Jefferson City, MO – Missourians for a Balanced Energy Future (MBEF) expresses sincere reservations regarding this week’s decision by the Missouri Public Service Commission (PSC), to grant a rate reduction for Noranda Aluminum.  Ruling on a current rate case, in a 4-1 decision, the PSC granted a significant rate reduction for Noranda , the Wall St. hedge-fund-controlled aluminum smelter operating in New Madrid, MO. This reduction for Noranda comes at the expense of all other electric residential and business consumers in the Ameren Missouri service territory.

In granting the smelter a lower electric rate, at the expense of other Ameren Missouri customers, the PSC also requires Noranda to meet strict concessions. If met, these concessions should, at a minimum, save jobs in Southeast Missouri and keep the smelter online for the present time.

“Missouri electric consumers are stuck footing the bill for one company that hasn’t managed its business properly. That is simply unfair and unjust.” said MBEF Executive Director Irl Scissors.

While approving the rate reduction, the PSC’s order contains stern words for Noranda:
“In part, Noranda’s precarious financial situation is the result of Apollo Management’s decision to milk massive amounts of cash out of the company when it purchased it in 2007. Certainly, Noranda would be better off today if it still had the hundreds of millions of dollars that Apollo borrowed against the assets of the company to give to itself as a special dividend.” Missouri Public Commission Report and Order, Case No. ER-2014-0258, April 29, 2015.

Commissioner Stephen Stoll expressed it best in his dissent:

“This Order arbitrarily goes beyond the Supreme Court’s prohibition against this Commission managing utilities it regulates to,
ineffect, managing an aluminum smelter over which it has no authority. It does this by shifting the risk for an aluminum 
smelting venture from the investors who own it and profit from it to the backs and pocketbooks of utility customers who 
neither own or manage it.” Missouri Public Service Commission Dissenting Opinion Case No. ER-2014-0258,
April 29, 2015.

Noranda ended up with a reduced rate of $36/MWh, which is $6/MWh less than what they have been paying, shifting some $80 million of their electric costs to all other Ameren Missouri electric customers over the next three years; with no benefit to those customers.

Along with their rate decrease comes concessions, including:

• a requirement to keep 850 workers employed at the New Madrid smelter at all times.
• a requirement that $35 million in annual capital projects be invested into the smelter.
• and ending special dividend payments, including those paid to New York hedge fund Apollo Management, which has alreadytaken over $400 million out of Noranda in less than a decade.

Part of MBEF’s concern with this decision is Noranda’s history of not living up to its obligations. Most recently, the company was sued by the Jamaican government for not abiding by the terms of a five-year tax deal. With the five year term over, Noranda still refuses to pay taxes.

According to The Gleaner, Jamaican Finance Minister Dr. Peter Phillips said, “Noranda is insisting on a five-year extension of the concession. The Government has honored the agreement with Noranda, which involved substantial revenue forgone and, in the circumstances facing the country, we are not able to grant an extension. While I am not in a position to expand further on this matter now, the Government’s position is that we must collect taxes due from all taxpayers, be they small, medium or large.” 

Scissors added, “Let’s not allow Missouri to become the next Jamaica, subsidizing corporations that do not honor their commitments. All energy consumers, large and small, must be treated fairly. It is crucial for the safety, reliability and future of our electric grid.”