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March 1, 2001

11 Min Read
The energy crisis: Molders strike back

Much has changed in the electrical utility industry since IMM first reported on developments in deregulation three years ago. Electrical supply and deregulation irregularities in California have been well documented, and the increasing popularity of hybrid and all-electric molding machines has given molders new options when it comes to energy consumption. IMM follows up this month with a report on energy use within the molding industry.

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Molders are taking advantage of the energy savings associated with electric presses. AMT has added five Niigata electric presses (above), and Vanguard Plastics bought a 330-ton Powerline electric press (below), the cost of which was offset by its power provider.

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Deregulation of electric utilities was supposed to let the market determine rates and produce lower costs for consumers. California is one of the first major test cases, and the problems that have surfaced so far have the rest of the country looking at deregulation with a jaundiced eye. If you think that just because you don't operate a business in Southern California you're home free, think again, say utility industry experts. Deregulation is coming to a power company near you. Let's hope they learn by example (see sidebar). 

For Southern California's injection molding companies, the deregulation experiment has been a financial nightmare. Many saw their electric bills quadruple this past year as power companies were forced to buy expensive out-of-state electricity during a time of high demand. Joe McCroskey is one of the unlucky ones. His molding firm, Co-Mack Technology Inc. (Vista, CA), is serviced by San Diego Gas & Electric. Although McCroskey anticipated "rough times" with rates going up in the summer, the situation was "worse than we expected," he says. "To add insult to injury, you don't know what they're charging until you get the bill." 

With 26 injection presses ranging from 65 to 1200 tons, Co-Mack's electric bills generally ran about $22,000 a month. Then, suddenly and without warning from SDG&E, Co-Mack's bill jumped 300 percent to an average of $70,000 to $80,000 a month. "They charge for lots of different things," McCroskey explains, "semipeak, on peak, off peak, summer rates, all different rates associated with this. We were used to sort of a blended average of 3.5 cents/kWh, but in some portions of our bill we were paying 35.5 cents/kWh." 

Eliminating the Volatility 
McCroskey knows this issue won't be resolved any time soon. "[SDG&E] has indicated that it doesn't expect the problem to go away," he says. "In fact, it will be worse next summer because [the utility] can't get new capacity online by then." To help ward off more surprises in his electric bill, McCroskey has signed on with AES New Energy, an energy broker in Los Angeles. AES is working with the Western SPI Section to provide its member molders with electricity that is not only cheaper than what the local utility offers, but also lacks the volatility. 

Tom Willson, director of business development for AES New Energy, says the company has put together two products for its customers in the San Diego area. Both involve "firm-priced" electricity that is not subject to volatility, something Willson says is critical for owners of molding plants. Molders nationwide will feel the pinch of higher costs of generating and delivering electricity, he says. "When you're doing your budgeting for 2001, everyone should add at least 10 percent [for energy consumption], if not more, and, to be safe, as much as 30 percent," Willson advises. 

Learning by Example

To avoid a California-style power crisis, states must look east to states like Pennsylvania that have successfully restructured their electricity markets, said the head of the Electric Power Supply Assn. (EPSA) in a recent speech. "By encouraging and expediting a variety of wholesale and retail supply options, Pennsylvania is already reporting an estimated $3 billion in customer savings," said EPSA President Lynne H. Church while speaking at the National Press Club.

By speeding the transition to full competition in the nation's power markets, instead of reverting to the inefficiencies of monopoly regulation, Church said California and the other states tackling these issues can provide consumers with improved energy products and services, while at the same time putting downward pressure on prices.

"Above all, the biggest lesson for other states, regardless of whether they've restructured or not, is to respond to the ballooning demand for additional long-term power supplies," Church said. "There must be a balance between environmental and aesthetic considerations, the need for adequate generating facilities, and greater conservation measures." 

AES New Energy secures blocks of power from out-of-state generators, and then works customers into the system in one of two ways. "You can buy the power you need when you need it, or you can buy blocks of power. While buying the power on an as-needed basis costs more, it saves over the take-and-pay block if you're not running your plant at full capacity," explains Willson. "The higher the load factor, i.e. the closer [molders] are to 90 percent or 100 percent load factor, the more the block option makes sense." The advantage of going with one of AES New Energy's plans is that molders "can budget for it, plan for it, and price their product by it," says Willson. "The rates are up from what the molders were used to paying, but it has nowhere near the volatility the current rates do," he adds. 

In fact, it was his attempt to stabilize costs that prompted McCroskey to go with AES New Energy. "The contract with an energy provider separates the energy source from the energy distribution," explains McCroskey. "We'll pay to use SDG&E's lines just to get the electricity here, but have locked in our rates with an energy contract with [AES New Energy]. It's an insurance policy in which they'll provide us the electricity at roughly 6 cents/kWh." 

Willson says AES New Energy's rates have gone up too, just not as drastically. "A year ago, rates were running at 4 cents," he says. "In the summer they jumped to 7 to 8 cents/kWh. Today, it's more than 10 cents for the same block of power, but we're exploring every resource trying to drive that price down. Right now, however, it's a seller's market." 

"The thing that kills me," laments McCroskey, "is that we had the opportunity to go to an alternative energy provider a year ago, and we would have bypassed this problem. But our rep from SDG&E talked us out of it. He assured us they'd stay competitive, that these Johnny-come-latelys in the power brokerage business made it questionable and you don't know what you'll be paying." 

Willson advises molders to look for power based on their needs for a specific length of time, and the longer that time is, the better. "We recommend a three-year contract, which is what most of our customers have, because we think there will be significant relief in three years, but not much within that time frame." 

Hydraulic vs. Electric

To prove the energy efficiency of electric presses against hydraulics, Toshiba teamed up with Southern California Edison to perform some real-time testing of two machines—one electric and one hydraulic. Each machine ran a two-cavity mold producing polypropylene icicles. Each mold had a 173 g/shot part weight. The results showed a 75 percent reduction in energy consumption when using the electric machine. Here are the details: 

 

220-ton Goldstar
hydraulic

EC 240-ton Toshiba
all-electric

Rated energy consumption

.83 kWh/kg

.199 kWh/kg

Cycle time

31 seconds

27.2 seconds

Actual energy consumption

18.72 kW
(.93 kWh/kg)

4.71 kW
(.21 kWh/kg)

Energy Conscious 
In the meantime, many molders are starting to think green in an effort to offset the rising energy costs. Rocky Morrison, president of custom injection molder American Technical Molding (Upland, CA), saw his electric bills nearly double in 2000 from about $23,000/month to $40,000/month. In the face of these rising costs, Morrison plans to move toward all-electric presses as a way to reduce energy consumption. ATM recently added five Niigata electric presses—two 110-tonners, two 85-tonners, and one 55-ton machine—to its 25 hydraulic presses. 

"The future is heading toward electric presses," states Morrison. "They use half the voltage and amperage. They don't use water or oil, and because they run cooler, you use less air conditioning in the plant." Besides the energy savings, Morrison sees several other advantages to electric presses, including a high level of repeatability, cleanliness, and reduced noise. 

But the biggest advantage for ATM is the energy consumption factor. Morrison is willing to pay more upfront for an electric machine to realize the long-term savings in both direct and indirect operational costs. 

Those companies producing electric machines are quick to point out the significant energy savings these machines can offer. Koichi Kasamatsu, a sales manager for Sumitomo Plastics Machinery America (Norcross, GA), reports that a Sumitomo electric machine can save at least 50 percent on electricity costs and 90 percent on water costs. 

Cutting Through the Red Tape

There are several resources available for those interested in becoming more energy efficient; the following is the short list. The best place to start when looking for information on energy is with the U.S. Department of Energy (www.energy.gov). This site is packed with data on all things related to energy, domestically and internationally. Included is information on pricing and consumption, papers on energy efficiency, and details on the science behind it all. From there you can reach other resources, including these:

• DOE's Energy Efficiency & Renewable Energy Network (www.eren.doe.gov). Helps consumers become more energy efficient and provides more than 600 links to other sites and 80,000 documents on the subject.

• Office of Industrial Technologies (www.oit.doe.gov). Works to create partnerships designed to further the development and implementation of energy-efficient, renewable energy, and pollution prevention technologies.

• National Inventory of Manufacturing Assistance Programs (www.oit.doe.gov/nimap/states.shtml). Provides a networking guide for energy efficiency information and services. The database can be searched by name, area code, Zip code, state, and keyword.

• OIT Toolbook for Financing Energy Efficiency & Pollution Prevention Technologies (www.oit.doe.gov/toolbook/). Provides a step-by-step guide to financing and technical assistance, covering both federal and state options, including utility rebate and incentive programs. It can be read online or downloaded. 

To give even more quantifiable energy savings numbers, Toshiba teamed up with Southern California Edison in a real-time test of a 220-ton Goldstar hydraulic machine vs. a Toshiba 240-ton all-electric press. The results of the test, details of which can be seen in the sidebar, Hydraulic vs. Electric", showed a 75 percent reduction in energy consumption by the all-electric. 

Such claims of great savings have caught the eye of many, including the utilities. Connecticut Light & Power (CL&P), for instance, has a rebate program that rewards companies that install energy-saving equipment. Vanguard Plastics Corp. (Southington, CT), a small family-owned and -operated custom molder, took advantage of this generosity, purchasing a new $240,000, 330-ton all-electric press from Ferromatik Milacron for about $170,000, approximately what it would have paid for a hydraulic press of comparable size. The CL&P rebate made up the difference. 

Better yet, the all-electric saves the company about $1000/month on its electric bill, an 80 percent savings compared to one of the firm's similar hydraulic presses. (To find out more about rebates and available financial assistance, see the sidebar "Cutting through the red tape.") 

Of course there are trade-offs, and not everyone is completely sold on all-electric technology. Energy consumption issues aside, some molders still prefer hydraulic technology for process performance reasons. "Hydraulics have faster cycle times while electrics have better precision in controls and run more consistently," says Jeffrey Mengel, a partner at consulting firm Plante & Moran LLP (Southfield, MI). "If cycle time is important, molders will go with hydraulic." 

It's also important to note that all-electrics are not the only machines garnering the support of local electric service providers. Flyte Tool & Die Co. in Bridgeport, CT, which operates 20 injection molding machines, has been getting "some breaks" from its electric company for purchasing newer hydraulic equipment, reports molding plant manager John Haddock. The new machines are reportedly twice as efficient as the firm's existing machines in terms of energy consumption, he says. 

Whether the current energy crisis in California and looming price hikes around the country will prompt the growth of sales for all-electrics remains to be seen, but one thing is clear: Molders have been forced to take a closer look at how they manage energy consumption and will likely come out better for it in the end. 

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