American Metal Market
AMM
May 29, 2014
By Daniel Fitzgerald

Felman can't reach deal on power rate

NEW YORK - Felman Production LLC and Appalachian Power Co. Inc. (APCo) have not reached a deal on a new electricity rate due to a disagreement over how the silicomanganese producer's discount should be calculated.

APCo has filed a petition for clarification with the West Virginia Public Service Commission over the commission's April 3 order granting a special electricity rate to Felman's New Haven, W.Va., plant and its subsequent reiteration of the order May 14 (amm.com, May 14).

"Since April 3, APCo and Felman have communicated with the objective of reaching agreement on a special rate contract for the purchase of electricity by Felman pursuant to the commission's April 3 order," APCo said in its petition. "In the course of the communications between APCo and Felman regarding a special rate contract, it has become apparent that APCo and Felman have different views about features of the special rate, in particular aspects of the special rate discussed in the May 14 order."

APCo said that "the principal disagreement between APCo and Felman surrounds the calculation of the discounts that Felman could receive under the special rate."

APCo contends that the maximum possible discount available to Felman for the first year of any special rate contract would be $9 million, and that "the discount calculated under the discount formula is limited by the number of megawatt hours (MWh) consumed by Felman because the discount is calculated on a 'per-MWh' basis.

"Felman's rate would be based on the following calculation: dividing the $9 million maximum possible discount by the annual base usage," APCo said. "An alternative view of the special rate is that it guarantees that Felman receive a $9-millioh discount annually. If, for example, Felman should use only $1 million of that $9 million discount, $8 million would be added to the carry-forward credit for later use. APCo submits that this view of the special rate is incorrect. Otherwise, the commission's May 14 order would not have included language that expressly indicated that the discount would be calculated on a per-MWh basis.

"Letart, W.Va.-based Felman previously had announced its intention to sign a new deal with APCo by May 1, complaining that it was "incurring sizable losses" while its New Haven plant was in standby mode (amm.com, April 11).