Sen. Doug Libla Supports the OPC’s Request for New Hearing by the PSC in Noranda Rate Case

Sep 12, 2014

JEFFERSON CITY – State Sen. Doug Libla, R-Poplar Bluff, strongly supports today’s filing by the Office of Public Counsel (OPC) to the Missouri Public Service Commission (PSC) for an affordable electric rate for Noranda. The PSC denied their initial request last month, leading to Noranda starting the process of reducing their workforce at the New Madrid aluminum plant by up to 200 jobs over the next six months.

“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. Libla. “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.”

The OPC offered a compromise proposal that aligned with the PSC staff’s supported rate and was supported by Noranda, Consumers Council of Missouri, the Missouri Industrial Energy Consumers and the Missouri Retailers Association. No one who is financially impacted by the decision opposed the OPC solution. This proposal received wide spread support because it will keep all customers rates lower than if Noranda was no longer receiving power from Ameren.

Because the PSC didn’t adopt the OPC’s compromise solution the first time around, Noranda has already begun the difficult process of eliminating jobs at the plant, plus suspending a $30 million capacity expansion project meaning that 60 construction jobs will also be lost from the Bootheel. If the PSC supports the OPC’s compromise stipulation these actions could be revisited and the job losses minimized.

“Electricity represents one-third of Noranda’s costs and it can’t pass on electric rate increases to its customers. They have cut costs everywhere possible in their control except electricity. No aluminum plant has survived in the United States without an affordable electric rate. 30 years ago there were 32 aluminum plants operating in the US. Today there are 9. Lack of affordable power is the reason why,” said Sen. Libla.

Noranda pays the 2nd highest electric rate compared to the remaining 9 aluminum plants in the US because of Ameren’s constant rate increases. While Ameren Missouri has paid Ameren Corporation $2.6 Billion since 2006 in dividends to shareholders, They have increased rates on its Missouri customers 43% over the past 8 years, charged an additional $500 million in new surcharges, and Ameren has earned above the PSC’s authorized return for the last 33 consecutive months.

Since 2008, excluding electricity, Noranda has reduced its annual cost to produce aluminum by over $40 million. However, its annual cost of electricity has gone up approximately $44 million, eliminating all other net savings combined. They have also made $238 million in capital investments in New Madrid since 2008.

“Other states are actively pursuing parts or all of Noranda’s business in New Madrid. The PSC needs to rehear the OPC’s compromise proposal immediately and approve it,” said Sen. Libla. “Noranda cannot wait any longer to start making decisions on how to secure the viability of the company. They have a responsibility to start making decisions to protect their employees if the state of Missouri isn’t going to provide an environment of affordable electric rates.”

“The 25th Senate District of Missouri faces a number of economic challenges, with job creation and retention being at the top of the list,” Sen. Libla said. “It is crucial that Noranda’s aluminum plant remains competitive. If that plant was to close, it would be very difficult to replace those jobs. These high-quality and high-paying jobs allow those workers to have a positive impact on the communities where they live, both economically and as leaders contributing to the overall quality of life. Noranda’s continued operations and profitability are of utmost importance to all the people of Southeast Missouri.”