Felman Production is rebutting criticisms that its special power rate proposal will guarantee the profits and allow the New Haven plant to skirt much of its power costs over the next 10 years.
The company last week filed rebuttal testimony in its special rate case currently before the state Public Service Commission.
In it, company officials called allegations the rate plan was being done merely to guarantee profits for investors in the idled Mason County plant as "offensive and naive."
"Our proposal doesn't guarantee that Felman makes a profit, what it does is allows us to continue operating as these periods of weak commodity markets come and go," said Barry Nuss, Felman's chief financial officer.
Felman wants the PSC to approve a 10-year special power rate for the steel additive manufacturing plant.
Felman is one of two domestic producers of silicomanganese, a deoxidizer that allows steel companies to produce a purer product. It's made by taking three raw ingredients and heating them to 3,000 degrees Fahrenheit in an electric arc furnace.
The plant shut down earlier this year because of poor market conditions. The company is working to determine if the shutdown will be temporary or permanent.
Because electricity represents 20 percent of production costs, Felman said it needs a more favorable power rate (its rate has risen about 45 percent since 2008) to compete globally.
The proposal the company submitted to the PSC would allow the plant's power rate to float according to the costs of its raw materials and commodity prices, offering the company up to $9.5 million in annual discounts on its power bill.
The $9.5 million figure comes from the amount Felman has been paying each year to cover Appalachian Power's fixed costs of operations. Should Felman shut down permanently, those costs would be shifted to other ratepayers.
When commodity prices are low, as they are now, Felman's power rate would go down. When they go up, Felman would pay more.
Last month, representatives from Appalachian Power and other parties filed testimony opposing the plan.
The power company said the proposal could shift a substantial portion of the company's business risk onto regular ratepayers.
Richard Baudino, consultant for the West Virginia Energy Users Group, which represents several large manufacturers across the state, called a portion of the plan that provided Felman a guaranteed gross margin on production "fatally flawed" and "unacceptable as proposed."
"West Virginia ratepayers, and particularly other West Virginia businesses, should not be required to support a rate of return for Felman's investors," Baudino said.