Industry seeing red in Grid plan

A hike in electricity distribution costs proposed by National Grid has commercial customers like Polytop Corp. concerned about the impact on their bottom line. At left, Polytop processor Ricky Ogunwomoju at work in the company’s North Smithfield facility. More

To continue reading this article, please do one of the following.



ENERGY

Industry seeing red in Grid plan

PBN PHOTO/DAVID LEVESQUE
ENERGY CONCERNS: Polytop Corp. processor Ricky Ogunwomoju operates a machine that uses a significant amount of electricity. The company fears a proposed change in energy rate setting will hurt its bottom line.
Posted 9/14/09

Toray Plastics of America in North Kingstown is the kind of business that state leaders salivate over. The company employs just shy of 600 people, pays $73 million in wages and vendor purchases, creates millions in economic impact and anchors the Quonset Business Park. But a hike in electricity distribution costs proposed by National Grid would cost the company $586,735 more a year and quash any future expansion or job creation.

“We need to bite the bullet to survive, but we’re losing competitiveness,” said Shigeru Osada, Toray’s senior vice president for engineering and maintenance.

This fall the R.I. Public Utilities Commission (PUC) will mull National Grid’s proposal to increase its rates and change the formula that sets them. For most small commercial customers the company says, monthly rates will increase 7.1 percent, with larger companies seeing increases ranging from .8 percent to 4.4 percent. The very largest industrial companies, National Grid says, will see a rate decrease of 1 percent.

Osada doesn’t buy it. National Grid’s figures do not incorporate proposed increases for other charges that Toray and many other companies pay. And the widely circulated sheet assumes that the PUC accepts National Grid’s proposals in its entirety.

“The public doesn’t know this,” he said sitting in a conference room at the plant that manufactures film with uses that range from snack food packages to holograms on credit cards to digital prints at CVS/pharmacy.

Osada estimates Toray’s bill from National Gird would rise 23 percent to $3.18 million a year if the PUC adopts the proposal. That price includes only the delivery of the electricity and not the actual energy, which Toray purchases directly from suppliers. The half-million dollar increase would come on top of a $548,995 annual increase the Tokyo-based company saw earlier this year after National Grid raised its transmission charges.

Osada said much attention has been paid to National Grid’s proposal to increase most residential rates by 11.2 percent and rates for low-income residents by 20.5 percent, but that fails to tell the entire story.

In essence, National Grid has asked the PUC to approve a guaranteed rate of return of 8.98 percent that would provide its shareholders up to an 11.6 percent return on equity while covering the costs to maintain and upgrade its infrastructure, support its pension obligations and meet all its other obligations. Right now it is allowed a 10.5 percent return on equity, but its actual return last year was 1.18 percent because of the underlying rate structure, said National Grid spokesman David Graves.

Next Page
Calendar
PBN Hosted
Events

Two Great Programs...One Great Event. PBN's Annual Celebration of Growth and Innovation is now underway. 2014 applications are now available. Deadline August 1st.
  • Healthiest Employers
    Celebrate with the Healthiest Employers in RI on August 14th at the Providence M ...
  • 40 Under Forty
    Thank you to our sponsors and to all those who attended the 10th Anniversary of ...
Advertisement
Purchase Data
Book of Lists
Lists
Book of Lists cover
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.
Data icons
Data can be purchased as single lists, in either Excel or PDF format; the entire database of the published book, in Excel format; or a printed copy of the Book of Lists.
  • Purchase an e-File of a single list
  •  
  • Purchase an e-File of the entire Book of Lists database
  •  
  • Purchase a printed copy of the Book of Lists
  •  
    National
    Local
    Latest News
    Advertisement