Noranda, Ameren appeal to lawmakers for electric-rate changes

The heads of Noranda Aluminum and Ameren Missouri, companies that long have been at odds over energy policy, have joined forces to urge state lawmakers to make major changes to Missouri's energy policy.

In a letter to the Missouri General Assembly on Wednesday, the two major employers said legislation is needed to accelerate upgrades to Missouri's electric grid, provide enhanced security and give customers more stable and predictable electric rates, all while creating and saving jobs.

The companies said they want a "globally competitive power rate" for Noranda's troubled aluminum smelter at New Madrid, Missouri. The Noranda plant is Missouri's largest electric customer.

Noranda has filed for Chapter 11 bankruptcy and plans to idle production at its sprawling Southeast Missouri plant by mid-March. Whether it will be a temporary or permanent closure depends on whether the smelter's energy costs can be reduced, the two executives said.

Permanent closure of the plant, which at one time employed about 900 people, "would be devastating to the economy of Southeast Missouri and mean other Missourians would pay more for electricity," the two employers stated in the letter signed by Layle K. "Kip" Smith, president and CEO of Noranda, and Michael Moehn, president of Ameren Missouri.

John Parker, vice president of communication and investor relations at Noranda, said there is no guarantee the plant will reopen its pot lines. But he said "without a competitive power rate," the smelter definitely will not restart production of aluminum at the plant.

Warren Wood, vice president for external affairs and communications for Ameren, said the Missouri General Assembly must pass legislation this session if there is any hope of saving the plant.

According to Parker, lawmakers need to act by April for Noranda to meet a bankruptcy-court deadline.

Both Parker and Wood said while Noranda would see lower electric rates, other commercial and residential customers would see an increase. But Parker said that increase would be less than what Missourians would pay if Noranda shuts down and is no longer an Ameren customer.

Noranda uses about 4.2 million megawatt-hours of electricity annually. Every $1 rate reduction would save the company about $4.2 million a year, Parker said.

Noranda currently pays about $38 per megawatt-hour. That rate could be lowered to about $30 per megawatt-hour under a proposal before the Missouri Public Service Commission.

In the letter, the presidents of Ameren and Noranda said they want:

• Caps on rate increases and utility profits while providing additional layers of transparency to ensure more electric-rate stability and predictability.
• Accelerated modernization of the electrical grid for safe, dependable, secure and cleaner energy.
• Accelerated installation of smarter technology to help customers better control their energy costs, making it possible to restore power more quickly after an outage and prevent some outages.
• New and expanded Missouri Public Service Commission oversight.
• Accelerated investments in physical and cybersecurity technology to protect customer data from hackers and protect critical energy generation, transmission and distribution systems.
• Use of low-interest rates on financing to minimize the cost of upgrades to the electric grid.
• Creation and retention of good-paying jobs.

The letter states "much of Missouri's electric grid was built more than 50 years ago and needs to be updated to meet customers' 21st-century needs and expectations."

Under the proposal, the Public Service Commission annually would review Ameren's financial records. Any "over earnings" would be returned to customers, Wood said.

Smith and Moehn said their two companies have been partly to blame for the energy situation in Missouri. They wrote that "for too long, gridlock and stalemates have dominated energy-policy discussions" in state government. "Ameren Missouri and Noranda have rarely seen eye-to-eye on what Missouri's comprehensive energy policy should include. Yet today we stand together committed to support real, much needed progress on energy policy and to do our part to bring this stalemate to an end."

mbliss@semissourian.com

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