CHICAGO St. Louis city officials are opposing a proposed electricity rate decrease for Noranda Aluminum Holding Corp.s New Madrid, Mo., smelter, which they said would cost residents millions of dollars in higher rates.
Lower electricity prices for the Franklin, Tenn.-based aluminum producer will push up rates paid by St. Louis residents, city counselor Michael A. Garvin said in a letter to the Missouri Public Service Commission dated March 25.
Noranda already has the "lowest rate" of any Ameren Missouri customer, paying 60 percent less than the average consumer, Garvin said. If successful, Norandas petition would see that rate drop another 25 percent, he said.
Any reduction to Norandas electricity rate would shift costs to other consumers and could cost St. Louis $3 million over 10 years, Garvin said. "The rate case will adversely impact St. Louis city residents," he said.
Noranda suggested that it exiting Amerens system could lead to higher prices. "We believe the city of St. Louis has not considered the effect Noranda leaving the Ameren system would have on the electricity rates of St. Louis consumers," the company said in an e-mailed statement to AMM March 28.
The company also stressed that it has support from the Missouri Retailers Association, the United Steelworkers union and the Missouri Industrial Energy Consumers.
Noranda has asked the Missouri Public Service Commission to approve a lower power rate from Ameren Missouri, a subsidiary of St. Louis-based utility Ameren Corp. The company said a lower rate is necessary to keep its New Madrid smelter open (amm.com, Feb. 13). The company also argues that Ameren might be earning more than it is permitted to under commission rules.
Ameren has sought to have Norandas rate petition dismissed, argued against the need for the issue being expedited and downplayed the possibility of the New Madrid smelter closing.
Other parties seeking a say in the case include Bentonville, Ark.-based Wal-Mart Stores Inc., which has more than 70 retail stores and related facilities that receive power from Ameren Missouri. The company has said it could see higher electricity costs if a lower rate is granted to Noranda, but hasnt officially taken a position in the case (amm.com, March 11).