– This week, the utility wars are hitting the road.
The Missouri Public Service Commission is set to begin hearings on Monday regarding two complaints filed against Ameren Missouri by its largest customer, Noranda Aluminum.
One complaint claims that Ameren is earning more than its authorized annual return on equity. While it’s not illegal, it’s being used as a reason for their second filing, which asks for some $270 million in relief on its electric rates over the next decade. Noranda, noting that aluminum prices have diminished aluminum while their electric rates have stayed the same, said that they need a rate reduction to remain viable, while Ameren has derided the move as the company seeking what amounts to an “economic development package” from the Missouri PSC.
The first hearing will take place on Monday in Caruthersville, Mo. deep in the boot heel, about 30 miles south of Noranda’s smelter in New Madrid, Mo. On Tuesday, the panel will hear testimony in St. Louis, the corporate headquarters of Ameren Missouri. The third public hearing will take place in Jefferson City, home of the Missouri PSC.
The Missouri PSC, which regulates Missouri’s gas, water, and electric utilities, has received hundreds of pages of testimony, some of which is redacted by confidentiality rules.
Nearly a third of Noranda’s costs for production at their facility near New Madrid, Mo., are spent on electricity. Noranda employs 900 employees at its southeast Missouri smelter, contributing some $300 million to the state’s economy annually.
Noranda consumes more than $160 million a year in energy from Ameren. Because of their heavy use, the company already pays an electric rate less than what the average consumer pays. In 2008, they were approved by the Missouri PSC to pay $37.84 per megawatt-hour. The smelter, which produces 260,000 metric tons of aluminum products each year, uses 485 megawatts of power, 24-7 for 52 percent of the year, the company said. That equates to about the amount of power consumed by the entire city of Springifeld, Mo.
Their ask from the commission, a spokesman said last week, is “sustainability”: A ten-year contract to set rates at $30 per megawatt-hour with a 60-cent cap on increase and relief on fuel adjustment surcharges. Noranda has earned support from the Missouri Industrial Energy Consumers (of which it is a large part), as well as the Missouri Retailers Association.
Ameren has supporters (and other companies concerned about the potential rate shift) of its own. Last week, Ameren received the support of the Missouri PSC’s staff, which wrote in a filing that “that the $.03 per kWh rate Noranda has requested is too low,” and that “it is not appropriate to relieve customers from paying the fuel adjustment surcharge or to limit future rate increases.”
This week’s public hearings are will precede next week’s evidentiary hearings, all of which come in the lead up to a scheduled decision by the Missouri PSC by August 6.