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Officials back Noranda lower power rate request

Keywords: Tags  aluminum, smelter, power supply, electricity rate, rate adjustment, shutdown, Noranda Aluminum, Missouri Public Service Commission Sarah L. Kliethermes


NEW YORK — Elected officials from five Missouri counties near Noranda Aluminum Holding Corp.’s New Madrid, Mo., aluminum smelter are backing the company’s request for a lower electricity rate.

In a June 9 letter to the Missouri Public Service Commission (PSC), officials from New Madrid, Dunklin, Pemiscot, Stoddard, and Butler counties expressed their "extreme concern" for the economic well-being of the communities surrounding the smelter, should Noranda be forced to shutter the facility because of unfavorable power rates.

The Franklin, Tenn.-based aluminum producer had asked the PSC to approve a new rate of $30 per megawatt hour (MWh) for its New Madrid smelter, about 27.7 percent less than the $41 to $42 per MWh the company now pays St. Louis-based utility Ameren Corp. Without the decrease, the company said, it would need to cut 150 to 200 jobs or ultimately close the 260,000-tonne-per-year smelter (amm.com, Feb. 13).

"The loss of 900 high paying jobs with substantial benefits will cause irreparable cascading damage to many business sectors that rely on both serving as vendors for the supply and maintenance of the smelter as well as those businesses that rely on the patronage of those employees of Noranda," the officials said.

The housing market "will plummet in all counties" surrounding the smelter and the construction and banking industries will suffer from "crushing numbers of defaults and home foreclosures" should the smelter be shutdown, they said.

However, PSC officials have said in testimony that Noranda’s requested rate is below Ameren Missouri’s variable cost of service for Noranda. "Using public numbers, all estimates fall below the reasonable range of wholesale energy costs, and are not reasonable to use in setting rates," Sarah L. Kliethermes, a regulatory economist on the PSC staff, wrote in testimony filed with the commission May 9 (amm.com, May 12). A spokesman for the PSC did not immediately return a request for comment.

A ruling in the case is expected July 30, with possible rate adjustments going into effect Aug. 13, according to the PSC.


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