The Herald, Sharon, Pa.

Business

March 7, 2009

FirstEnergy customers will cover ‘secret’ discount

Michael Roknick and Christopher Lehberger

A first-of-its-kind electric deal for an Ohio company has caught the eye of businesses on both sides of the border.

On Wednesday the Public Utilities Commission of Ohio approved an agreement with V&M; Star Co. and Ohio Edison Co. Under the 10-year deal, the pipe maker will get a discount on electric rates on the promise of creating 300 jobs by expanding its Youngstown operations.

The discount on the electric generation part of the company’s bill will be subsidized by FirstEnergy Corp. customers in Ohio which, in addition to Ohio Edison, includes Toldeo Edison Co., and Cleveland Electric Illuminating Co.

FirstEnergy’s Pennsylvania Power Co. customers in Pennsylvania are not part of this deal.

PUCO approved V&M;’s request that the discount rate was a trade secret and that it not be made public. The agency ordered the discount rate be kept under seal for the duration of the 10-year deal.

Matt Butler, a PUCO spokesman, said the electric rate falls under the category of proprietary information and keeping the details under wraps ensures the safe-keeping of the company’s competitive edge.

“The commission agreed with V&M;’s argument that they would be at a competitive disadvantage to have this information made public,’’ Butler said.

Such rulings are not uncommon as the commission doesn’t reveal marketing information in natural gas cases, Butler added.

Factored into the agreement is that V&M; will consider energy efficient resources such as capturing and using waste heat to produce electricity, improving its electric furnaces and redesigning its compressed air system.

Ohio Edison is not affected financially by the agreement as the company is a distributor, not a generator of electricity, said Ellen Raines, a company spokeswoman.

Getting an electric discount can reap a huge savings for business — particularly those in the steel industry — said Lee McCracken, president of Premier Power Solutions, an energy broker in Grove City.

“Even something as small as a penny off on every kilowatt-hour could mean several hundred thousand dollars for a small steel plant,’’ McCracken said. “For a bigger plant it could run into millions for just one company. You’re talking big, big dollars.’’

With states such as Ohio and Pennsylvania moving to deregulate the electric markets, he questioned why PUCO would keep the rate a secret.

“If this is being done in a deregulated market I would say why not see what the rates are so that it can be evaluated to see if it’s reasonable,’’ McCracken said. “I’m not so sure keeping it a secret is being fair to other FirstEnergy customers in Ohio.’’

With large industrial clients in Ohio, McCracken said he will be checking on their behalf to see if they qualify for an electric discount.

V&M;’s deal is the first of its kind under a new Ohio law that went into effect in January. The law allows PUCO to give electric discounts to large industrial customers if it can be shown it will have a vital impact on jobs in a community. Discount rates can vary depending on such factors as a company’s size and employment capabilities.

A business probably could apply to the commission if it could be shown an electric discount would also save jobs, Butler said.

“The hope is the economic development benefits and efficiencies created for a company would benefit everyone particularly in these difficult times’’ Butler said.

He added this isn’t a situation where every company in the state would be granted a discount just by asking for one.

“The commission will take a look on a case-by-case basis when it comes to approving anything,’’ he said.

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