Anheuser-Busch Plant Cuts Consumption, Still Sees Utility Costs Rise

Anheuser-Busch Plant Cuts Consumption, Still Sees Utility Costs Rise
November 20, 2013

Moorhead, Minn. plans to charge its local Anheuser-Busch plant higher rates for power and water, adding tens of thousands of dollars to bills that already total about $1.75 million annually.

“When you talk to them, they say we’re not thinking that we’re going to shut the doors but you never know, that’s the thing about those big plants,” said Bill Schawndt, general manager of the Moorhead Public Service Commission. “They’re owned by InBev, a multi-national corporation, so you don’t want to make it like you’re not trying the best you can. We want to make sure they know we’re paying attention.”

The Moorhead Public Service Commission plans to jack up water rates 3 percent and electricity rates 3.5 percent in 2014, after 2 percent price hikes in 2012 and 2013. The brewer already pays about $550,000 for water and $1.2 million for power each year.

Increases Negate Savings

The rate increases effectively zero out conservation measures that have led to significant efficiencies in electric and water usage, even as the plant’s production surged, according to the brewer.

The brewing giant operates one of its two U.S. malting plans in Moorhead.

“We didn’t get any savings out of reducing our water usage because the rates went up. We reduced our energy demand, our energy usage and the rates went up,” Ralph Judd, director of raw material for Anheuser-Busch said during a recent public hearing. “We do have some real concerns, but we want to continue operating this plant. It’s one of the finest malt plants in the world.”

Any public discussion of the malt plant’s bottom line makes officials understandably nervous. The Moorhead plant already survived a near-death experience in 2011, when Anheuser-Busch chose to shutter a Wisconsin malt plant instead and continue operations in this northwestern Minnesota city.

“Unfortunately, I had to go through some of the worst efforts of my entire career two years ago when I had to close one of my plants in Manitowoc, Wisconsin,” said Judd. “That facility had been operating since 1848.”

Money Goes to Other Services

Yet the public hearing also highlighted the expanding role city finances play in the cost of doing business here. By law, up to 20 percent of Moorhead Public Service’s net revenues can be transferred to city coffers — $7.7 million in 2013 and $8 million or more in 2014.  An Anheuser-Busch handout at the hearing warned the increasing dependence on utility customers to, in effect, support city services threatens the plant’s viability.

“The message from our utility to the City Council is let’s take a look at this and try to manage this so the need for cash to the city is not so great that it becomes an onerous burden, certainly to the business entities that we have in the community, as well as our residents,” said Ken Norman, president of the Moorhead Public Service Commission.

City Wants Big Levy Increase

The city of Moorhead has proposed one of Minnesota’s largest 2014 tax levy increases — 11.3 percent. Yet the city still faces a $342,000 operating budget deficit. One of the biggest discretionary line items in the budget — $94,000 for lobbyists — does not appear to be on the chopping block, nor does a proposed reorganization of City Hall that could cost up to $232,000. At the same time, transfers from the city utility funds will increase by at least $250,000 in 2014.

“The city could not just arbitrarily reduce the transfer without finding the money somewhere else to operate police, fire, all those things we need here as residents of the city,” said Mike Hulett,  a City Council member and liaison to the utility.

While MPS remains Moorhead’s cash cow, the city and utility continue to hold discussions on ways to mitigate the effect on business. “I haven’t heard anything that would indicate that a company with that large of a facility is going to suddenly leave because of a normal rate increase,” said Hulett, who’s participating in the discussions. “Our rates are still competitive in the area up here, and again I think it’s very normal for a large user of a utility to come to a rate hearing and express their concern.”

The outcome could be a key factor as Anheuser-Busch continues internal discussions of its own on a potential expansion of the plant operated here since 1978.

“In order to remain viable, we are asking the Moorhead Public Service Commission and the City to ensure that utility rate increases do not outweigh the benefits of our conservation efforts,” Judd said in a statement. “We look forward to working closely with Moorhead officials on this matter, and remaining a valued business and employer in the community.”

Tom Steward (tom@watchdogminnesota.org) reports for Watchdog.org, where this article first appeared.