For more than a century, Mobile (pronounced Moh-beel) in Alabama has been a somewhat sleepy port, where few events of national note have happened since the end of the American Civil War in 1864. But that changed in July 2012, when Airbus, a European aircraft manufacturer headquartered in Toulouse, France, announced plans to build its first US-based production facility in the city. Suddenly, the town was propelled into not just the national, but the international, arena.

In few places were the shouts of joy louder than in the offices of the economic development department at Alabama Power, a utility company that provides electricity to a good proportion of the state, including Mobile, and which had helped close the deal.         

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In Alabama, as in other states in the south of the US, electric utility companies have become integral to the state’s efforts to attract new business. The majority of the utilities are privately owned, but they do not promote economic development in the states they serve just from a spirit of good citizenship; it also helps their bottom line. The more businesses that locate in a utility’s service area, the more energy they consume and the more profitable the power company become.

Sweet ohms in Alabama

Ken Novak, vice-president for economic and community development at Alabama Power, says that the company has a record of working to attract businesses to the state that dates back to 1913. Like many of the firms working in this capacity, the company offers a range of services to assist potential investors in site selection, as well as discounted rates for new corporate arrivals that qualify. Prospective investors can take advantage of confidential building and site evaluations, labour force and demographic analysis, technical training advice, information on local tax structures, and logistical data.

“We have resources available to us in the course of business that enable us to assist,” says Mr Novak. “We have geographic information systems that give us detailed information on infrastructure; we perform logistic studies and we have the expertise to do transportation studies," he says, listing just some examples of the resources at hand.

In Alabama, companies that bring or add new jobs in the state may also qualify for a two-year discount on the rates that the utility charges, if their additional electricity consumption meets the minimum requirement and the state’s capital investment standards. The discount, or rate rider, is 10% of monthly base rates for the first year and 5% for the second.

Alabama Power also works closely with the state’s economic development agency, the Alabama Department of Commerce, which offers its own set of incentives. “We go to market as a team, selling the state as a whole,” says Mr Novak.

In addition, Alabama Power has a 'community development' component that assists local areas to prepare for potential investment and develop strategic plans. It encourages communities to develop industrial parks and helps them with the cost of engineering studies. No-interest loans are available for qualified speculative buildings.

Mississippi's groundwork

Mississippi Power offers a comparable service for communities in its south-eastern Mississippi service area. Its 'Project Ready Certified Site Programme' has three dedicated project managers. Gena Lentz, the utility’s economic development manager, believes that such programmes are invaluable.

“When companies make a decision to locate in a new facility, speed is of the essence. With the Project Ready Certified Site Programme, all of the infrastructure is either in place or documented in a plan,” she says. The programme scored its first major success when GE Aviation invested $56m in a 32,000-square-metre plant to manufacture composite components for the aviation industry. The Ellisville-based plant opened in 2013. 

The utility company works closely with the Mississippi Development Authority and with local economic development planners. Which entity takes the lead role depends on the circumstances. Mississippi Power also offers a discounted rate for new or expansion businesses, but Ms Lentz says its service offerings are generally more valued by companies.

Georgia's tightly knit team

In few places is the coordination between the state’s economic development initiatives and a utility company closer than in Georgia. “We work hand in hand, closely together,” says Chris Cummiskey, commissioner of the state’s Department of Economic Development, speaking of Georgia Power.

Indeed, the company-owned Georgia Resource Centre, which houses the utility’s extensive resources to assist potential investors, is operated as a public-private partnership, and shares its headquarters with the Department of Economic Development, the state’s workforce development programme, and related programmes of the Georgia Institute of Technology, a state university.

Georgia Power also works with the department and other partners to market Georgia domestically and internationally as a business location.

Even though Alabama Power, Mississippi Power, and Georgia Power, along with Gulf Power, which serves north-western Florida, are all subsidiaries of Atlanta-based Southern Company, each competes fiercely against the others to attract industry to its home state. 

They also face competition from another challenger, Duke Energy, which serves North Carolina and South Carolina as well as parts of Florida, Indiana, Ohio and Kentucky. Much like its rivals, Duke Energy offers site readiness and project development services to attract new investment, often in collaboration with state and local governments.

The company prides itself on a business development team that proactively reaches out to companies in seven target sectors, according to Stuart Heishman, vice-president for economic and business development. The team acts independently of state agencies, but collaborates on some initiatives.

Prime targets 

New trends are beginning to intensify the already high level of competition among electric utilities to land certain industries in the states they serve. Data centres, which require large quantities of low-cost and reliable power, are prime targets.

They also represent one of the fastest growing sectors in the US, according to Deane Foote, an Arizona-based site selection consultant. Indeed, some states, such as Tennessee, are developing certified sites specifically for data centres and at least one, Indiana, has created a personal property tax exemption for the business type.

The future of another trend, sustainable energy, is less certain as an economic development tool. For example, Georgia Power generates energy from a range of sources, including coal, nuclear, natural gas, hydro power and landfill gas. However, the utility executives interviewed were unanimous in the view that cost and reliability are more important to potential investors than 'greenness', although Mr Heishman says that a diversified generation mix may be significant for some customers, including data centres.

One trend that definitely will not waver is the unending search for ways to deliver electrical power more efficiently and at lower cost to more business customers, and the endless competition to lure the next Airbus.