If you are a large energy user in New England – a manufacturer, a commercial entity, or a healthcare or educational institution – you have your work cut out for you managing your energy costs.
At an Independent Business Council of NH forum in Manchester, a manufacturer described how their energy costs had escalated from 2% of cost of goods sold three years prior to 5% in 2014. And those costs were expected to climb to 8% of cost of goods sold in 2015.
For the past two decades, mid to large-size consumers of electricity and natural gas have been proactively engaged in reducing the amount of energy used in their facilities through energy efficiency programs and integration of energy control measures.
So, when the lights are LEDs, the motors are premium efficiency with variable speed drives, and compressors have been upgraded and serviced, what is left for businesses to do to meet their energy budgets? We all understand that when expenses spike, the option to increase prices for products, services, patient care or tuition is rarely available in the domestic or global marketplace. So how can businesses budget for rising energy bills?
They are being forced to make tough decisions that could result in heavy consequences for this region.
To meet their energy expense obligations, businesses are choosing to:
- Look elsewhere for facility expansion or relocation opportunities
- Freeze hiring activities and wages
- Reduce R&D spending
- Put growth plans, whether a new shift or a new product line, on hold
- Move south, even if it is just 200 miles, to where lower-cost energy is readily available
This region has a very real need for increased infrastructure to be competitive with the price of electricity and natural gas in neighboring states. Expanding pipeline capacity will deliver natural gas needed for thermal requirements and support natural-gas fired electric generation year round. Increasing the availability of hydro-powered electricity will help balance the mix of fuels used for generation in New England’s power pool.
The state’s businesses need our support, now more than ever before.