Several key groups filed testimony with the state Public Service Commission last week opposing Felman Production's request for a special power rate for its Mason County plant.
Felman has asked state regulators to approve a 10-year special power rate for its New Haven steel additive manufacturing plant.
The plant shut down earlier this year because of poor market conditions for silicomanganese, a deoxidizer that allows steel manufacturers to produce a purer form of steel.
The company's rate proposal 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 potential discounts would come from the $9.5 million the company pays each year to cover Appalachian Power's fixed costs. Since electricity represents 20 percent of the company's production costs, Felman said the new rate structure would help it restart production and better compete in the global market.
Last Friday, Appalachian Power, along with analysts from the West Virginia Energy Users Group, PSC staff and the Consumer Advocate Division, all filed written testimony opposing the Felman plan.
Steven Ferguson, director of regulatory services at Appalachian Power, said the Felman plant already has a special power contract, negotiated in 2006, that provides the company with discounts while protecting other ratepayers.
Ferguson said the new rate proposal has the potential to shift up to $95 million in costs onto Appalachian and Wheeling Power ratepayers over the next 10 years.
"This could shift a substantial portion of Felman's business risk from Felman to the companies and their ratepayers," he said.
While Appalachian Power provides service to Felman, the Wheeling Power customers could be affected in the future through the proposed merger of the two utility companies.
Felman has estimated the average residential customer's bill would go up by about 55 cents a month if the full $9.5 million discount is taken. When prices go back up, as Felman officials believe they will, the company would pay a premium on its power bill and that could be used to lower costs for other ratepayers.
Barry Nuss, chief financial officer at Georgian American Alloys, told the Daily Mail earlier this year that this rate proposal leaves consumers no worse off than they would have been if Felman shuts down permanently.
"If Felman shuts down, Appalachian Power will still have to collect the same $9.5 million a year in fixed costs that Felman pays currently," he said. "This would be accomplished by spreading the same amount of total fixed costs over the remaining, smaller customer base."