The announced closings of three casinos in Atlantic City — and the seemingly inevitable closings of a few more — have state and local governments scrambling to address the economic consequences that will have in the area.
Perhaps overlooked is the impact these closings will have on businesses that serve these casinos, such as Atlantic City Electric.
“The casinos that we have, about 11 or 12 and probably south of that soon, makes up about 10 percent of our sales,” said Vince Maione, the regional president of Atlantic City Electric.
A.C. Electric, which ranks No. 7 on the NJBIZ Top 100 Privately Held Companies list, had $1.22 billion in revenue last year — meaning a loss of 10 percent is more than $100 million.
Making up that type of money — with the threat of more casino closings coming — is not easy.
“Looking at what we need to do as a business, it's difficult,” Maione said.
A.C. Electric serves 550,000 customers in South Jersey, from the southern portions of Gloucester, Camden and Ocean counties down to Cape May.
Passing the losses back to those ratepayers is never an easy sell. With that in mind, Maione said the company will look to cut costs by weighing out or scaling back future projects.
But even that's a tough discussion, since infrastructure projects are the key to future growth.
“As the utility evolves over the years, the biggest challenge, I think, is to keep focus on our infrastructure and focus on our customers' expectations,” Maione said. “Our infrastructure is something we recognize as constantly needing improvement and constantly needing attention in order to maintain that level of customer satisfaction.”
Frank Felder, director of Rutgers University's Center for Energy, Economic & Environmental Policy, said there's a scope of factors that prompt updates to infrastructure, ranging from the mundane events such as a car taking out a pole to major weather events such as Hurricane Sandy.
Luckily for A.C. Electric and its roughly 850 employees, it didn't take a hurricane to teach the company its business hinged on infrastructure.
Since the beginning of 2010, the company has invested about $685 million in its infrastructure. This includes upgrading distribution circuits and poles, along with two new substations and upgrades to existing substations, with more planned.
“We've been proactive, even prior to Sandy. And they've been very fruitful to us,” Maione said. “We've seen almost 50 percent improvements in both duration and frequency — (or) how often people go out and how long they stay out.”
Felder said improved infrastructure might just increase efficiency and help make up for losing the area's casinos. And he doesn't just mean replacing utility poles — upgrades to computer systems, which are seeing improvements at an exponential rate, are becoming more important these days.
“The types of newer technologies include automatic switching — when there's a problem, portions of the grid can reconfigure itself — (and) more advanced sensing systems, like smart meters that can detect an outage,” Felder said. “It can inform maintenance and even anticipate problems.”
Maione said A.C. Electric and its customers already are seeing the value in the investment.
“Some people see one outage, one may see two or three outages and someone may see no outages in a year,” he said. “It's been getting better every year.”
According to Maione, the average duration is a little more than 100 minutes, or about an hour and a half.
And cutting down that duration remains an important goal. As technology is increasingly integrated into our everyday lives, the need for a reliable delivery of electricity becomes greater.
“With the advent of so much technology, people don't tolerate being out of service as much as they used to back 30 years ago. Everyone wants their service on immediately,” he said. “That's something we continue to stay focused on, making those improvements.”
In part, that means integrating the same technology A.C. Electric is servicing into its own systems.
“There's more information for us to utilize to make improvements and restore customers quicker than ever,” Maione said. “We've added changes to our mobile app that let's them get real-time information if they go out of service. We post the latest news and the customers can pay their bills on that application.”
And as they look to the future, the focus will stay on the infrastructure and the customer — two items that, at least for A.C. Electric, always fit in the same sentence.
“As we move forward, we're going to continue to make investments in our infrastructure and continue to make investments in our systems to help our customer service, especially around the experience our customer has,” he said.
A.C. Electric will do all of this while continually keeping an eye on the casinos, searching — like everyone else — for answers to the issues in the Atlantic City area.
“It is a significant part of our business, and also the amount of people that they employ is significant,” Maione said. “We're trying to stay focused and work with the county, local and state government to see what we can do to try and assist as these casinos go through this little bit of turmoil and change in their industry.”
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