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Published: Friday, 8/22/2003

Businesses face rate hikes, closure as utility struggles to meet high energy demand

BY GARY T. PAKULSKI
BLADE BUSINESS WRITER

At least one Toledo-area factory shut down yesterday and others faced steep temporary rate increases as FirstEnergy Corp. tried to cope with heat and the lingering aftermath of last week's massive blackout.

Struggling to meet demand for electricity, the Akron-based utility gave heavy energy users on special contracts the option of closing or paying higher rates linked to the cost of electricity on spot markets. Businesses agree to the arrangement in exchange for cheaper rates during normal periods.

“We're operating, but we're just paying more for our power,” said Rich Menzel, spokesman for a steel mill in rural Delta operated by North Star BHP Steel.

If supplies deteriorate further, the mill has been advised that it may have to close temporarily, Mr. Menzel said. That happened last Friday, the day after the blackout, when the firm suffered $1.5 million in lost production.

Businesses in Cleveland on so-called “interruptible service” were asked to shut down about 2 p.m. yesterday, said Mark Durbin, a FirstEnergy spokesman.

It was the second day that FirstEnergy took special measures to conserve energy.

Utility officials on Wednesday asked residential customers to use fans instead of air conditioners and wait until evening to use heavy appliances like dishwashers.

Rolling blackouts might be necessary in the Cleveland area without the moves, FirstEnergy warned.

The problem is that two of its nuclear power plants that produce 17 percent of its generating capacity are shut down.

The firm's Perry nuclear plant was shut by the blackout, but is expected to return to service “in the next day or so,” Mr. Durbin, the spokesman, said.

About 50 million people from New York to Toledo, Detroit, and Toronto were affected by the blackout that began last Thursday and is believed to have started in the Cleveland area.

The Davis-Besse Nuclear Power plant, near Oak Harbor, has been out of commission for 18 months because of a corroded nuclear reactor head.

That facility normally produces 883 megawatts of electricity, or 7 percent of FirstEnergy's total output.

The wholesale cost of electricity on spot markets has soared by more than a third since the blackout. It rose 8 percent to $64 a megawatt in Ohio earlier this week.

Besides reduced generating capacity and high prices on spot markets, FirstEnergy had to cope with increased demand yesterday as customers cranked up air conditioners as temperatures soared into the high 80s.

Ellen Raines, another FirstEnergy spokesman, wouldn't say how many businesses are on interruptible service contracts.

Ending the flow of electricity to them would reduce demand by 700 megawatts or nearly the production of Davis Besse.

She was unsure if the firms would be affected today.

Participants are free to resume normal operations at night, after 11 p.m., when electricity usage falls.

MSC Walbridge Coatings, a steel processor in Walbridge, opted not to pay the higher rates and was closed Wednesday and yesterday.

About 150 workers were affected, plant manager Tom Bishop said.

“We hope to operate tomorrow - we need to,” he said.

Ford Motor Co.'s parts plant in Maumee is on interruptible service, but operated Wednesday and yesterday, said Rich Voytowich, a spokesman in Dearborn, Mich. He was unfamiliar with details of the arrangement.



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