Society of the Plastics Industry Inc. members in California can wield their collective clout to receive discounted electricity rates under a deal SPI has struck with an energy reseller. Participants in the joint venture between SPI and Pasadena, Calif., energy reseller New Energy Ventures Inc. will reduce the cost of their retail power 2 cents per kilowatt hour starting in 1998, according to New Energy's Michael C. Burke.
Retail commercial electric power in the state now goes for 9-11 cents per kilowatt hour - the highest rates in the western United States.
Plastics manufacturers tend to have consistent energy demands that ``barely fluctuate during a 24-hour day,'' said Burke, senior vice president. Lumping them together in their own buying group ``creates increased purchase volumes resulting in lower prices.''
Burke's 18-month-old company sells direct access to power companies' output at open market rates. A New Energy contract allows processors to buy discounted power from any electric generator in the western United States, Burke said.
SPI, based in Washington, is the fourth trade association contracting with Burke's company.
``They now don't get any economy of scale. That's ridiculous. Now, they'll be a single account,'' Burke said of SPI member companies.
Only SPI members are eligible for the program, which offers one-, three- or five-year contracts.
``I had my first meeting with an SPI member [Aug. 13] and got a signed, five-year contract,'' Burke said.
He would identify the company only as a medium-sized injection molder in Ontario, Calif.
``We help those who collectively might have substantial buying power. Once the power contracts are in effect, we will provide technical assistance,'' he said.
Burke said New Energy is the only firm of its kind with no ties to a particular power supplier.
``We are pure buyers' agents. We don't care who our customers buy power from. Most others are affiliated with a utility,'' he said.
It is not a risk-free proposition for Burke.
``We only get paid when they save money below the power exchange price'' - roughly the same rates as what consumers are paying in 1996, he said.
New Energy's action may be helped along by a California Public Utilities Commission energy deregulation proposal to ``pool'' the retail outputs of power giants Pacific Gas & Electric, Edison International and Enova Corp. - formerly San Diego Gas & Electric -into something similar to a commodities exchange.
If approved by the Federal Energy Regulatory Agency, the plan would go into effect in 1998, producing one large power transmission grid across the state. Producers would bid to supply the state's $20 billion annual retail power market.