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Ormet halts output at Hannibal smelter

Keywords: Tags  Ormet, shutdown, Hannibal, Ohio, smelter, Mike Tanchuk, Public Utilities Commission of Ohio, PUCO American Electric Power

CHICAGO — Aluminum producer Ormet Corp. said it cannot emerge from bankruptcy after failing to secure a more favorable power rate from Ohio regulators, and is shutting down operations at its Hannibal, Ohio, smelter, which will impact more than 600 workers, it said Oct. 4.

Ormet lashed out at the Public Utilities Commission of Ohio (PUCO) for not granting the company what it considered a rate plan that would have allowed it to operate while building its own on-site natural gas power plant.

"The PUCO commissioners never mentioned in their comments that Ohio’s energy policy transition to market has massively increased energy costs and is misguided, with its first major casualty being Ormet. How can this administration justify an energy policy that puts thousands of people out of work?" Ormet chief executive officer and president Mike Tanchuk said.

Any restart of the Hannibal smelter would depend on Ormet getting a better long-term power deal similar to the one negotiated by Chicago-based Century Aluminum Co. for its smelter in Hawesville, Ky. (, June 12), as well as improved aluminum prices, Ormet said.

Ormet filed for bankruptcy largely because of high power prices and low aluminum prices.

The Hannibal-based company said Oct. 4 that its power rate had increased to $60.83 per megawatt hour (MWh) by last month from $39.66 in 2009, while wholesale power costs had dropped 10 percent during the same period.

PUCO on Oct. 2 approved a fixed rate of $50 per MWh hour for Ormet. Ormet had requested an average fixed rate of $45.89 per MWh and permission to break its agreement with Columbus, Ohio-based utility American Electric Power Co. (AEP) effective Jan. 1, 2014 ().

The commission denied that request and ordered Ormet to remain with AEP for the length of an agreement that stretches through 2018, citing the potential negative impact of Ormet leaving on other ratepayers.

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