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AEP to keep lights on at Ormet Ohio plant

Keywords: Tags  Ormet, American Electric Power, AEP, Public Utilities Commission of Ohio, PUCO, power, electricity, bankruptcy protection aluminum smelter


CHICAGO — American Electric Power Co. Inc. (AEP) must keep power flowing to Ormet Corp.’s operations in Hannibal, Ohio, for the duration of the aluminum producer’s bankruptcy proceedings, Ohio officials have ruled.

The Columbus, Ohio-based utility must continue to provide electricity service to Ormet, which is based in Hannibal, "to protect the public from potential environmental harm" that might result from a disconnection, the Public Utilities Commission of Ohio (PUCO) said in an order dated Oct. 30.

"We will abide by the commission’s order and are working with Ormet on a weekly prepayment plan that will apply going forward through the pendency of the bankruptcy proceeding," an AEP spokeswoman said via e-mail Oct. 31.

AEP had threatened to disconnect power at Ormet’s idled Hannibal smelter on Nov. 1 after the company failed to pay a bill due Oct. 23. The utility also said the commission lacked the authority to change its power agreement with Ormet ( amm.com, Oct. 25).

Ormet argued that a power cut would jeopardize preparations for the sale of its assets in Hannibal and the operations of Hannibal Real Estate Inc., a third-party oil and gas drilling services provider that employs more than 200 people and gets its power through Ormet’s system.

In addition, a U.S. Environmental Protection Agency-mandated clean-up project would be endangered if power were cut, putting the public at risk and potentially seeing Ormet liable for non-compliance with an EPA order, the company said. A sewage treatment plant operated by Ormet also needs electricity, and wastewater not treated by the plant could pose additional risk to the public and expose the company to further liabilities, it said.

The commission on Oct. 30 said it found Ormet’s request to be "reasonable" and also ordered that AEP bill the company at a rate based on its current reduced electricity usage rather than a higher rate used when the Hannibal smelter was operating.

Ormet filed for Chapter 11 bankruptcy protection in February ( amm.com, Feb. 26).

A proposed sale of the company fell apart after Ormet failed to win approval from PUCO for a lower fixed power rate or to gain permission to break its agreement with AEP ( amm.com, Oct. 4).

Ormet is now seeking court approval to sell its Burnside, La., alumina refinery to Almatis Inc. for $35.3 million. The deal doesn’t include the idled Hannibal smelter ( amm.com, Oct. 28).


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