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Government, Politics & Issues

Noranda Plans Layoffs, Drops Expansion After PSC Refuses To Cut Electric Bill

Ameren Missouri's largest coal-fired power plant in Labadie, Missouri.
File photo | Veronique LaCapra I St. Louis Public Radio
Ameren’s 2,400-megawatt plant near Labadie, Missouri, is the state’s largest coal-fired power plant. (Véronique LaCapra, St. Louis Public Radio)

Executives with Noranda, the aluminum-smelting operation in southeast Missouri, are following through with their threats of cutbacks as a result of the Public Service Commission’s refusal to cut their electric bill.

Noranda now plans to lay off up to  200 workers over the next six months at its New Madrid plant, and is suspending its planned $30 million expansion project, said  chief executive Kip Smith at a news conference Tuesday.

Executives also “are exploring the opportunity to move the construction of our $45 million state-of-the-art rod mill to a neighboring state,’’ Smith said. “If our smelter is no longer sustainable in New Madrid, it makes no sense to locate the rod mill here. This capital project represents another estimated 60 construction and engineering jobs which would be lost to the state of Missouri.”

Smith said such actions were “heartbreaking,’’ but necessary, because the PSC rejected its request to force Ameren to lower  the electric rate paid by Noranda. 

Noranda employs about 900 people, and is southeast Missouri’s largest non-agricultural employer.

Noranda also is the state’s largest user of electricity, and already pays the lowest rate of any of Ameren’s customers. But it had sought a 25 percent rate cut, saying that it still pays more than most of the competing smelters around the country. Executives have emphasized that Noranda’s utility bill is its biggest cost – even outstripping labor – and have maintained that a cut is needed to protect the smelter’s survival.

The company says it’s also asking the PSC to reconsider.

Ameren and its allies have contended that Noranda's financial straits, and its bid for a rate cut, are tied to  the New York-based hedge fund, Apollo Holding Corporation, that controls about a third of the board. Ameren has accused Apollo of bleeding the company's profits.

Gov. Jay Nixon issued a statement lamenting Noranda’s latest actions, and called for both sides to consider a compromise proposal offered in late July by the state’s Office of Public Counsel, that would have granted Noranda about 60 percent of its sought-after reduction.

“The job losses announced today are particularly troubling because the Office of Public Counsel had proposed a workable path forward, supported by consumer advocates, that would have protected ratepayers and avoided this unfortunate outcome,” Nixon said.

The Public Counsel’s proposal included a stipulation, however, that Noranda would have to refund its utility savings if it conducted layoffs or reduced the full-time workforce during the first year of the rate cut.

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