NORANDA JOBS HINGE ON CO-OP'S CHOICES

MARSTON -- Employees at the sprawling Noranda Aluminum plant in Southeast Missouri face an uncertain future. So do coal miners in northern Missouri.

Their continued employment depends on how the board of directors of Associated Electric Cooperative Inc., based in Springfield, decides to bring its coal-fueled Moberly power plant into compliance with federal Clean Air regulations. The regulations take effect in 1995.

Associated Electric officials are looking at two main options installing costly scrubbers to clean the high-sulfur coal or closing down the company's coal mine near Moberly and shipping in low-sulfur coal from Wyoming.

Associated Electric officials are currently holding a series of meetings around the state to obtain public input. One will be held at 7 p.m. Friday at the New Madrid High School gymnasium.

Closing the mine would result in the loss in 1995 of about 350 jobs at Associated Electric's Thomas Hill Energy Center near Moberly. Another 165 jobs would be phased out over a 17-year period, utility company officials say.

But it would also be the most cost effective in terms of keeping electric rates stable, officials of Noranda Aluminum and utility officials maintain.

Installing costly scrubbers at the Thomas Hill power plant would result in higher electric costs, prompting Noranda to lay off about 450 of its 1,200 employees and shut down one of its three production lines or potlines, Noranda officials say. Substantially higher electric costs could eventually shut down the entire plant, company officials warn.

That would be a devastating blow to the Missouri Bootheel, said Bill Brooks, president of primary products for Noranda. "If you pull out 1,200 middle-income jobs, this place will be like a Third World nation," he said..

Associated Electric produces and supplies electric power to 43 rural electric cooperatives in Missouri and southeast Iowa, including the Scott-New Madrid-Mississippi Electric Cooperative based in Sikeston.

Noranda is Associated's largest electric customer. The Marston plant uses more electricity around the clock than Missouri's third-largest city, Springfield, utility officials say.

"We are the single-largest user of electricity in the state of Missouri," said Brooks. "Our power bill runs in excess of $7 million a month."

The loss of any Noranda jobs is a concern to the New Madrid County School District. Superintendent Robert Payne said Associated Electric and Noranda comprise about 60 percent of the district's tax base.

A loss of jobs would ultimately lower the school district's tax revenue, he said.

Brooks said Tuesday that Noranda spends more than $90 million annually on power costs for its aluminum manufacturing plant. Power costs comprise about a third of the manufacturing plant's expenses, he explained.

Noranda receives about 60 percent of its electric power from Associated Electric's New Madrid power plant and the remainder from the Thomas Hill power plant under contracts that end in 2003.

Brooks said electric charges paid by Noranda for Thomas Hill power "are among the highest in the world."

It's estimated it would cost Noranda $56.84 million a year for Thomas Hill power from 1995 to 1999 if the plant is upgraded to meet federal Clean Air regulations governing the burning of high-sulfur coal.

If the utility company switches to Western coal, the average annual cost would be $46.44 million, Associated Electric officials maintain.

"The cheapest option could save us $7.4 million," said Brooks.

He said Noranda can't compete if it has to pay higher electric rates.

The real problem, said Brooks, is that it costs $37 a ton to mine coal at the Missouri mine, while it costs $15 to $17 a ton to mine Wyoming coal and ship it to Missouri.

"In order to compete we just can't go out there and be subsidizing that mine," said Brooks. "I don't want anybody to lose their job, but I can't support $37 a ton."

Associated Electric already has decided to switch to a Western coal supply for its New Madrid power plant. The plant currently burns high-sulfur coal mined in Illinois.

It's estimated the scrubber option for the Thomas Hill plant would cost Associated Electric $836 million more during a 17-year period than switching to Western coal.

U.S. Rep. Bill Emerson, R-Cape Girardeau, said an economic analysis indicates the loss of Noranda jobs would have a greater impact on the state's economy than the closing of the coal mine.

Closing the mine would result directly and indirectly in the loss of 800 to 900 jobs, while the closing of one production line at the Noranda plant could put 3,000 people out of work statewide, Emerson said.

Associated Electric officials said that installing scrubbers at the Thomas Hill plant would result in increased electric rates, while switching to low-sulfur coal would allow for lower rates.

Residential customers with an average monthly bill of $50 to $125 could pay $1.31 to $3.28 more a month if emission-cleaning equipment is installed as proposed in Option 1. Switching to Western coal as proposed in Option 5 could result in a $2.93 to $3.33 decrease in customers' monthly utility bills.

As to commercial electric rates, businesses with an annual bill ranging from $50,000 to $150,000 could be paying $1,641 to $4,924 more a year under Option 1. Under Option 5, commercial rates could decrease by $2,663 to $5,990.

But Associated officials also have conceded that the utility will have to increase its generating capacity beginning in 2000 to meet projected demand. Such expansion could eliminate any rate decrease, they said.

Brooks said there are some expenses Associated will incur in shipping in Western coal such as constructing rail lines to the power plants.

Brooks said Noranda isn't anticipating any real rate reduction. "We would just be tickled to death if it wouldn't go up anymore."

Associated Electric is expected to make a decision by July.

"If in fact they go up on the power cost," said Brooks, "that is the beginning of the end of this (Noranda) plant."