Senator Feinstein Seeks to Help Small Businesses Hurt
by Power Crisis in Western United States
February 8, 2001

Washington, DC --U.S. Senator Dianne Feinstein (D-Calif.) today introduced legislation to aid small businesses facing exorbitant energy costs in the West, which could force them to shut down or lay off workers due to the current energy crisis.

The bill authorizes $25 million for the U.S. Economic Development Administration to operate a revolving loan fund to assist small business owners in California and other states affected by the shortage.

“While many businesses throughout the West have felt the impact of the power shortage, smaller firms are taking a larger hit because they pay a greater percentage of their budgets to energy and gas bills,” Senator Feinstein said. “This legislation will hopefully help prevent these firms from being forced to close their doors or lay off employees because of skyrocketing energy costs.”

Small businesses, classified as those with 500 workers or fewer, employ 37 percent of the California’s total workforce.

The bill allows small businesses to be eligible for loans if their monthly gas or electric bills are at least double what they were a year ago. If a company’s gas bill, for example, is $4,000 in the months of January, February, and March 2001 and the company averaged only $2,000 for the same period last year, that firm is eligible for a no-interest loan.

The measure will allow small business customers of the Pacific Gas and Electric Company, Southern California Edison, or San Diego Gas and Electric in California who are not covered by a State-mandated cap to apply for the no-interest loans to stave off lay offs, re-hire employees, and keep their facilities up and running.

The bill also covers other areas of the Western United States because the current power drain has led to higher costs for businesses throughout the Northwest. Some aluminum and paper manufacturers in Washington and Oregon have already been forced out of business.

Small businesses that were covered by a state cap on energy expenses will not be eligible for the loan program. The revolving loan fund will help dozens of small manufacturers with so-called “interruptible contracts” which are price discounts to users who agree to reduce consumption during peak demand periods.

But while companies can withstand infrequent power interruptions, the fact is that California and other states have been hit hard by the energy crisis and the service interruptions have come far too frequently.

“Today, even small business owners who chose not to join the interruptible list -- and opted instead to brave the higher gas and electric bills -- have found the price spikes too much to handle,” Senator Feinstein said. “Sadly, many of these firms have discovered that they too are being forced to shut down because they can’t pay their energy bills.”

Here are a few examples of companies that have been affected:

• A small business owner in San Diego operating a fluff-and-fold laundry facility was forced to close when his December electricity bill jump four-fold to $4,000. At this time last year, his monthly bill was roughly $1,000.

• The Saint-Gobain Calmar company -- a plastics manufacturer in Los Angeles with roughly 300 employees -- has been forced to stop production 22 times in the past six months because of the fim’s “interruptible” status. Although the company has been able to avoid layoffs up to now, the owners say the outlook is not good.

• Another example is the McKoen and Associates potato-flake plant in Tule Lake, California. The owner of the facility says he may be forced to lay off about 100 employees permanently due to the mandatory shut downs.