NEW YORK Ormet Corp. could see annual electricity costs at its Hannibal, Ohio, smelter increase by more than $20 million if proposed power rate hikes by AEP Ohio, a division of American Electric Power Co. Inc., are implemented, Ormet said Tuesday.
"The current issue is that AEPs electricity rates have increased so much that Ormet needs additional assistance to keep employment levels up," Ormet chief executive officer Mike Tanchuk said in a statement. "We have been working very hard with AEP and the state of Ohio over the past several months to formulate a solution to the rising electricity prices, but unfortunately could not come to an agreement for any of the alternatives developed."
The Public Utilities Commission of Ohio (PUCO) voted in early August to approve a modified electricity security plan for AEP Ohio that would freeze current base generation rates through May 31, 2015. It also put forth a schedule for AEP to transition to a competitive market where generation rates will be set through a competitive bidding process beginning June 2015. AEP will conduct an energy-only auction for 10 percent of its standard service offer load, followed by a second energy auction for up to 60 percent of this load on June 1, 2014, and a third auction for 100 percent by Jan. 1, 2015.
Ormet began the curtailment process for a second potline at the six potline, 270,000-tonne-per-year smelter last week, and anticipates the potline will be completely shut down by Aug. 31 (amm.com, Aug. 27).