Office of Public Counsel files new proposal to lower Noranda power rates

The state Office of Public Counsel has filed a new compromise proposal with the Missouri Public Service Commission, seeking a reduced electricity rate for the Noranda aluminum smelter plant in New Madrid, Missouri. If approved, the new rate structure would begin Dec. 31.

The proposal filed Sunday carries into the existing Ameren rate case. The proposal originally was submitted in August but was not considered by the commission, which had recently rejected Noranda's request for lower power rates.

On Oct. 1, the commission determined Noranda's petition should be denied, saying the company had failed to meet the burden of proving its rates are not just and reasonable.

This latest filing follows the commission's recommendation that both sides in the case continue to negotiate a compromise that can be reconsidered. The Ameren case, first filed in July, requests a $264 million increase in Missouri electricity rates, meaning rates would rise for utility consumers statewide but decrease for the smelter plant. This is the sixth such Ameren request in the past eight years.

John A. Parker, Noranda's vice president of communication and investor relations, said the company is encouraged by the new proposal.

"Our smelter is the economic backbone of Southeast Missouri and provides hundreds of high-quality jobs to the Bootheel region," Parker said. "This proposal sets out a path to an outcome which could benefit not only those jobs and the region, but all Ameren consumers."

Noranda, one of nine smelters in the U.S., produces 14 percent of the nation's aluminum. It is the largest single user of energy in the state, consuming roughly the same amount as the city of Springfield. It is the largest private-sector employer in the Bootheel, with 900 workers, and is one of the largest manufacturers in Missouri.

Noranda officials had announced in early September that without lower rates they would be forced to cut 125 to 200 jobs and scale back infrastructure investments, including a $30 million plant expansion. Company officials also said they were considering moving the construction of a new, $45 million rod mill from New Madrid to another state.

Sunday's proposal stipulates a five-year agreement for a $34.44/mWh initial effective annual rate, down $3.50/mWh from Noranda's current rate. It also would call for a first-year exemption from fuel adjustment charges.

That exemption would be reduced by 25 percent annually so that by the fifth year Noranda would pay the full charge, which now stands at $4.40/mWh. In addition, the proposal calls for a 2 percent cap from any general Ameren rate increase. In exchange, Noranda would commit to a certain level of employment and invest $35 million per year.

The OPC was joined in its proposal by the Consumers Council of Missouri, the Missouri Industrial Energy Consumers and the Missouri Retailers Association.