Held Over a $700K Barrel, Alcoa Says

CANTON, N.Y. (CN) – Aluminum-production giant Alcoa claims in court that a former business partner tried to bait it into renegotiating by refusing to pay out $700,000 owed from a New York state energy-reduction program.

The deal dates back to 2013, according to the complaint, which Alcoa filed up by the Canadian border in St. Lawrence County Supreme Court.

Alcoa says it had a successful contract for two years, helping Demansys Energy to reduce its electricity consumption at one of its smelters in exchange for revenue under a program run by New York’s power grid operator.

After Tarsier bought out Demansys in December 2015, however, the complaint says Tarsier’s CEO dangled payments Alcoa was owed as leverage to negotiate a new contract.

The maneuver in March 2016 caused Alcoa to back out of the energy-reduction program almost immediately, according to the complaint. Alcoa says it terminated its contract with Tarser a month later and signed on with a new service provider in September, but that the process cost $900,000 in revenue.

Run by the New York Independent Service Operator, the state’s electricity-reduction program is designed to ease the stress on the power grid in the state. Energy-management companies like Demansys and Tarsier that receive payments under the program are then required to pass along to energy users.

Under the Demansys agreement, Alcoa says it was owed 80 percent of the monthly revenues, as well as compensation for low production costs associated with the lower energy consumption and a portion of the revenues to offset hardware and software costs. Demansys, which is not a party to the Dec. 19 complaint, would take the remaining 20 percent of the remaining revenues under the agreement.

Despite meeting the contract’s terms initially, Demansys began missing its monthly obligations to Alcoa in May 2015, according to the complaint.

When Tarsier acquired Demansys in December, Alcoa says it was owed roughly $600,000. Tarsier allegedly resumed making weekly payments to Alcoa until the payments stopped altogether in March.

Alcoa claims it withdrew its smelter from the program and notified the state. It says Tarsier CEO Isaac Sutton admitted to withholding Alcoa’s payments during a call two weeks later because the contract was not profitable to Tarsier.

Sutton, also a defendant in the complaint, then allegedly said Alcoa would not be paid any further revenues unless it entered into a new four-year contract that also allowed Tarsier to generate more substantial revenue through the NYISO program. In return for the more favorable contract, according to the complaint, Sutton offered to pay $250,000 of the $700,000 owed.

Alcoa says it later learned that Tarsier had reintroduced the smelter into the state program at least three times without Alcoa’s consent.

Tarsier is a technology company with a number of energy-saving business solutions, including LED lights and solar farm development. A representative for the company has not returned a voicemail seeking comment left in the general mailbox.

Alcoa is represented by John Nutter, an attorney with the firm Woods Oviatt Gilman in Rochester, N.Y.