Round 3 in OPC v PSC over Noranda's Rate Reduction
JEFFERSON CITY – Friday the Office of Public Counsel (OPC) Friday filed a request to the Public Service Commission (PSC) on behalf of the entire state to provide Noranda with a reduced electric rate because losing Noranda would adversely affect all consumers on the Ameren grid. The proposal is an effort to save hundreds of jobs at Noranda and local economies throughout Southeast Missouri.
The new stipulation and agreement was filed in the wake of a recent rejection by the PSC to grant a rehearing for Noranda regarding its original power rate reduction request filed last spring.
The OPC’s previous proposal garnered support from 37 consumer and corporate organizations; and local, state and U.S. elected officials.
Friday’s OPC document was backed by the Consumers Council of Missouri;, the Missouri Industrial Energy Consumers; the Missouri Retailers Association; New Madrid County R-1 School District Superintendent Cynthia Sharp Amick; state Sen. Doug Libla; and state Rep. Todd Richardson. SEMO TIMES contacted Mo. Gov. Jay Nixon’s office for his official statement, but received no reply as of yet.
The rate relief, as requested in the petition, would take effect Dec. 31, according to the filed documents.
The OPC’s proposal states that the PSC encouraged further negotiations “on a compromise position that can be presented for consideration in the general rate case.”
The “general rate case” the PSC referred to is Ameren’s request to raise consumer rates by $264 million, its own documents indicate.
Since 2008, Ameren Missouri increased consumer rates statewide by 43 percent and enjoyed profits that were more than the state-mandated maximum profits by allowed by the PSC for an electric utility, according to court testimony.
The PSC hinted in late September that it might consider Noranda’s rate reduction proposal within Ameren’s overall rate increase. That action suggested a possible win-win situation.
Noranda officials said Friday they were “encouraged by this proposal to provide much needed electricity rate relief to our New Madrid smelter” by year’s end.
“We appreciate the quick decision by the (OPC) and other consumer groups to follow the PSC’s recommendation to bring this proposal into the ongoing Ameren rate case,” said Noranda spokesman John Parker. “The smelter is the economic backbone of Southeast Missouri and provides hundreds of high-quality jobs to the Bootheel Region.”
Parker said the proposal makes way for an outcome beneficial to both Noranda and all Ameren’s customers.
Noranda is Ameren’s largest customer and the state’s largest energy consumer, according to reports. The plant uses enough energy to power the Springfield metropolitan area, the third largest city in the state, records indicate.
Noranda spent some $160 million in 2013 for power, reports state. The smelter employs approximately 900 Bootheel workers at the plant and injects hundreds of millions of dollars annually into the Show-Me State’s economic machine, documents indicate.
Of America’s nine remaining smelters, Noranda pays the second-highest cost for power, reports state. That amount represents one-third of the company’s operating costs, Parker said. The only smelter whose energy costs eclipses Noranda’s will be shut down permanently because of those power costs, officials reported.
Since the utility giant denied Noranda’s initial request for rate relief, Noranda President and CEO Layle K. “Kip” Smith announced in September the company would lay off up to 200 employees in an effort to cut costs. Those job losses would be spread across the company’s strata and would affect management as well as production workers, Smith said.
The petition filed Friday calls for a five-year restructuring of costs and includes a $34.44/MWh initial effective annual rate; a first year exemption from fuel adjustment charges (FAC), which costs Noranda $4.40/MWh; and that the FAC is reduced by 25 percent annually so that by the fifth year the company pays the full FAC.
In return, Noranda pledges to retain a certain unspecified level of employment and invest $35 million annually in the smelter, according to the document.