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Friday, December 12, 2008

DISCUSSION: A CONVERSATION WITH CANTON ECONOMIC DEVELOPMENT DIRECTOR ROBERT TORRES

The STARK COUNTY POLITICAL REPORT (The Report) touched base with Robert Torres, Director of Economic Development for the city of Canton this past week.

On the American Electric Power (AEP) rate increase. The Report asked Torres whether or not he had been contacted by AEP in his capacity as Canton's economic development person and asked to appear on behalf of AEP at the Canton hearing (Glenwood Middle School - October 16th).

The Report noted to Torres that it appeared, because of the number of economic development types testifying, that AEP had gone out and solicitied these folks in sort of a coordinated fashion to be at the hearing to buttress the AEP request for a 52%/62% increase in AEP/Ohio Power.

Torres denied that Canton was part of a coordinated AEP effort. Torres expressed regret (The Report's word) that Canton had made any appearance at all because many at the hearing took his statment (speaking for himself) and Mayor Healy's statement as being pro-AEP rate increase. He said Canton should have remained on the sidelines and neutral as Canton needs an economically viable AEP/Ohio Power while keeping business/industry competitive.

Mayor Healy did eventually issue a supplemental communication expressing concern about the financial stress that the requested increase would cause to Canton business, industry and residents.

On government giving subsidies to lure to businesses into Canton. Torres said that whether or not subsidies are granted in dependent on a cost/benefit analysis. He cited a number of examples to give the concreteness to his position.

Torres talked about a business which was 99% completed in terms of relocated to Canton. At the end of the process, the ownership asked about the availability of a subsidy. Torres' response was to say none were available in light of the fact the the business was not going to be backtracking on the relocation when the process was at the 99% completed stag.

Another example. If a business, let's say a retail pizza business operation expresses interest in relocated to Canton. Torres says there would be likely be no chance that Canton would offer any kind of subsidy since Canton has as many pizza businesses as it needs.

Asked about doing economic development in times like these (i.e. the United States has been in a recession since December, 2007), Torres said that tough economic times like these make it imperative that economic planners get very creative in luring and maintaining new businesses and that he welcomed the challenge.

2 comments:

Sandy Theis said...

Today's Portsmouth Daily Times has a nice overview on AEP's rate hike:

OSCO joins others against AEP
By FRANK LEWIS
PDT Staff Writer
OSCO Industries, Inc. of Portsmouth has petitioned the Public Utilities Commission of Ohio not to grant American Electric Power a 52-percent rate increase through an Electric Security Plan.

In a letter to the PUCO in Columbus, John Burke, president of OSCO Industries says the company's facilities consume about 65,000,000 Kilowatt hours of electricity annually at an aggregate cost of almost $4 million.

"If fully implemented, AEP's proposed rate increase will cost OSCO well over $2 million in additional annual expenses by 2011," Burke wrote. "It is interesting to note that in 1997 OSCO built its newest facility, which utilizes electricity for melting iron, in Ohio in AEP's service area because of the competitiveness of AEP's electric rates and the presumption that AEP would continue to manage its business in a cost-efficient manner."

Burke told the PUCO that OSCO did not endorse deregulation back in the late 1990's because they believed their location along the Ohio River, in what Burke referred to as an epicenter of electric generation plants, would provide and sustain the competitive edge he says his company desperately needs in the globalized world economy."
Sandy Theis of the Ohio Manufacturers Council said the PUCO is holding hearings on the rate hike, and has heard from AEP, as well as interested parties representing every type of electricity customers, including residential, industrial, commercial and low-income homeowners.

Expert witnesses hired by both consumer advocates and business groups agree that a utility's earnings would be "excessive." It has a return on equity higher than 14 to 15 percent, according to OMC.

AEP disagrees. In the case of Columbus Southern Power -- one of AEP's two Ohio companies -- its return on equity would exceed 30 percent if the pending rate hike plan is approved, according to a new analysis by the Ohio Energy Group, an organization that represents large industrial customers.

"You don't need an expert to conclude that a 52 percent rate increase, especially in today's economy, is excessive," Kevin Schmidt, director of public policy for the Ohio Manufacturers' Association, said. "Manufacturers, just like homeowners, are under extraordinary pressure to cut costs. AEP's request is unjustified and poorly timed."

AEP's current rates expire Dec. 31, and the PUCO of Ohio is holding hearings to determine whether to accept, reject, or modify AEP's proposal to raise rates.

According to the utility, AEP Ohio's plan proposes electricity rates for the company's Ohio customers through 2011 and if approved as filed, would result in total electricity rate increases of approximately 15 percent per year for the next three years.

The plan includes increases in base rates for generation and distribution, as well as separate trackers for collecting fuel costs and required investments in energy efficiency and demand-side management programs.

"By filing only an Electric Security Plan, we are seeking to balance the financial impact of rising electricity prices for our customers and the health of the Ohio economy with the future viability of our company," Michael G. Morris, AEP chairman, president and chief executive officer said. "The cost of every component of the electric utility business is increasing dramatically and is reflected in higher electricity costs across our nation."

Theis said the name Electric Security Plan is the one chosen by AEP under provisions of the recently-enacted Ohio Senate Bill 221 that governs the operations of investor-owned electric utilities in the state.

Burke protested the increase by saying AEP has been steadily and substantially raising the cost of electricity at the rate of 7 percent per year.

A spokeswoman for AEP, reached Thursday afternoon by phone said the evidentiary stage of the process is over and now the case is in the rebuttal stage.

She said when the presentations are over the PUCO will announce a decision or give a date when the decision will be announced, and said the new rates would go into effect beginning Jan. 1, 2009.

Anonymous said...

Did you call Mr. Torres today for his reaction to the Rep's article yesterday on Healy's "economic development" plan ..... booting a local company in favor of one from Cleveland that donated $4600 to his campaign? Just wondered ....