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InBev plays hardball to get price break on city water.

Faced with high water rates, Anheuser-Busch InBev reportedly scaled back production dramatically at its Williamsburg, VA, brewery. Now the local water utility, which resisted lowering its rates for the brewery for years, has proposed a lower industrial water rate.

According to the Virginia Gazette, production at the brewery was scaled back substantially since the InBev takeover, and the brewery reduced its distribution area. A-B InBev said that media reports that production dropped by 50% were "incorrect information" though brewery workers told the Gazette that lines had been shut down with some frequency.

According to the Virginia Gazette, A-B InBev even shifted production of some products to Baldwinsville, NY, to save on water costs, bringing the liquid back to Williamsburg for packaging.

Anheuser-Busch had pressed Newport News Waterworks for lower rates in the years predating the InBev takeover. But the drop in production in the last couple of years really brought the issue home to the Williamsburg-area community.

When the Waterworks declined to consider a price cut, county supervisors considered plans on how to resell water to the brewery at a reduced rate.

This week, however, Newport News Waterworks suggested a rate reduction to the Newport News City Council. In what the Virginia Gazette called "an extraordinary turnabout" the Waterworks proposed a new industrial water rate.

The Waterworks cited a recent study found that residential customers were not shouldering their "cost of service" and industrial users were paying too much.

Waterworks spokesperson Lee Ann Hartmann told the Gazette that the previous rate structure also didn't take into account economies of scale for industrial users.

The new schedule would charge industrial users a standard $3.32 per hundred cubic foot rate (for the equivalent of approximately the first 30 million gallons). After that, the industrial rate would kick in at $2.89 per hundred cubic foot.

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Publication:Modern Brewery Age
Date:Mar 18, 2011
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