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February 23, 2015
By Bob Matyi

Ohio consumer advocate opposes Eramet extension

An Ohio consumer advocate said Eramet Marietta, one of two producers of manganese ferroalloys in the US, has failed to demonstrate its requested extension of a discounted electricity rate is "just and reasonable" and should not be approved by the Ohio Public Utilities Commission.

In a filing last week with the commission, the state Office of Consumers' Counsel, Ohio's residential utility consumer advocate, joined with the Ohio Energy Group in urging denial of Eramet's application unless the French-owned company provides additional supporting information.

Eramet Marietta is operating under a "reasonable arrangement" with American Electric Power that took effect October 28, 2009. The deal is to expire in 2019, but Eramet is seeking a one-year extension through 2020.

According to OCC, the company's power discount funded by AEP's Ohio customers over the original 10-year duration was estimated at $37.2 million to $57.2 million.

Eramet said it needs lower rates for an additional year, in part to justify spending up to $25 million at Marietta to comply with a US Environmental Protection Agency hazardous air pollution rule expected to be issued in May, with compliance starting in May 2017.

But OCC said Eramet has said it will only use "best efforts" to secure the $25 million in environmental investment and has not fully committed to the project or to maintain an average 175 full-time employees at Marietta should the extension be granted.

"As noted by the Ohio Energy Group, Eramet did not quantify the amount of discount that is to be given to it under the proposed amended application," OCC said. "This is important information because [AEP] customers will likely be asked to pay in whole or part for the discount," essentially to make up the difference between the discount and AEP's normal rate tariffs.

Eramet is asking for an "all-in rate" that would cover all electric generation, transmission and distribution charges plus any surcharges, riders or other bill adders, OCC said

"But Eramet does not identify what the impact on other customers [or AEP] will be if it avoids or bypasses the numerous riders," OCC said.

Also causing concern for OCC is Eramet's proposal, "to the extent possible," to obtain generation from competitive power suppliers instead of AEP. If Eramet switched the plant to a power marketer, OCC said, customers subsidizing the discount to Eramet "will be subsidizing a competitive generation service offered by a third party. This appears to be an unlawful subsidy of competitive service by non-competitive services."

Rising electricity costs increasingly have become a major concern for US metals manufacturers in recent years. They have been blamed for the shutdown of several plants, including Ormet's 260,000 mt/year Hannibal aluminum smelter in southeastern Ohio.

The PUC is expected to rule on Eramet's request this spring.

Eramet does not disclose capacity figures. Felman Production's plant in New Haven, West Virginia, is the other silicomanganese producer in the US.