Noranda requests compromise on electric rate

Legislators and consumer advocates are voicing support for Noranda Aluminum Holding Corp.'s motion to get a state agency to reconsider a previous request for an energy rate reduction.

The Friday motion asks the Missouri Public Service Commission to revisit its Aug. 20 order denying Noranda's request for a lower Ameren Missouri power rate at the company's aluminum smelter plant in New Madrid, Missouri. The Missouri Office of Public Counsel, which represents all consumers in matters before the commission, has filed a similar request.

Noranda is asking the commission to consider the compromise solution originally filed Aug. 1 by the Office of Public Counsel, the Missouri Industrial Energy Consumers, the Missouri Retailers Association and the Consumers Council of Missouri. In its August order, the commission said it had not considered the compromise.

As a result of the decision, Noranda officials announced two weeks ago they would reduce their workforce by 125 to 200 people over the next six months and scale back infrastructure investments, including a $30 million plant expansion representing 60 additional construction and engineering jobs.

"This request is about jobs and the fact that a proposal supported by representatives of all customer classes wasn't considered," Noranda president and CEO Layle K. "Kip" Smith said.

Smith said the company also was considering moving the construction of a new $45 million rod mill to another state. Noranda employs 900 people at its New Madrid plant. It is the largest private-sector employer in the Bootheel and one of the largest manufacturers in Missouri. The company also pays the second-highest electricity rate of the nine smelters now operating in the U.S. It produces 14 percent of the nation's aluminum supply.

In announcing its Aug. 20 decision, the commission said it had found Noranda's compromise proposal "intriguing," but declined to consider it because the measure was submitted "after the record closed, after briefs were filed, and after the commission publicly began deliberations at an agenda meeting."

In its rehearing request, Noranda argues such timing is not unusual in the commission's history of evaluating cases. "Settlement has always been favored by the commission, and should not be discouraged at any phase of proceedings," the motion says.

In its order, the commission encouraged the parties to "continue to pursue negotiations on a compromise position, as it could be considered in Ameren Missouri's current rate case."

In a filing to the commission in early July, Ameren requested a 9.6 percent increase in its Missouri rates, enough to raise the average consumer's monthly electric bill by $10. That was Ameren's sixth request in eight years. The utility has increased rates to its Missouri customers by 43 percent, or $860 million, since 2008.

The Office of Public Counsel compromise proposal would reduce Noranda's electricity rates by approximately $30 million in its first 12 months, and increase the average consumer's monthly electric bill by 90 cents, or less than 1 percent per year.

The measure also would establish commitments by Noranda to retain jobs and make capital investments in New Madrid.

"If our rehearing request is successful, and depending on how quickly an affordable rate can be secured, we would be in position to re-evaluate [our layoff and scale-back] actions, and minimize job losses," Smith said.