Utilities: Big Fish In a Murky Pond

ow can you help your region grow when you’re busy managing your own growth?

       
That is one of several questions facing the economic development arms of utilities big and small around the United States. As a recent benchmarking and best practices survey by the Utility Economic Development Association found, utilities are taking hard looks at the metrics and financial performance of their ED initiatives.

       
“Deregulation is a part of the reason that our industry is changing so quickly,” says Lisa Payne of Louisville-based LG&E Energy Corp., chair of the UEDA research committee. “Economic development generally has been on the regulated side. We have to figure out where it best fits.”

       
Sometimes the hard looks result in hard decisions, such as the step taken by PP&L to eliminate 600 jobs, including the bulk of ED team. “Implicit in our balanced strategy approach is a commitment to aggressively manage our costs,” said company Chairman, CEO and President William F. Hecht in announcing the 7-percent work force reduction.

       
Realignment is evident throughout the power generation and distribution cycle, as proven in late July with announced downsizing by GE Power Systems, which is cutting 2,500 jobs over the next nine months at plants in Greenville, S.C. and Schenectady, N.Y., even as it moves some generator manufacturing activity to Schenectady from Pensacola in order to free capacity in Florida for producing a new line of wind turbine blades. The overall dip in electrical generation equipment orders is to blame for the cutbacks – gas turbines, for instance, are expected to experience an 80-percent drop in orders over the next two year, a GE spokesman said.

       
Whereas the past saw utilities grappling to traverse the terrain they served with infrastructure, utility economic developers face another obstacle: the sheer geographic reality of their own organizations. First, their huge territories and interwoven functions sometimes work at odds with the notion of promoting one region over another. Second, in an age of “focusing on core strengths,” the job of utility ED often is left on the periphery.

       
But Payne points out that the merger and acquisition process is actually prompting utilities to “create new economic development initiatives, look for new products and services and how they can be combined. It’s still a very important part of each company, especially in regard to the distribution process within each state. I think there is a place for economic development, and that we are in a changing environment right now and we are looking to find the best place for that department to stay and help the company.”

       
Given the maelstrom of activity, it’s hard to believe anybody had time to respond to Site Selection’s Utility Companies Editorial Questionnaire for 2001. But respond they did, and from all indications, the teams we have selected from that pool for our Ten Top Utilities respond even more heartily to the clients and communities they serve.

       
Of course we recognize them based foremost on the hard numbers (both new jobs and new capital investments in general and per capita). But we also look at them through the more subjective lens of impact on their service areas through such un-measurable (and immeasurably valuable) criteria as innovative partnership programs and expanded site selection services.

       
“I think there is a place for economic development, and that we are in a changing environment right now and we are looking to find the best place for that department to stay and help the company,” says Payne.

       
Here, in alphabetical order, we give those that helped their clients and their communities their just desserts as our Top 10 Utilities of 2001.

       
Bolstered by its Web site and by media training for the communities it serves, Alliant Energy, whose parent company is based in Madison, Wisc., helped bring 3,804 new jobs and more than $157 million in new capital to the heartland. Among the companies pursuing projects were Cargill, Civco Medical Instruments, Bio Growth, Rubbermaid and Worley Warehousing.

       
Alliant offers water and steam services as well as electricity and natural gas, but the bulk of its sales are in electricity, with 41 percent of those sales coming from industrial customers in 2001. The company is building a $600-million 1,100-megawatt natural gas combined-cycle power plant in western Michigan in partnership with Dallas-based Panda Energy International, expected to become operational in 2004.

       
Yes, the company is based in Indiana, even though it’s most associated with Cincinnati, a city which draws a lot of its ED power from Northern Kentucky. Such is the cross-pollinating nature of this tri-state area (see “Way to Go, Ohio“). And such is the nature of one of the nation’s dominant utilities, which helped to attract 6,748 new jobs and more than $669 million in new capital to its service area, which spans some 25,000 square miles in those three states.

       
“Teamwork continues to be the key to our success,” writes Scott Fulford, manager of economic development marketing, echoing comments he’s made almost annually as Cinergy consistently cracks our Top 10. Helping them get there this time around were a $100-million warehouse location by Indianapolis stalwart Eli Lilly (further expansions were announced this spring); a $138-million expansion by North American Stainless in Carroll County, Ky.; and a $36-million corporate office center location in Mason, Ohio by LensCrafters.

       
“Company management recognizes how communities benefit from our support and services, as well as how we can benefit the bottom line of the corporation. Continuing our regionalized approach in 2001, our Field Economic Development Representatives directed their time and expertise to meet the needs of customers within their localities in three key areas: community development, existing industry support and marketing.”

       
Helping to attract 9,000 new jobs and $750 million in new investment in 2001, Columbia Gas of Virginia, a NiSource company, is a vital link for businesses that locate in its service area, which comprises 65 percent of the land mass in the very hot location of Virginia.

       
“The big project was Capital One,” says Elizabeth Moran of the company’s decision to bring gas service to its $700-million, 2-million-sq.-ft. (185,800-sq.-m.) campus location, now under construction in Goochland County, outside of Richmond. Other projects included a $15-million investment by Motion Control in South Hill.

       
With the acquisition of natural gas provider MichCon, DTE Energy’s service area almost tripled to 21,000 square miles, and its customer list topped three million. You might think that would strain some resources. Instead, the growth merely enhanced the utility’s ED outreach, in partnership with dozens of development organizations around the state. The 270 projects completed during 2001 resulted in 19,856 jobs created and almost $4.3 billion in new investment, helped in a major way by the Pfizer location in Ann Arbor, as well as the $95-million training center being built in Detroit by the United Auto Workers and General Motors.

       
One of the major tools DTE wielded was the Michigan Site Network, a database developed in conjunction with the Michigan Economic Development Corp. and the Michigan Economic Developers Association in order to place available sites and all their specs in the sights of prospecting companies. With GIS integration, brownfield information, and more than 200 users updating property listings every week, the Web site presents a comprehensive real-time look at commercial and industrial properties in the state’s 83 counties. And like a country club looking for late dues, it even features a “Hall of Shame” displaying the names of users/members who have not updated property information in over 30 days.

       
Thus was DTE, founded 99 years ago, able to play a major part in helping the state to manage its real estate portfolio much like a corporation itself would.

       
“Particularly noteworthy in 2001 was the leadership role assumed by our development team in convincing the collective commercial real estate community throughout Michigan to adopt MiSiteNet as their ‘official’ commercial listing service,” writes Lennox E. Sheppard, manager, economic development, for DTE Energy.

       
One of two Pennsylvania utilities to garner Top 10 status (although its holding company is headquartered in Akron), FirstEnergy brought 6,251 new jobs and more than $1.7 billion to its service area of 4.3 million customers, stretching from the Ohio-Indiana border to the New Jersey shore. Much of the utility’s effort is concentrated in northern and eastern Ohio, including high-functioning partnerships with the chambers of commerce in Youngstown-Warren, Akron, Cleveland and Toledo. Among the companies locating or expanding in the FirstEnergy service area were Bayer Corp., American Express, Whirlpool and Ford Motor Co.

       
Typical of the direction major utilities are headed, FirstEnergy recently inked a service agreement with Corning Corp. that will entail energy-use analysis at 29 of the company’s facilities in 10 states, many of them beyond the utility’s normal service area.

       
The Peach State’s most visible utility helped to bring in 10,221 new jobs and $761 million in new investment in 2001. Chief among the locations were a $30-million, 1,000-employee manufacturing plant in Norcross by Project Gene; a $40 million, 225-employee Procter & Gamble distribution facility in Albany and the $100-million Ritz Carlton Lodge at Reynolds Plantation in Greensboro, a project which – no doubt much to the company’s liking – the utility categorized as “Non-classifiable.”

       
The utility’s success came in part because its ED team went above and beyond the usual menu of site tours pamphlets by taking the lead in analyzing industry trends. Special reports compiled by the utility included a look at the state’s scope of automotive manufacturing and “New Options for Urban Site Seekers” in central Atlanta. The utility’s interest in its home city extends to even lending that city’s Central Atlanta Progress organization one of its urban affairs executives.

       
Georgia Power’s Web site services were carried a step further by the addition of personalized e-mails containing concise site reports to site seekers. And unlike many other utilities, Georgia Power’s position in its market allows the offering of retention and expansion incentives as well as services. That is as it should be, given that the company became the state’s first economic developer in 1927.

       
Serving more than 1.1 million combined electricity and natural gas customers in 99 of Kentucky’s 120 counties, LG&E Energy Corp. has helped entice and then weathered the buyout/merger sequence officially concluded in July by E.ON’s purchase of new LG&E parent Powergen. One reason for the utility’s attractiveness is how it continues to get it right when it comes to economic development. In 2001, that meant getting 3,689 new jobs and more than $1 billion new dollars for the Commonwealth.

       
Among the major locations were new plants for Covers Unlimited and Quadrant Technology Corp. The ED team, spread among Louisville, Lexington and Henderson, helped LG&E garner the No. 1 ranking for customer satisfaction among mid-size business customers during 2001, according to J.D. Powers and Associates. The team’s series of 2001 postcards earned first place in the printed pieces/direct mail category of the Better Communications Contest recently sponsored by Utility Communicators International. Special services offered by the department include tax analyses, financing and time-of-day incentive rates.

       
To further enhance the attraction of Pennsylvania’s Keystone Opportunity Zones (KOZs), PECO Energy established a new KOZ electric tariff rider in 2001, allowing for reduced electric rates if the newly arrived company increases employment in the KOZ by 20 percent or makes a capital investment there equivalent to 10 percent of company gross annual revenue.

       
Such an innovation was just one way that PECO helped to attract 8,786 reported new jobs and more than 890.7 million in capital investment. Among the year’s highlights were the $32-million Research Enterprise Center at Drexel University (devoted to life sciences), the move of 800 employees into offices in Chester City by Synygy, the location of a $61.5-million distribution center by Marshall’s that will employ 1,300 and the $40-million R&D investment by GlaxoSmithKline in the Renaissance Park in Montgomery County.

       
Part of the larger PPL Corporation that serves some six million customers in the U.S., U.K. and Latin America, PPL Electric Utilities is based in the same city as its parent. And its hew headquarters is part of that town’s current wave of rejuvenation and redevelopment. Meanwhile, in 2001, the development team of 13 community development directors and eight ED professionals helped to bring 8,833 new jobs and more than $288 million in new capital to its service area of 10,000 square miles in eastern and central Pennsylvania.

       
Not only did the utility offer a deep menu of services in 2001, it also kicked in some capital of its own, primarily to support a host of business park projects like Lehigh Valley Industrial Park VI.

       
In partnership with several central Pennsylvania ED groups, PPL has helped drive the Focus Central Pennsylvania program, which earlier this year garnered the “2001 Economic Development Partner of the Year” award from the Pennsylvania Economic Development Association. Equally impressive was its Blue Ribbon Partnership awards program, which provided as much as 75 percent of the cost of marketing initiatives (up to $6,000) to local and regional ED organizations. Among the major projects attracted were a $21-million investment by CTC, a $70-million investment by Wal-Mart and a $7-million expansion by Best Foods.

       
Based in a state where the utility scene is dominated by a name associated with a university in another Research Triangle city, Progress Energy held its own in 2001, helping to attract 6,958 new jobs and almost $987 million in new capital to projects in its 50,000-sq.-mile service area in parts of the Carolinas and Florida that came about as a result of the December 2000 merger between Carolina Power & Light and Florida Progress.

       
“This increase in our service territory (an in the size of our organization) enables us to better serve our prospects, who might be considering several states in the Southeast,” writes research analyst Sarah Walas, who notes that a new commercial/industrial service rider in Florida gave the utility some discounting flexibility in working with business customers. Among the new and expanding companies were Akzo Nobel, International Paper, Borg-Warner, Celestica and Siemens.