If the new rules of electric industry competition don't permit stranded-cost recovery, the credibility of the U.S. government would be seriously undermined. Or so an executive of one of the...
Failed Muni Fight Shut Anchor's Door
Anchor Glass Container closed its Aberdeen, NJ, manufacturing plant on January 15, after a failed effort to municipalize the township's electric system. Anchor also closed its Houston, TX, plant the same day. Walter J. Schaffer, the company's energy director, says energy costs were one of the reasons for the Aberdeen closing, which left most of the 326 workers unemployed. He also admits that the fight with Jersey Central Power & Light (JCP&L) (see, "Anchor Glass vs. JCP&L," PUBLIC UTILITIES FORTNIGHTLY, 2/1/96) did little to strengthen Anchor's economic position. Anchor's annual electric bill in Aberdeen was about $4.5 million.
"The key issue is the high cost of energy in Jersey Central territory," he says. "Not that they're a monopoly. Not that we're trying to abandon their system. . . . We wanted them to offer us customer choice. We wanted to bring competition to the marketplace."
The closing of Anchor's plant depletes JCP&L's load by 8 megawatts (Mw), Schaffer notes: "If that's JCP&L's goal, to skirt the issue and run a customer out of town, if that's a success to them, the remaining captive customers of JCP&L need to be asking some serious questions."
According to Glenn O. Steiger, JCP&L corporate affairs director, Anchor's problems at the Aberdeen plant ran deeper than energy costs (em they included the high costs of raw materials and labor.
"I had access to all their financials and there was no way that plant was going to stay there, even if they had gone to municipalization," Steiger says. "In fact, I can honestly tell you that we could have given the power away and they still would have had to close the plant. We were not the main problem there."
Steiger says JCP&L recognizes its high rates and is working on lowering them, having helped get what has become known as the "flex rate legislation" passed in New Jersey. The law allows utilities to offer discounts and price products differently, including offering incentive ratemaking and price caps, such as those recently proposed by Public Service Electric & Gas Co.
As for the lost 8 Mw of load, Steiger says the company recognizes it as lost: "We have no plans on any base rate increase. We're going to be eating all these things in the foreseeable future until we get an alternative regulation plan in place." JCP&L hopes to file its plan with the state Board of Public Utilities within the coming year. (em JS
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