JEFFERSON CITY, Mo. – With the recent announcement of layoffs at Noranda’s New Madrid smelter in light of Public Service Commission (PSC) not granting the company an affordable rate, utility consumer groups have announced their support for a motion filed by the Office of Public Council (OPC) to ask regulators to rehear the rate case this afternoon. Noranda’s case for rate relief was denied this summer; the company has previously asked for a rehearing of the compromise.
“You hear about other aluminum smelters shutting down because of high electricity costs, but we’ve long hoped it wouldn’t happen here,” reads a release from Noranda about the rehearing. “Now I fear the recent job losses at this plant are just the tip of the iceberg if state regulators don’t step in and quickly approve this compromise. The men and woman who show up for their shifts every day are doing everything within our power to make this plant a success. Now is the time for the Missouri Public Service Commission to partner with Noranda and all of our employees to save these jobs. Without the PSC’s help, our families are in danger.”
“This request is about jobs and the fact that a proposal supported by representatives of all customer classes wasn’t considered,” said Layle K. “Kip” Smith, President and Chief Executive Officer of Noranda which last week announced it had initiated a workforce reduction expected to eliminate 125 to 200 jobs at the aluminum smelter over the next six months. “If our rehearing request is successful, and depending on how quickly an affordable rate can be secured, we would be in position to re-evaluate these actions and minimize job losses.”
The Fair Energy Rate Action Fund supports the rehearing and recognizes the compromise that OPC drafted will save all ratepayers money. The compromise would grant 45% of the affordable rate requested by Noranda. Noranda is Ameren’s largest energy consumer and an economic staple in Missouri’s boot heel. Smelters historically use a very large amount of energy; the New Madrid smelter has the second highest rate of any aluminum smelter in the country.
“Right now, Ameren’s massive rate hikes are crippling families and businesses, including Noranda,” said Joan Bray, former state senator and executive director of Consumers Council of Missouri, a member of FERAF. “The commission should approve this compromise settlement because it will protect consumers. If the commission does nothing, the evidence shows that rates will be even higher for all consumers.”
FERAF pointed out that the 200 jobs eliminated at Noranda are a direct result of the constant barrage of electric rate hikes by Ameren Missouri in recent years.
“But the Commission determines that the evidence presented in this case does not warrant a departure from cost-of-service ratemaking,” the Commission said upon denying and dismissing the case. “The Complainants have not demonstrated a liquidity crisis nor adequately demonstrated that Ameren Missouri’s remaining ratepayers would be better off if Noranda took service at its requested rate than they would be if Noranda exited Ameren Missouri’s system. Finally, and importantly, a request for an economic development subsidy of this magnitude is more properly directed to the Missouri General Assembly.”
Public records that Ameren turned over show it has earned above the PSC authorized rate of return for the past 33 consecutive months. The PSC said that Ameren overearned $25 million but chose to not act on it. That $25 million, which costs Noranda $2.5 million, represents a lot of jobs and those workers families that could have been spared.
“It is unbelievable that Ameren Missouri’s own reports show it earned excessive profits for 33 consecutive months and the PSC chose to do nothing about it,’’ Bray said. “Ameren’s overearnings cost consumers millions of dollars a year, and the PSC turned a blind eye to that burden.”
Legislators hope that the rehearing will be able to provide Noranda with a compromise.
“For Noranda to compete in these economic conditions, the PSC must grant this rehearing and approve the consumer-friendly OPC compromise. Without the leadership of the PSC, these 900 family sustaining jobs could be lost and the economy of the Bootheel could be permanently damaged,” stated Sen. Doug Libla (R-Poplar Bluff). “The viability of Noranda’s plant is very dependent upon having reliable and affordable energy. This rate relief filing with the PSC will protect Missouri’s economy, workforce, and rate payers.”
“Noranda currently pays the second-highest electricity rate of any U.S. aluminum smelter,” Sen. Gary Romine (R-Farmington) said. “This is a recipe for disaster and has put the jobs of 900 Southeast Missouri families at risk. I support the Office of Public Counsel’s compromise, which will protect consumers and save these jobs. The PSC should act quickly to approve this deal.”
Barry Aycock, CEO of AgXplore, a leading agriculture specialty company based in Parma, issued this statement following the Office of Public Counsel’s motion for a rehearing in the Noranda rate case.
“As a small business owner in the bootheel, the loss of Noranda would be devastating to our region and state,” Aycock said. “Noranda contributes $300 million annually to Southeast Missouri’s economy. These layoffs at the plant are real and if the Public Service Commission doesn’t approve this compromise, rates will be higher for all customers.”
However, not all are supportive of the compromise.
“We fully support the Missouri Public Service Commission’s unanimous order rejecting Noranda’s claim,” read a statement from Missourians for a Balanced Energy Future. “The report clearly indicated that the smelter misrepresented its financial status to the Commission and the relief requested would in fact cost Missouri consumers MORE, not less as Noranda alleged. Their stock price jumped 33% today on the heels of paying millions of dividends to shareholders, which is great news for Wall St., but no relief for laid off workers.”
Over the past eight years, Ameren Missouri has increased rates 43 percent, or $860 million, and collected $500 million more in surcharges. Ameren has also filed for another 10 percent increase, or $264 million, that is currently pending before the PSC.
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.