UNION — Its ability to negotiate lower utility rates as part of an industrial recruitment incentive package benefits not only the industry being recruited but the City of Union as well as the people of Union County.
Union City Council voted unanimously Tuesday to approve first reading of an ordinance authorizing the mayor to negotiate utility rate agreements as part of incentive packages to facilitate the location of new industries in Union County and/or the expansion of existing industries that meet an investment threshold of $2.5 million.
Utility Director Joe Nichols pointed out that the ability of the city to “provide utility services under a negotiated contract rate can be an important element” in attracting new industry and supporting the expansion of existing industry. Nichols pointed out that Union County or the State of South Carolina has occasionally asked the city to “assist in industrial recruitment efforts by providing utility services at negotiated contract rates as an incentive package for a prospect.”
Nichols said that the ordinance “authorizes the mayor to negotiate utility rates for a certain period of time” for an industry that invests at least $2.5 million in its new facility in the county and/or the expansion of an existing facility. He said the rate agreements requested for incentive packages in the past have been for industries locating in the county, but outside the city, to get the lower utility rates provided customers within Union’s municipal limits.
In recommending that council approve the proposed ordinance, Nichols pointed out that the city benefits from such agreements because “industrial customers are often high-volume users of utility services with high load factors which make them less costly to serve than other customers. Increasing the industrial load contributes to increased economies of scale and to a more efficient use of utilities.”
Nichols added that the negotiated rates remain in effect for the term of the contract only if the industry makes the agreed upon investment and job creation. If it does not, Nichols said the negotiated rates are no longer in effect and the industry would have to pay the higher rates charged customers outside the city’s municipal limits.