Noranda Loses Bid To Obtain Lower Electrical Charge From Ameren

Aug 21, 2014

As expected, the Missouri Public Service Commission has blocked the effort by Noranda Aluminum Inc. to get its electrical bill cut by about 25 percent.

Ameren is pushing back against EPA proposals to cut carbon emissions from power plants, saying it needs more time to comply.
Ameren power plant
Credit (Veronique LaCapra/St. Louis Public Radio)

Ameren contended that the cut would have forced rate hikes for most other Missouri customers in the state.

The question now is whether Noranda’s parent company follows through with a threat to close the smelter, near New Madrid, Mo., and the largest non-agricultural operation in southeast Missouri.  Noranda employs about 900 people.

The commission announced Wednesday that it voted unanimously, 5-0, to reject Noranda’s request to lower the rate it is charged to $30 a megawatt hour, down from the $41 a megawatt hour that it pays now.

The decision came about two months after several passionate hearings were held, including one at Harris-Stowe.

Noranda has said that the rate it pays Ameren – while the lowest rate in the state – is higher than the utility rate paid by most competing smelters around the country. Its executives have said that Noranda’s utility bill is its most expensive cost and, coupled with low aluminum prices, threatens the smelter’s survival.

Ameren and its allies contended that Noranda’s financial troubles were caused by the New York-based hedge fund, Apollo Holding Corporation, that controls about a third of the board.

The PSC said in its formal decision that it recognized economic importance of the smelter to the New Madrid area “and it sympathizes with Noranda’s employees and the residents of the New Madrid area who testified at the local public hearings in this case.”

Even so, the commission said that Noranda’s evidence didn’t warrant the rate cut of that magnitude. More importantly, the PSC said that “a request for an economic development subsidy of this magnitude is more properly directed to the Missouri General Assembly.”