Ameren moves to end contract with New Madrid smelter

ST. LOUIS -- Ameren Missouri has notified state regulators the utility plans to challenge a recent order allowing lower rates for its largest customer.

St. Louis-based Ameren filed notice Tuesday it will challenge the Missouri Public Service Commission's April order allowing Noranda Aluminum to pay less for electricity at its New Madrid, Missouri, smelter.

Ameren argues the commission, which also granted the utility a general rate increase, ignored the cost to serve Noranda when it allowed the smelter to have lower rates.

Noranda also said Tuesday that Ameren plans to let its contract with the aluminum smelter expire in 2020. The move would require Noranda to find a new electricity supplier or renegotiate a new contract with Ameren.

Ameren said its decision to end its contract with Noranda had nothing to do with the smelter's rate cut. Ameren Missouri spokesman Warren Wood said if Ameren hadn't filed the notice before the end of May, its contract with Noranda would have automatically renewed.

"You're putting in a placeholder for the opportunity to have a discussion," he said.

Noranda spokesman John Parker said Ameren's contract can't be terminated without regulatory approval.

The actions came after the commission rejected Ameren's request for a rehearing of its rate case. The commission's order allows the utility to earn about $122 million annually in new revenue, adding about 6 percent to household bills, or about $6.50 to $7 a month.

Noranda has spent months trying to convince state regulators the 850-employee smelter needed a lower rate.

The smelter is Ameren's largest customer and expects to save about $17 million to $25 million a year on power costs under the new rate. Other customers are expected to make up the difference, which amounts to just less than $1 a month for a residential ratepayer.