Larry Erikson, general manager of custom injection molder Illinois Valley Plastics Inc. in Washington, Ill., earnestly wants to find a way to reduce his electricity bills. Erikson, who supplies nearby Caterpillar Inc. and other industrial customers, also serves on the customer advisory council for investor-owned Central Illinois Light Co., or Cilco, based in Peoria.
Some 2,400 electricity customers are participating in a new Cilco experiment to provide them with the cheapest electric power available through a process called ``retail wheeling.''
Retail wheeling is a major feature in utility deregulation set down in federal law in 1992, which allows the often lower-priced independent power producers to send their product through the nation's high-tension transmission wires, regardless of the wires' original ownership.
Its appeal is in the way it allows companies, large and small, and even households to find their best price for generated electricity.
Cilco's project is one of the first of its kind in America. Erikson is watching the experiment closely.
``Eventually, [retail wheeling] will have a big effect on
all molders. We as molders are attractive to power marketers because of our constant, 24-hour usage of electricity,'' he said.
``I think competition is coming and it will benefit all processors. Some will get the opportunity sooner than others.''
Molders such as Erikson like the idea of buying electricity on the open market, but believe that practice is still several years off for the average injection molder.
``Electric power is the sore toe of the plastics industry,'' said Murray Gerber, president of Prototype & Plastics Mold Co. Inc. of Middletown, Conn., and organizer of the Connecticut Plastics Council gathering in January to address electric power rates.
That group's purpose is to have the plastics industry identified by the government as a job-creator deserving of industrial incentives - such as lower power rates.
Gerber, who runs 14 injection presses, pays $100,000 a year for electricity. Mold making takes up 25 percent of that amount.
Connecticut commercial users, he said, face rates 85 percent higher than the national average. A cut of 2 cents per kilowatt hour to these users would result in a 20 percent rate reduction and a 50 percent cut in the difference between what Connecticut users pay and what is paid by users in some other states, like South Carolina.
``Mandates and social costs, such as welfare, add 20 percent to the cost of power. Power companies will not shut off power to those who don't pay their electric bills. Somebody has to pay those bills.
``Out-of-state power providers don't pay those social costs, at least in our state,'' Gerber said.
That makes power cheaper, but ``do we shop elsewhere, look for the cheapest price and let the devil take the hindmost?''
Most likely to see savings under retail wheeling are injection molders using machines that start and stop constantly, operating around the clock. Such consistent operation appeals to utilities, and does not require additional power during ``peak'' demand periods, when some utilities themselves purchase power at higher rates to provide adequate service.
A typical injection molder uses about 2 megawatts of power for its 10-12 presses, said John D. Cook, manager of national sales for plastics and industrial markets for Houston Lighting & Power Co.
Injection molding machines, however, though they outnumber by far the other types of plastics processing devices, often are operated by smaller shops further down the chain of customers that are most important to utilities. M. Barr Klaus, director of product development and product management with Cincinnati Milacron Inc.'s plastics injection machinery business, noted that by contrast, power use is concentrated in big users in the extruding industry.
``Eighty percent of the power for the plastics extruding industry in the U.S. is used by 20 percent of the extruders,'' he said.
That concentration of power use can mean the utility industry can focus on serving a few of a similar type of customer - always a less-costly proposition.
Dean Akey, marketing director for Cilco competitor Illinois Power in Decatur, said, ``It will be some time before the small plastics processor will have access to the market'' to buy from any electricity supplier.
``The larger processors will have access immediately. Mid- to larger-size injection molders, maybe some thermoformers, will see the benefit of open access. Thermoforming is not as energy-intensive as injection molding, nor does it have nearly as many machines operating in the United States,'' Akey said, adding that no specific studies have quantified which aspect of the plastics processing industry would benefit most from retail wheeling.
``As power marketers, it makes no difference'' what kind of company it is, he added.
``There's a significant amount of plastics plants that will be able to take advantage of these programs,'' Akey said. Smaller molders ``will use aggregation of a bunch of small loads, lumping them together and marketing them to a supplier who finds that profile or buying pool attractive.
Others wonder if electric customers the size of the majority of plastics processors will benefit from retail wheeling.
``In the scramble to serve the refiners and bulk plastics manufacturers, [all power generators] may overlook smaller customers,'' said Graham Painter, public affairs manager for Houston Lighting & Power Co.
Large companies sometimes have the ability to produce their own power, so they are likely to receive discounts on additional power they buy for any peak demand periods, he said.
Several large companies, including the Big Three U.S. automakers in Detroit, already have made deals with Detroit Edison under the federal deregulation law.
``The fixed costs for these systems will have to be paid by someone,'' Painter said. ``Our concern is that major users would urge competition from independent generators, who don't have to serve ... those customers who can't pay.''
Michael Potts, supervising engineer for energy for Kohler Co. in Kohler, Wis., said: ``There will not be an industrial customer that will not be affected in the United States. What happens in one customer class will affect all others.''
Kohler, which Potts said performs some plastics molding but specializes in steel and ceramics, has a corporate attitude that in retail wheeling, ``Even though all customers will not benefit at the same magnitude, no one should be harmed,'' Potts said. ``We are advocating a proper deregulation of the industry where the customer is the beneficiary, not the utility.
``Large companies are out playing the game daily. But smaller companies are gaining from that learning on a macro level.''
Wisconsin utilities also are considering experiments in small commercial and residential retail wheeling. Potts is one of 22 members of a panel on the subject before the state Public Service Commission, which is seeking comment on how to implement a program.
Two major developments are accelerating the national power deregulation debate. First, in a few weeks, federal regulators expect to produce power pricing guidelines for the use of utility company transmission lines for power generators and marketers. Next, U.S. Rep. Dan Schaefer, R-Colo., chairman of the house energy and power subcommittee, is expected to introduce a bill outlining the specifics of the currently cloudy question of how retail wheeling should work.
Whatever the outcome, large utility companies have many options available to them to recoup the revenue they might lose as a result of the dismantling of the utility monopoly. Options include diversifying - even into the telephone business.
A Dallas-based utility, Central and Southwest Corp., on April 3 became the first utility to receive Federal Communications Com-mission approval to get into the telephone and cable television business under the new federal telecommunications law.
