Anyone else seeing more economic development incentives showing up in utility rate structures? Alabama Power just introduced a new economic development rider that offers significant discounts for qualifying new businesses. The criteria are pretty specific - minimum 50 new jobs, $10 million capital investment, etc. Wondering if this is a trend we'll see more of as states compete for business relocations.
Economic development incentives affecting utility rates
CPS Energy here in San Antonio has had similar programs for years. The challenge is making sure existing businesses don't subsidize the incentives through higher base rates. We've seen a few cases where the economic development discounts were essentially paid for by rate increases elsewhere in the tariff structure.
That's exactly the issue, Vivian. Duke Energy has been pushing these programs hard, but the cross-subsidization concern is real. The Ohio PUC requires detailed cost-benefit analyses now before approving any economic development rates. Still, if your client qualifies, the savings can be substantial - we've seen 15-20% reductions in some cases.