CHICAGO Electricity-rate reductions sought by Ormet Corp. are drawing opposition from Industrial Energy Users-Ohio (IEU-Ohio), whose members include several big metals and manufacturing companies.
IEU-Ohio contends that if the bankrupt Hannibal, Ohio-based aluminum producer is granted measures it seeks to cut its electricity costs, the move would push the burden of those costs to customers served by Columbus, Ohio-based utility American Electric Power Co. (AEP), according to documents filed July 16 with the Public Utilities Commission of Ohio (Puco).
The relief that Ormet seeks would see AEP customers in Ohio hit with "the rate increase burden that Ormet seeks, right or wrong, to avoid," the group said. "In this context, IEU-Ohio is compelled to protest."
Ormet is seeking a fixed price for electricity for 2013 and permission to buy power on the open market beginning with the January 2014 billing cycle. But AEP argues that such changes would violate a supply contract it contends it has with Ormet through 2018, as well as bankruptcy law (amm.com, July 12).
A Puco hearing over the power issue is scheduled for Aug. 27, although Ormet is appealing to move the hearing date up to the week of July 22 (amm.com, July 15). IEU-Ohio also objects to pushing forward the date of the hearing, according to the memorandum to Puco.
Given depressed aluminum prices, cheaper electricity is an urgent issue for the companys survival, Ormet said in separate bankruptcy court filings in Delaware. Without affordable electricity, Ormet is "unable to operate the company as a going concern" because Wayzata Investment Partners LLC and its entities have advised Ormet that they are "unwilling to move forward with the sale" without a better power deal. Wayzata, Minn.-based Wayzata Investment Partners is the parent company of Smelter Acquisition LLC, which last month was approved as Ormets stalking horse bidder (amm.com, June 4).
IEU-Ohio questioned that assertion. "No prudent successor to Ormets operations would close an asset purchase deal contingent on permanent modifications to Ormets unique arrangement" with AEP and Puco, the group said.
IEU-Ohio members include Columbus Castings, Columbus, Ohio; Globe Metallurgical Inc., a subsidiary of New York-based silicon producer Globe Specialty Metals Inc.; welding and cutting company Lincoln Electric Co., Cleveland; Plymouth, Mich.-based automotive parts manufacturer Metaldyne LLC; Ohio Star Forge Co., Warren, Ohio; Welded Tubes Inc., Orwell, Ohio; and Vallourec Star LP, a subsidiary of Boulogne-Billancourt, France-based Vallourec SA.