By Despite the facility's power bill going from $1.4 million in 1999 to $1.9 million this year -- a 35 per cent increase -- Northlands has not sought a renegotiated contract.
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When businesses were being urged by the provincial government to select power suppliers and sign long-term contracts in 2000, Owens Corning's parent in the United States nailed a very good company-wide, five-year deal, recalls Wilson, the local plant manager.
Unfortunately it was with Enron Corp. And in the fall of 2001, Enron disappeared from the corporate map in a firestorm of scandal. Forced to find an alternative, Owens Corning's Edmonton facility began buying power on the Alberta open market.
Then, in March and April 2002, the price spiked. In just two months, the price jump cost Owens Corning an extra $400,000 US -- and Wilson scrambled to cushion the blow by buying half his remaining 2002 power needs on a set contract with two retail brokers.
The result, says Wilson, is the company's total electricity bill this year will be $1 million more than originally budgeted.
The low value of the Canadian loonie and low natural gas prices have allowed the Edmonton plant to remain competitive in the continental market, Wilson said. But Alberta's highly touted manufacturing advantage has been wiped out by power bills here.
While Owens Corning's brush with Enron may be uncommon in the Edmonton-area's industrial and commercial community, lingering problems with deregulation are not.
Many businesses signed long-term electricity contracts when prices were sky-high -- contracts they now wish they hadn't signed but are unable to break.
Colorfast Corp.'s vice-president Ian Stirling took the matter to provincial politicians. He wanted the government to force the renegotiation of steep five-year contracts like the one his company signed.
"I don't see any help from that direction," Stirling said. "So here we are paying double what we should be paying."
In late 2000, the price of wholesale power was above 13 cents per kilowatt-hour. So far in 2002, it has averaged 3.7 cents and for the past 30 days the average has been 2.6 cents per kilowatt-hour.
Retail prices are typically double or triple wholesale rates because they include other costs such as broker fees and distribution charges. But they mirror swings in the wholesale rate.
Stirling figures the gap between his contract price and the current open-market price will cost Colorfast more than $40,000 this year, and he's furious with Epcor Energy Services, one of two retail marketing companies willing to sell him power: "They've got to be making a killing out of it."
Not so, responds Brian Gerdes, Epcor director of electricity marketing.
Epcor bought the power to supply customers like Colorfast at the time of the contract -- and at the rate of the day, not today's rate. Besides, few companies have come forward asking to reopen contracts, Gerdes said.
A company's reason for buying long-term contracts should be to provide budgetary certainty, he says. "You're not procuring the lowest price. What you're procuring is stability. You know what you have to pay, and you're not going to worry about that."
That's small compensation for Pro-Western Plastics Ltd. of St. Albert, said president Paul Lacroix.
"The increased cost of electricity has become a huge negative for us," he said. "We're all paying double what we were three years ago."
Twenty per cent of Pro-Western's sales of plastic containers are to the U.S. and Lacroix agreed with Wilson that it's mainly the exchange rate that gives him any advantage.
Albchem Industries of Bruderheim, a manufacturer of bleaching agents for the pulp sector, has eased its power-price squeeze by opening a second plant in Manitoba, where cheaper electricity is generated at hydro dams and regulated by the government.
"The two facilities give us flexibility" to shift production, said president Kevin Kohler. Both plants are now running 24 hours a day, with the Manitoba facility picking up about one-third of the business.
The power bills in Alberta are higher than in Manitoba, Kohler said.
Here in Alberta, electricity accounts for 50 per cent of cash costs on products.
Northlands Park has more than three years left in its five-year contract with Epcor, says assistant general manager Opal Blackstock. "Certainly, our utility rates are an issue for us."