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Possible breakthrough in Noranda rate relief case

  

JEFFERSON CITY, Mo. — The Missouri Office of Public Counsel filed a Stipulation recommending Noranda Aluminum receive rate relief totaling 60 percent of their original request. The filing comes one day after five Public Service Commissioners indicated that they were unwilling to grant Noranda the entirety of their request.

The Missouri OPC, which represents the interests of the public and utility customers in PSC proceedings, formally offered a stipulation to the PSC reducing the plant’s base electricity rate from $37.94 MWH (megawatts per hour) to $34.44 MWH and requiring the plant to refund any of the savings gained if the plant engages in layoffs in the first year, or drastically reduces its full time workforce.

The OPC recommendation states that Noranda’s closure in New Madrid would negatively impact consumers across the state.

“Further, OPC offers this Stipulation because closure of Noranda’s New Madrid smelter would result in Ameren Missouri’s ratepayers being worse off than if the Commission ordered this Stipulation to take effect, in that the remaining ratepayers are then at risk to pay materially more in their base electric rates and in their fuel adjustment charges, and the primary and secondary economic effects of Noranda’s closure would be felt throughout the economy of the State, particularly in Southeast Missouri,” one portion of the stipulation reads.

The Stipulation would prevent layoffs of Noranda’s workforce for at least one year and require the smelter to retain a minimum workforce of 850 full-time employees. The stipulation agreement also contains “clawback” provisions — requiring Noranda to refund money to the state if they do not meet the conditions outlined.

Inside the plant
Inside the plant

The OPC also changes the way the Fuel Adjustments Surcharge (FAC) is calculated for the smelting operation.

“OPC stipulates that the record before the Commission is sufficient to conclude that the volatility inherent in the Fuel Adjustment Charge, as currently implemented, exposes Noranda to a degree of energy price risk exceeding that which would allow Noranda reasonably and prudently to access the capital markets to serve its liquidity needs,” the document reads.

Noranda will have no FAC in the first year under the new terms outlined by the OPC, with an adjusted FAC of just 25 percent of what it would have paid in the second year. The FAC subsequently would increase 25 percent every year until reaching 100 percent in the 5th year Noranda’s new reduced base rate is in effect.

The OPC document also made a point of agreeing with a key portion of Noranda’s original complaint, citing it in the document. The OPC states that Noranda’s closing “would be a tragedy for the 888 families who are supported by the stable and dependable employment offered by Noranda, and also a tragedy for the families whose livelihoods depend on the business supported by Noranda. Thus, this result would cause significant economic harm to the State of Missouri and to Ameren Missouri’s other customers.”

The agreement would also place strict stipulations on Noranda’s workforce. The smelter will not be allowed to retain a reduced base rate if it reduces its overall workforce below 850 full-time employees. It also requires Noranda to invest “$35 million in capital into its operations at the New Madrid smelter in the first year its reduced rate is in effect.”

The OPC operates as the official representative of consumers and utilities before the PSC. Ameren and Noranda have been locked into a heated public battle for months over whether or not to make changes to the rates of the massive smelting operation in New Madrid. The OPC’s stipulation was filed earlier today with the PSC, where a final decision will be made.

Rep. Shelley Keeney, a member of Republican leadership, said she supported the OPC stipulation.

“I was pleased to learn about the breakthrough with the Office of Public Counsel today,” Keeney said. “The OPC is a great defender of the public’s interest and I agree with them that Ameren’s customers are better served with Noranda on their system. The entire bootheel region must be relieved that Noranda will remain in business. Not to mention the 850 employees being able to continue working and raising families in the bootheel.”