IT’S EASY BEING GREEN
The city of Hamilton’s production of hydroelectric power makes it easier for companies to brag that they’re being green.
As part of a utility incentive agreement that helped lure Procter & Gamble subsidiary iMFLUX Inc. to Hamilton, the city promised iMFLUX it would formally certify “that all of the electric energy consumed by iMFLUX in their operations shall be 100 percent Green Energy.”
Mahendra Vora, an owner of Vora Technology Park in Hamilton, which has lured businesses to the city, says that factor can be significant.
“The green aspect helps in two or three ways. It helps because sustainability and responsibility to the environment is a big deal these days,” Vora said. “Twenty years ago, maybe it was not. But these days, it’s a big thing, just like minority spending is a big thing. These social responsibilities are becoming very important for large companies, and responsible use of resources available — preserving them for other generations — that becomes important.”
“There is one city that we all know, close to us,” Vora said, not naming the city. “They are not blessed with the natural hydro capability that we have, so what they’re doing, to have similar advantage, they’re spending over $500 million in creating a bio-diesel plant, so they can say, ‘We also provide green power.’ “
Operating its own electric utility means Hamilton has an economic-development tool few other cities can use.
Hamilton can lower the electric rates of companies it wants to lure within its borders, or to encourage businesses already operating within city limits to expand in place.
“It’s an incredible incentive for economic development, because we aren’t just competing with neighboring communities,” said Jody Gunderson, Hamilton’s economic development director. “We’re competing with other cities outside the state of Ohio, so we’re competing with the rates that they have within those areas as well.”
That can bring significant savings for intensive consumers of electricity, like two of the city’s larger recent success stories: Procter & Gamble’s plastics-innovation subsidiary, iMFLUX Inc.; and growing high-tech shock-absorber manufacturer ThyssenKrupp Bilstein of America Inc.
Hamilton’s electric production also is attractive to businesses that need unbroken flow of power, like the 75-employee data center, CenterGrid, located in Vora Technology Park. That’s the same technology park where the new Barclaycard US call center, which plans to bring 1,500 new jobs to Hamilton, is located. Such companies can be connected not only to Hamilton’s electric production and distribution system, but also to Duke Energy, which serves the rest of the region, so electricity keeps flowing when one producer has a blackout.
Neither CenterGrid nor Barclaycard received utility incentives from the city, but Vora Technology Park did, and indirectly passes savings on to its tenants through their leases, according to Gunderson.
Hamilton’s production of hydroelectric power also gives environmentally conscious companies, like Procter & Gamble, something to boast to investors: use of green energy.
Mahendra Vora, chairman of the Vora Technology Group, which owns Vora Technology Park, worked with Hamilton’s city government to attract Barclaycard to the city over competing sites in the region.
“I can tell you based on my many discussions with very large companies who are looking at electrical infrastructure, ability to provide dependable electrical infrastructure as an alternate to large electric companies, ability to have hydro power for green facilities, and ability to offer competitive rates for electricity are three major factors that they get very excited about when we talk,” Vora said. “And Hamilton offers all three.”
Vora is chairman of CenterGrid as well as several other technology companies in town.
Like other local governments, Hamilton city uses such tools as property-tax abatements and local jobs-creation tax credits to also attract new businesses.
But, “especially with companies that are big electric users, (utility breaks) will be part of the conversation every time,” Gunderson said. “That’s a big part of an expense for a company, and they’re going to want to ensure that they’re getting a pretty good rate, because they know it’s going to be a big part of their balance sheet.”
“Hamilton offers electricity at such competitive rates that a lot of people I talk to, on the West Coast and other areas, frankly, they don’t believe that,” Vora said. “They’re like: ‘Wow.’ Because when you run a lot of computers in a data center, you need a lot of electricity for cooling the computers, and it makes a huge difference.”
Officials from iMFLUX, which in 2013 leased the former Hamilton Fixture building on Symmes Road instead of a site in West Chester Twp., were not available to comment on how much of a factor the utility incentive played in their decision.
As part of the company’s incentives, the city guaranteed in March of 2014 that in a space of 10 years iMFLUX’s rates “will be at least 10 percent below the rate that Duke charges for (comparable) electric service through their standard service offer.”
In turn, iMFLUX agreed to create within 36 months, and maintain, 200 full-time jobs within the city “to the best of their ability.” Full-time employees in the agreement work at least 35 hours a week, under the deal. Such companies also agree to keep their power usage within certain ranges, which helps the city’s utilities predict what the city’s overall loads will be at various times.
Hamilton also promised it would “formally certify to iMFLUX that all of the electric energy consumed by iMFLUX in their operations shall be 100 percent Green Energy.”
The top local official for ThyssenKrupp Bilstein of America Inc., which last month celebrated the grand opening of a 30,000-square-foot plant expansion, also was unavailable to comment on the electric incentives Hamilton City Council has approved for his company, which soon will launch yet another 30,000-square-foot expansion. The company employs about 680 in Hamilton, and expects to continue hiring at least into 2017.
Under the city’s terms with TKBA, the firm can receive annual credits against utility charges of up to $40,000 per year over five years, for a total of $200,000. The company must maintain job targets and keep its power usage and loads within specified ranges.
Companies that select a site consider many factors, Vora noted, so it’s hard for outsiders to tell how significant any particular factor may have been in their decision.
“I can’t tell you exactly if there’s any one factor that swayed their decision, but I can tell you it’s the accumulation of many factors, and some of these, green power and cheaper power, definitely matter,” he said.
For his own CenterGrid, which he called one of the region’s fastest-growing data centers, “one of the major (location) decisions had to do with the electrical infrastructure, green power and cheaper electricity,” Vora said.
It’s difficult to say exactly how much higher residential rates have to be to counter the rate reductions for companies, said Nathan Perry, the city’s utility business manager. But on the plus side for residents, when companies move in, they boost the income and property taxes that keep city government running, and that helps lower various forms of taxes for residents.
Perry noted that having more electricity customers lowers overall utility costs across the board.
“We have more energy through our resources than we have load to serve our customers, so by bringing in these industries that use a lot of energy, like an iMFLUX, or a ThyssenKrupp, we’re able to fill up some of that excess capacity that we have,” Perry added. “And with having a lot of fixed costs, the more energy we sell, the more we bring those costs down for everybody.”
Hamilton’s incentives are based on companies using certain power loads, according to Gunderson.
“If they do not reach those, they aren’t penalized for it, but they just aren’t granted the benefit,” he said. “So it really places a lot of responsibility on the company to know exactly what it is they intend to do, and what they need to do to achieve the benefit.”
“It’s as much a benefit to our system that we have agreements like this, because essentially what we’re doing is eliminating some of the unpredictability within our consumption in a grid,” Gunderson said. “If we can get a much better handle, then we know the proper times at which to purchase power, if we need to purchase.”