Businesses Groan Under Weight Of State’s High Electric Costs

WATERBURY (AP) — Businesses in Connecticut were spared a proposed electric rate increase of more than 16.7 percent, but the increase of 10.3 percent approved by state regulators is still a jolt to manufacturers struggling with overseas competition and rising costs for health care, insurance, and raw products.

The rate increase, which is set to take effect January 1, is easier to absorb than the initial proposal by Connecticut Light & Power.

“This is already a difficult area to grow manufacturing when your competition is in lower-cost areas,” said Rick Allen, executive vice president and chief operating officer of Custom Bottle in Naugatuck.

Custom Bottle, which manufactures and distributes plastic bottles that package cosmetics, foods, pharmaceutical, veterinary supplies, and other items, employs about 160 workers, in addition to between 20 and 30 temporary employees.

Rob Earley, assistant counsel at the Connecticut Business & Industry Association, said even the final, double-digit increase comes at a time when manufacturers are facing unprecedented global competition.

“I believe that the bottom line is they are happier the blow will be a little bit softer, but they’re upset nevertheless they’re going to have to experience another high-cost charge to doing business in Connecticut,” Mr Earley said. “It makes it that much more difficult to stay in the game, and grow and retain jobs.”

Connecticut’s electricity rates are among the highest in the nation, said Frank Johnson, executive director of the Manufacturing Alliance of Connecticut. The state is home to the eighth-highest electric rates, based on per kilowatt-hour of use for industrial customers, according to the National Association of Manufacturers and two other industry groups.

Mr Johnson said the increase adds to the burden of double-digit increases in health care costs, rising costs for insurance, worker’s compensation, and raw materials.

“All the while, these guys are under constant pressure from their customers to bring their prices down, not up,” Mr Johnson said. “Could this be the straw that breaks the back for some manufacturers? Absolutely.”

Some manufacturing operations, such as plastics molding plants and plating operations, use more electricity than other manufacturers.

Thomaston-based Whyco Finishing Technologies, which plates automotive, medical, electronic, and other components, spends between $650,000 and $700,000 a year on electricity. A 10.3 percent increase adds about $70,000 to the annual electric bill.

“That’s an employee or two you can’t have,” said Michael P. D’Angelo, Whyco’s president and chief executive officer.