Suncast Corp., maker of consumer plastic storage and furniture products, is agreeing to stay and increase production in Batavia, if it can get a break on how much it pays for electricity.
The Batavia City Council will vote Monday on a contract that offers incentives, including rebates of up to $7.5 million and the ability for Suncast to buy some of its electricity at market rates, which right now are lower than that offered by Batavia.
"We feel it is really important to keep that employer here. The impact of them leaving would be very, very difficult to deal with in terms of impact on our rates," let alone the loss of about 1,200 jobs, said city administrator Bill McGrath. He said the company was looking at moving its operation to another state.
The deal, recommended unanimously by the council's joint committees of the whole Tuesday, also calls for the city to pay up to $250,000 of the cost of adding electrical equipment at Suncast to accommodate the increased electrical load, and a $231,000 one-time incentive payment related to what Suncast will have paid for electricity from August 2011 to July 2013.
Suncast is the city's largest employer, and its biggest electricity customer. The deal concerns electricity used at its plant at 701 N. Kirk Road. It also has a warehouse in the industrial park east of Kirk.
It uses about 12 percent of the city's electricity.
Alderman Mike O'Brien said that if Suncast weren't buying Batavia's electricity, Batavia be selling it on the PJM market, where it is selling power for less than it pays for it. Selling to Suncast keeps jobs in town, he said.
"I support it because the break, the incentive, is on additional power (used). We would rather give it to Suncast than to the market," O'Brien said.
Under the proposed contract, Suncast will pay Batavia's standard commercial bundled rate for up to 61.5 million kilowatt-hours per year. That's how much it used in 2013. Anything above that, it can pay market rate or Batavia's rate, whichever is lower.
The contract would be retroactive to Jan. 1 and extend to Dec. 31, 2023.
The potential $7.5 million rebate would be based on how many kilowatt-hours of new usage there is, at 2.52 cents per kilowatt hour, for this year through Dec. 31, 2019.
And it depends on whether the city gets $7.5 million in grants for roadwork from the state of Illinois.
The city pays for roadwork out of its general fund, which receives state money, and out of its motor fuel tax fund. Under the contract, an amount equal to the state funds would be used to pay the electricity rebate.
If the city receives less money, the rebate would be less. The rebate is for the first 50 million kilowatt-watt hours per year and is capped at 300 million kilowatt-hours total.
The city has a similar market-services agreement, where the user can pay a lower market-based rate for increased electrical use, with Rubicon Technology, which makes sapphire substrates used in the electronics and optical industries.
The city is also offering market-based rates to a new customer, AGS Technology, a plastics-injection molding company moving in to the former Portola Packaging plant.