by Deloitte Consulting that identifies 50 criteria needed in order to certify a site for industrial development in Arkansas.
Georgia Power
Atlanta, Georgia
A fixture for many years in the top utility ranking, Georgia Power showed no signs of slowing in 2005, garnering 8,938 new jobs and $1.43 billion in capital investment.
Leading the way was an eye- popping $300- million investment from ADP in a new data center in Alpharetta in North Fulton County, which has become one of the nation’s hottest markets for state- of- the- art data centers (see related story on p. 674). Other large investments came from Solo Cup ($55- million distribution center in Social Circle) and Buhler ($50- million primary metals plant in LaGrange).
Georgia Power’s project activity climbed 50 percent from 2004 and included a significant resurgence in manufacturing, bolstered in large part by the state’s elimination of the corporate franchise tax. The utility helped 72 companies set up new locations or expand in Georgia last year.
The Georgia Power Web site kept pace with this change, adding many upgrades and enabling site selectors to conduct more robust searches of the state’s considerable property inventory.
Hoosier Energy
Bloomington, Indiana
Indiana received international headlines this year when Honda selected the Hoosier State for a major manufacturing plant, but Hoosier Energy had already been doing its part to make Indiana a breeding ground for factory growth.
In 2005, the utility facilitated the creation of 1,810 jobs and the investment of $400 million into corporate facilities. Five Star Mines led the way with a $125- million investment in Knox County, where the company is adding 425 workers. Rush Renewable Energy LLC is investing $82 million in Rushville, while Aisin Takaoka Tell City announced a $35- million expansion in Tell City.
Other big investments came from Natural Pork Production in Wayne County ($18 million), MedVenture in Jeffersonville ($17.8 million) and Sunrise Coal Mine in Howesville ($16 million).
“Energy, ethanol, bio- fuel and especially coal projects dominated most of our time, but also generated some of the biggest numbers,” said Peter Lieber, economic development coordinator for Hoosier Energy.
Mississippi Power
Gulfport, Mississippi
www.southerncompany.com/mspower
Everyone knows what happened to the Mississippi Gulf Coast last year. What most people don’t know is what took place after the storms.
Mississippi Power, which serves the hardest- hit areas of Southeast Mississippi including Gulfport, Biloxi, Pascagoula and Bay St. Louis, jumpstarted a remarkable recovery effort by servicing 17 corporate location projects that brought 3,330 new jobs and $210 million in facility investment.
Northrop Grumman, Rolls Royce, BearingPoint, NASA Shared Services, Genesis Manufacturing, SilverCare, Kohler, Farmer Fresh, Teikuro and Tower Automotive made major investments in Southeast Mississippi last year. All benefited from Mississippi Power’s assistance, especially when that help included restoring power following catastrophic weather.
“We’ve added an analyst role and a new industry recruiter,” said Melissa Morel, an economic development analyst with Mississippi Power. “We’ve also added valuable information to our Web site.”
Northeast Utilities
Hartford, Connecticut
Doug Fisher, manager of economic and community development for Northeast Utilities, succinctly captured his company’s 2005 performance when he said, “Results far exceeded targets.”
With 7,131 new jobs and $553 million in new investment, Northeast Utilities brought a lot of high- paying employers to its 4.5- million- resident service area in New England.
Royal Bank of Scotland made one of the biggest announcements in the region, consolidating its North American operations and 1,850 jobs in Stamford, Conn., where it will have a projected 5- megawatt demand for power.
Technology played a key role in Northeast’s success. Fisher’s department launched an improved SiteFinder web site and Economic Development Data and Information site. Both of these sites, along with QuickTracts.com (a database of shovel- ready parcels), have been cited as national best practices.
PECO Energy
Philadelphia, Pennsylvania
A perennial winner of a top utility award, PECO, an Exelon Company, flexed its muscle in 2005 by facilitating $887.5 million in capital investment and the addition of 5,525 jobs to its 3.75- million- person service area.
One of Greater Philadelphia’s largest expansions occurred in Fort Washington in Montgomery County, where GMAC Mortgage announced a move into 450,000 sq. ft. (41,805 sq. m.) to accommodate 2,500 employees in a new corporate headquarters. The $110- million project should be completed in late 2007 and will give GMAC added flexibility to grow its Philadelphia work force.
“Our economic development program continues to evolve,” said Phil Eastman, director of economic development for PECO. “We are collaborating more closely with Select Greater Philadelphia (SGP), a new private, non- profit regional economic development organization that is affiliated with the Greater Philadelphia Chamber of Commerce. Rather than focusing strictly on our five- county service area territory, PECO is increasingly assisting SGP with its efforts to market and provide economic development services for the 11- county, tri- state area (Pennsylvania, New Jersey and Delaware).”
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| RBC Centura’s plan for a new $100- million headquarters in Raleigh is among Progress Energy’s recent economic development success stories. |
Progress Energy
Raleigh, North Carolina
One of the largest electric utilities in the U.S., Progress Energy covers 54,000 square miles (139,860 sq. km.) of service territory in three states – North Carolina, South Carolina and Florida – maintains 11,000 miles (17,700 km.) of transmission lines and 99,000 miles (159,291 km.) of distribution lines, and operates 32 generating plants and 147 generating units. The company also has 8,700 employees.
In 2005, Progress Energy put that infrastructure and manpower to work to secure 10,178 new jobs and $1.52 billion in facility investment. Among the projects was Lenovo‘s 500,000- sq.- ft. (46,450- sq.- m.) campus in Morrisville, N.C., where the company will add 400 workers and spend $80 million to build a new Innovation Center.
GlaxoSmithKline unveiled plans to expand its pharmaceutical plant in the Wake County (N.C.) town of Zebulon. That decision adds 200 jobs and brings a capital investment of $92 million. Grant Forest Products ($200 million), RBC Centura Bank ($100 million) and Valpak ($182 million) also made huge announcements in Progress Energy communities last year.
Progress Energy also was instrumental in convincing federal officials to preserve and expand military installations such as Shaw Air Force Base, the Naval Air Depot at Cherry Point, Seymour Johnson Air Force Base and Fort Bragg.
South Carolina Power Team
Moncks Corner, South Carolina
www.southcarolinapowerteam.com
Comprised of Santee Cooper, Palmetto Economic Development Corp. and the 20 electric cooperatives that distribute Santee Cooper’s power, the South Carolina Power Team serves several of the state’s fastest- growing markets and more than 2 million people.
In 2005, the Power Team helped generate 3,187 jobs and $385.5 million in investment for South Carolina. The 27 projects facilitated by the Power Team included American Gypsum‘s $125- million, 250- job investment, plus several other large deals.
Global Containment announced an investment of $60 million and the creation of 800 jobs. Fruit of the Loom is investing $28 million to add 200 workers; and ISO Poly Firms is spending $25 million and hiring 50 workers.
Among other work, the Power Team last year launched strategic initiatives for industrial site certification and economic development professional training.
Tennessee Valley Authority
Nashville, Tennessee
Serving 8.7 million people, TVA’s power service area covers 80,000 square miles (207,200 sq. km.) in the Southeast. It includes most of Tennessee and parts of Mississippi, Alabama, Kentucky, Georgia, North Carolina and Virginia.
Last year, TVA facilitated $3.6 billion in project activity and the creation of 50,845 jobs. Companies making major project announcements included Gerdau Ameristeel, Jewelry Television Network, Caremark Rx Inc., Tennessee Bun Co., Twin Solutions, T- Mobile USA and Mark IV Automotive.
“Three new megasites were independently certified by McCallum Sweeney Consulting in our service area,” said Glenda Betts, project manager for TVA. “These megasites are generating interest in industrial sites for companies wanting sites that are ready to go and relatively risk- free.”
Tennessee also adopted TVA’s powerful building and site database as the basis for developing a new statewide, Web- based, site selection database.
