Preparing for Successful Electric Negotiations

The key indicator of profitable production is cost per unit of output. Cost reduction has often been focused on reducing the number of workers per unit. While layoffs and downsizing have been a quick way to cut costs, the near- and long-term consequences--such as reduced attention to maintenance and improvement programs--are making some enlightened management teams search for better ways to lower unit costs. Utility rate negotiation is proving beneficial for a growing number of plants and, in some cases, also for their utility suppliers. The intense contest for profitability now faced by many manufacturers is no longer local. It is national and even international. Competition for industrials has been a continuous, overriding concern for many years. Competition for utilities is just beginning. The winds of change are blowing strongly for electric and gas utilities. The massive deregulation program offers an exceptional opportunity to restructure plant relationships with their utility suppliers. Now is the time to start negotiating with the utility company for an improved package of rates and other benefits.