Panel denies electric rate cut for smelting plant

JEFFERSON CITY, Mo. -- State utility regulators denied a request Wednesday from a Southeast Missouri manufacturer to cut its electric rates by about 25 percent and pass the difference to other customers of Ameren Missouri.

In an order accompanying its 5-0 vote, the Public Service Commission said it was unconvinced by Noranda Aluminum Inc.'s assertion it faced a "liquidity crisis" or that the rate cut was crucial to the future of its large smelting plant in New Madrid, Missouri.

Noranda pays Ameren about $160 million a year in base electric rates to power the smelting plant, which employs nearly 900. The company said the reduction it requested in February would amount to about $48 million.

Noranda estimated its request would increase rates for Ameren Missouri's 1.2 million other customers by 1.8 percent or less, although Ameren put the figure at more than 2 percent.

The Public Service Commission took note of Noranda's contention the smelter is crucial to Missouri's economy, saying it "certainly does not want the smelter to close."

But it said the company had failed to prove the state and its citizens would be hurt more by the plant's closing than by reducing its electricity costs.

"While we are disappointed with the PSC's decision to deny Noranda rate relief at this point, we remain committed to transforming our cost structure and to reducing the cost of New Madrid's electricity," Noranda president and CEO Layle Smith said in a statement. "We will thoughtfully evaluate our alternatives for accomplishing our objectives and provide additional information at an appropriate time."