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PSC indicates support for lowering Noranda’s rate

   

JEFFERSON CITY, Mo. – After a lengthy discussion, the Public Service Commission (PSC) gave Staff instructions to prepare an order granting Noranda Aluminum rate relief as a portion of the Ameren rate case.

No official votes were held today, but each commissioner gave their opinions, line by line, on the issues that are set to be determined in the case. Three of the five commissioners – Daniel Hall, Scott Rupp, and Bill Kenney – indicated they would support granting Noranda rate relief with numbers discussed ranging from $34 to $38 per megawatt.

Chairman Robert Kenney led the discussion and ultimately instructed the judge over the case to begin preparing an order to implement the will of the commission, which meets again on Wednesday of next week.

Just as the meeting began, Gov. Jay Nixon issued a statement supporting the stipulation filed by the Office of Public Counsel on March 10 that would have granted Noranda a rate of $34 per megawatt. Commissioner Steve Stoll was the most skeptical of Nixon and the other commissioners’ position, but, during the discussion, indicated he has kept an open mind throughout the process and would continue to do so.

“Noranda is a vitally important employer that supports the livelihoods of hundreds of Missouri families and anchors the region’s overall economy,” Gov. Nixon said. “This proposal by the Office of Public Counsel and consumers is a workable path forward that would protect ratepayers and I hope that the PSC gives it serious consideration.”

If the other commissioners can convince Stoll to join the consensus, a victory at the PSC today — along with the well-received announcement as the meeting ended that Nixon was appointing Nicole Galloway as State Auditor — serves as a sign that the Governor is regaining momentum after a challenging fall.

Currently, Noranda pays $42 per megawatt. In the coming days, before an order is approved, the PSC will have to decide how much rate relief they will receive.

The commissioners were unconvinced that Noranda was in as dire of a financial position as they claimed to be, but Commissioner Rupp, who has a background in finance, pointed out the potential for them to get in that place was real. Commissioner Hall stated that he believed there was a danger the plant would go out of business, although he was joined by all of the commissioners in chastising Noranda for telling one thing to the PSC and another to their investors and financiers.

There was some discussion about the stipulation the Office of Public Counsel filed on March 10. Under their proposal Noranda would pay a rate of $34.00/MWh. The proposal also features several provisions aimed at reducing electric rates for low-income families.

Ameren has previously proposed that Noranda be classified as a wholesale consumer of energy, rather than as a retail business. But consumer groups say that will cause rates to go up if Noranda is no longer on the grid. The new stipulation proposal comes in a rate case where Ameren is requesting a $264 million increase and a 10.4 percent return on equity.

The commission discussed what Ameren’s future rate of return should be and the mean number calculated by Commissioner Bill Kenney was 9.5, but they all decided to take more time to consider the number instructing an order be prepared.

Ameren is, by law, limited in how much money it may make in any given year, and has frequently had to deal with accusations of overearning, which the commission unanimously rejected last fall. Ameren counters that Noranda’s rate is far below the cost of service.

“The current stipulation is nothing new,” said Irl Scissors, Executive Director of the Ameren-backed Missourians for a Balanced Energy Future. “Industry experts continue to prove that Noranda is making up their own hardship forecasts. The entire foundation of Noranda’s request for a rate reduction on the backs of other electric consumers is baseless.”

OPC, Missouri Industrial Energy Consumers, Missouri Retailers Association, Consumers Council of Missouri, Sierra Club, Ameren, Midwest Energy Consumers Group, PSC Staff, and United for Missouri all filed reply briefs relating to a variety of questions from consumers and commissioners that emerged during the hearings over this past weeks clarifying their stances. Commissioner Rupp discussed two briefs – in particular, one from the Missouri Department of Economic Development and the other from United for Missouri.

Many other complaints relating to Ameren were rolled into the stipulation and addressed in the hearings, such as weather normalization, income tax issues, amortizations, ice storm AAO, storm restoration costs, vegetation management and infrastructure inspection trackers, union issues, economic development riders, lighting issues, Labadie electrostatic precipitators, and fuel adjustment clause (FAC) issues.

The commission mostly sided with Ameren and against most of the complaints. However, the commission did remove several energy trackers that allow the utility a way to recoup investment costs faster.

Before today’s agenda was addressed, new staff was introduced, including Hampton Williams of Carthage, Missouri.

Collin Reischman contributed to this story.