OPC, consumers file new proposal to lower Noranda power rates

The Missouri Office of Public Counsel (OPC) has filed a new compromise proposal agreement with the Missouri Public Service Commission (PSC), proposing a reduced electricity rate structure for the Noranda aluminum smelter plant in New Madrid, beginning Dec. 31. The proposal, filed last Friday, carries into the current Ameren general rate case a proposal that was originally submitted in August, and was not considered by the PSC, in recently rejecting Noranda's request for lower power rates. The filing follows PSC's recommendation that both sides in the case continue to negotiate a compromise position that can then be re-presented to PSC for consideration. The Ameren case, filed in July, requests a $264 million increase in Missouri electricity rates. This is the sixth such Ameren request in the past eight years. Noranda's Vice President of Communication and Investor Relations, John A. Parker, said "We are encouraged by this proposal, and we appreciate the quick decision by the Office of Public Counsel and other consumer groups to bring forth this proposal."

Noranda, one of nine smelters now operating in the U.S., produces 14% of the nation's aluminum. It is the largest single user of energy in the state, consuming roughly the same amount as all of the city of Springfield. It is the largest, private-sector employer in the Bootheel, with 900 workers, and is one of the largest manufacturers in Missouri.

Noranda officials had announced in early September that, without lower rates, it would be forced to initiate a workforce reduction of 125 to 200 employees at the New Madrid facility, and scale back infrastructure investments, including a $30 million plant expansion. Company officials also said they were considering moving the construction of a new, $45 million rod mill from New Madrid to another state.

Friday's OPC proposal stipulates a five-year agreement between the two parties, for a $34.44/MWh initial effective annual rate, down $3.50/MWh from Noranda's current rate. It would also call for a first-year exemption from fuel adjustment charges. That exemption would be reduced by 25% annually so that, by the fifth year, Noranda would pay the full charge, which now stands at $4.40/MWh. In addition, the proposal calls for a 2% cap from any general Ameren rate increase. In exchange, Noranda would commit to a certain level of employment, and invest $35 million, per year.

The OPC was joined in its proposal by the Consumers Council of Missouri, the Missouri Industrial Energy Consumers, and the Missouri Retailers Association. "Our smelter is the economic backbone of southeast Missouri, and provides hundreds of high-quality jobs to the Bootheel region. This proposal sets out a path to an outcome which could benefit not only those jobs and the region, but all Ameren consumers," said Parker.

On Oct. 1, the PSC determined, on a 5-0 Board of Commissioners vote, that Noranda's petition for lower power rates should be denied, saying the company had failed to meet the burden of proving Ameren's rates are not just and reasonable.

District 152 State Rep. Todd Richardson, representing Dunklin and Butler Counties, said, "PSC commissioners have urged consumers to pursue a path to lower Noranda's massive electric bill, which would protect hundreds of southeast Missouri jobs. I was pleased to see ratepayers from all over the state rally around this compromise. For Missouri to succeed economically, manufacturing must continue to play a key role. Nowhere in the Bootheel is this more important than at Noranda's New Madrid plant.

District 25 State Sen. Doug Libla agreed with Richardson. Libla, who represents virtually the entire southeast Missouri region, said, "My hope is that the PSC will hear the OPC's compromise proposal and approve it. Noranda cannot wait any longer and has a responsibility to start making decisions to protect (its) employees, if the state of Missouri isn't going to provide an environment of affordable electric rates."