Corp. might not remain in business, executives at American
Electric Power Co. Inc. (AEP), Ormets power supplier,
said during a July 25 earnings call.
"There are issues
related to whether or not Ormet stays in business," AEP
executive vice president and chief financial officer Brian
Tierney said when asked by an analyst about the Columbus,
Ohio-based utilitys exposure to the bankrupt Hannibal,
Ohio-based aluminum producer. "If Ormet were to stop operations
altogether," the move would result in AEP seeing a pre-tax hit
to revenue of about $2.8 million per month, he said.
Ormet, like other
industrial users, represents a large load for AEP, said company
chief executive officer, president and director Nicholas Akins.
"But that one in particular (Ormet) ... we hardly make any
money off it to begin with," he said.
An AEP spokeswoman
stressed that the executives comments about Ormet, the
utilitys largest customer, came in response to a
hypothetical scenario presented by an analyst. "We really
dont have any special insight into the status of their
operations," she told AMM.
Ormet executives did
not respond to a request for comment July 26, and an attorney
representing the firm said he could not comment on whether or
when Ormet might make a decision to curtail production.
Steelworkers (USW) union, which represents workers at Ormet,
said it was unlikely that any move to curtail operations was
imminent. Ormet probably wont make any decision until the
Public Utilities Commission of Ohio (PUCO) weighs in on a power
dispute between the company and AEP next week, a USW spokesman
PUCO will decide
during a regular meeting July 31 whether to move up a hearing
on the dispute between AEP and Ormet, which is currently slated
for Aug. 27, a commission spokesman said.
Besides, "the company
would have to confer with us in terms of exactly what they
would be doing in terms of curtailing operations," the USW
spokesman said, noting that any cutbacks wouldnt likely
come until "early August" and would not necessarily involve
shutting down all operations. Ormets fate depends largely
on its ability to reach an agreement with AEP on reduced
electricity rates, he said.
AEP has in the past
worked to help Ormet remain an employer in Ohio, the AEP
spokeswoman said. "Despite the significantly discounted
electricity price that they receive, unfortunately the aluminum
markets are very difficult and they are in bankruptcy," she
said. "They are looking for reduced energy costs through a
subsidy that would be paid for by other AEP Ohio customers, and
we have concerns about that."
Ormet filed for
bankruptcy protection in February citing high legacy and power
costs and low aluminum prices (
amm.com, Feb. 26). The company was sold last month to
a subsidiary of Wayzata, Minn.-based Wayzata Investment
Partners (amm.com, June 4).
Ormet says the power dispute jeopardizes the sale and may
force production cuts or even liquidation (amm.com, July 15). The company has
permission to slash production if necessary (amm.com, July 24).