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Brewer, Old Town pursue low-cost power

Michael C. York | BDN
Michael C. York | BDN
The main floor of the auto parts manufacturing plant operated by Lemforder Corp. in Brewer. (BANGOR DAILY NEWS PHOTO BY MICHAEL C. YORK) CAPTION The main floor of the auto-parts manufacturing plant operated by Lemforder Corp. in Brewer, Maine, Thursday, August 13, 2009. Bangor Daily News/Michael C. York
By Matt Wickenheiser, BDN Staff

When Lemforder Corp. finally shuttered its Brewer plant last year, it marked the end of more than five years of effort by company and city officials to find cheaper power for the manufacturer.

Operating in a global economy, there were a number of challenges for the company. Competition from China and costs of shipping to and from Maine were among them. But the big one was power.

The company was paying 16 cents per kilowatt, compared with 5 cents at its sister plant in Virginia. And Lemforder was using 10 million kilowatts a year.

“Utilities was the No. 1 thing in Maine that was killing us,” said Larry Levasseur, the former chief financial officer.

The company was a significant taxpayer, and employed — at its peak — up to 400 people.

Brewer worked with the company to explore different ways to cut power costs for Lemforder, said D’arcy Main-Boyington, the city’s economic development director. They explored self-generation of power, looked at co-generating power with other neighboring businesses and examined other options.

“We couldn’t find a solution,” said Main-Boyington.

But that experience remains fixed in the minds of Brewer’s economic development team, as does the vast challenge that power prices represent to industrial companies in Maine, or to those considering Maine.

So it is little surprise that a key component of Brewer’s planned industrial business park between the city landfill and the Orrington town line is power at a reduced cost for tenants.

“We need to be talking about substantial savings, with an eye toward green, sustainable,” said Tanya Pereira, deputy director of economic development in Brewer.

The region is leading the way in trying to address the problem of high-cost power. The city of Old Town has plans for a new business park off Penny Road that also would seek to offer low-cost power to tenants, possibly through local generation from landfill methane, biofuels or even hydro-electric.

“If we’re going to get [companies] to come north of Bangor, we have to have that,” said Old Town City Manager Peggy Daigle.

Because of the similarities, the two cities are talking about marketing the parks together. Some tenants would be attracted to Old Town because of the proximity of the University of Maine and the Old Town Fuel & Fiber work being done nearby (the business park will sit between the mill and the Hilltop section of the UM campus). Some would see the urban environment of Brewer, transportation infrastructure and nearby natural gas pipeline as a main attraction.

Most companies, officials from the cities agree, would find cheap power a draw. The issue of the high cost of power in Maine as a deterrent to business often came up during the recent gubernatorial election. Matt Jacobson, former candidate and president and CEO of Maine & Co., a business attraction organization, said the high cost of power is “the single biggest reason companies don’t choose Maine.”

“These business parks in these particular communities absolutely understand the problem,” said Jacobson.

Brewer is looking at roughly 60 lots to be built in two phases on the 350-acre site. This summer, the city plans to extend existing roads, sewer and water to the park location. In spring 2012, the city hopes to start development of the park. A new park is needed, said Main-Boyington, because the city is just about out of developable industrial land.

The total cost of the park is estimated at $12.8 million, to be paid for by grants, bonding and through tax increment financing funds.

The first tenant, Maine Liquid Methane Fuels, will move in this year. That company plans to be in production by December 2012, according to vice president Aleksandar Cook.

The Old Town “Energy and Enterprise Park” is 160 acres total, and the city has permitting in place and seeks to break ground this year. Daigle said several companies are already interested in moving into the park. Like Brewer, Old Town has little land to develop to grow its tax base, and is looking to the 31-lot park as the best option. The cost estimate is $7.1 million, to be covered by grants and bonding.

Officials in both towns are still exploring how they’ll provide cheap power. In Brewer, the park would be able to connect to Bangor Hydro-Electric on one side and Central Maine Power on the Orrington side. The city might try to negotiate lower prices for its tenants, said Main-Boyington. They might try to attract initial tenants that are generators that could supply heat and power to tenants. Or they might navigate complicated and seldom-used Maine utilities laws to set up a municipal power authority, such as the one in Madison, to procure cheaper power.

In Madison, the low-cost power has been pointed to as a chief reason the area was able to attract Backyard Farms, an extensive hothouse operation that produces tomatoes and employs roughly 200.

Those are similar to options Old Town is exploring, said Daigle. The Old Town site is near potential power generators, including Old Town Fuel & Fiber, hydro on the river and the Casella landfill, which is currently burning excess methane, but is looking at using it to run generators.

UMaine assistant vice president for research, economic development and government relations Jake Ward sits on the LLC that Old Town created to develop the business park. He noted that the economics make sense, when you look at power generators in the area and a potential power user like the university. There’s supply, and enough demand. The tenants in the park add to that demand, he said.

“If you have local generation and you can control it locally for local consumption, you might have ability to play with the margins a bit better,” said Ward.

Ward and Jacobson noted that these local options aren’t the way to solve the problem Maine faces regarding power costs.

“It’s not the best solution as a statewide policy, but there may be good solutions for communities,” said Ward.

Maine’s historical strength is in manufacturing, a high-energy-using sector, said Jacobson. Our work force is tuned to manufacturing, he said, but that strength is weighed against the cost of power. It’s a problem the state has to solve as a whole, he said.

“We don’t ever have to be the cheapest electricity in the world, and in fact we won’t be,” said Jacobson. “But we’ve got to get to a point where we can get competitive.”

In the meantime, communities such as Brewer and Old Town may benefit if they can work through laws and regulations to use lower-cost power as an economic development tool.

“If there’s a void, hell yeah, we’re going to do it. We’re not just going to sit back and take whatever’s given to us,” said Main-Boyington. “We’ll fight to make this happen.”

Lemforder – www.zf.com

Brewer Econ Dev – http://www.brewerme.org/economicdev/economic.htm

Old Town Econ Deve – http://www.old-town.org/index.asp?Type=B_BASIC&SEC={13010F93-E257-44D2-8E10-3FD834ECE4BA}

Maine & Co – www.maineco.org

Backyard Farms – www.backyardfarms.com

Madison Electric Works – http://www.madisonelectricworks.com/

Maine Liquid Methane Fuels LLC – http://www.maineliquidmethanefuels.com/

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