JEFFERSON CITY, Mo. — The Public Service Commission unanimously denied Noranda’s request for electricity rate relief today in a 5-0 decision, making the closure of the New Madrid smelter which employs almost 900 people possible. It is expected that layoffs will start within the week and the construction of expansion of Rod Mill will end, which Governor Nixon helped to break ground on last year.
Noranda has publicly stated that the New Madrid smelter has the second highest utility rate of any aluminum smelter in the country. The company requested an adjustment of about 25% in order to increase liquidity. Noranda is the Ameren’s largest customer and at a recent quarterly earnings call, shared that the New Madrid plant is one of the most productive in the country, but during testimony before the PSC, its CEO Layle “Kip” Smith told the commission that if they were not able to secure rate relief Noranda would have to relocate their planned rod mill and be forced to layoff employees.
Ameren has other cases to be heard before the PSC, which has no commissioners from Southeast Missouri, requesting a rate increase which were filed after Noranda’s request for relief. A series of public hearings before the commissioners of the PSC showed a large number of Ameren rate payers who were very concerned with their current rates with the utility company.
Since the PSC’s official denial and dismissal, Noranda’s stock has dropped almost 11%. In a statement, the company said they were “disappointed” in the decision, yet will “remain committed to transforming our cost structure to reducing the cost of New Madrid’s electricity.”
The PSC spent the most time on the Noranda denial, with each commissioner making a statement regarding the decision. Each contended that though the decision was difficult, they could not justify approving rate relive because they believed that Ameren would make other rate payers subsidize the decrease in Noranda’s rates. The commission also shared that they thought Noranda was very important to the regional economy and they hope that the companies will work out an agreement on their own.
PSC Chairman Robert S. Kenney said “customers would not be better off,” while Commissioner Scott Rupp said that he did not believe that Noranda’s case “met the threshold” for relief. Commissioner Bill Kenney said that he “did not think it was proper to subject the rest of the rate payers to subsidize them.”
In the post hearing conference, Commissioner Rupp said, “I did not believe the liquidity crisis was as much as being represented. I don’t think it’s fair to ask all the shareholders or all the ratepayers of Ameren…to burden the whole cost of any type of rate reduction.”
“This is truly a win for all Missouri electric consumers. I’d like to commend the PSC staff, Commissioners and Judge Woodruff for their careful consideration and analysis,” said Irl Scissors, Executive Director of Missourians for a Balanced Energy Future.
Rachael Herndon was the editor at The Missouri Times and also produced This Week in Missouri Politics, published Missouri Times Magazine, and co-hosted the #MoLeg podcast. She joined The Missouri Times in 2014, returning to political reporting after working as a campaign and legislative staffer.
Rachael studied at the University of Missouri – Columbia. She lives in Jefferson City with her husband, Brandon, and their two children.