RELEASE: MBEF Asks to Dempsey, Jones to Look Into Rate Shift
Rate Payers Lose $500 million While Noranda Parent Company Sells Stock to Make Tens of Millions
Jefferson City, MO – In the wake of the planned sale of 10 million shares of Noranda Aluminum stock by Apollo Global Management, the hedge-fund that controls Noranda and the subsequent rate-shift claim before the Public Service Commission, Missourians for a Balanced Energy Future (MBEF) sent a letter to President Pro Tem Tom Dempsey and House Speaker Tim Jones seeking their engagement to protect Missouri consumers from funding further Apollo profits through higher electric rates.
The letter, from MBEF Executive Director Irl Scissors, states, “JUST YESTERDAY, Apollo Holding Corporation, Noranda’s parent company, announced a massive sell-off of Noranda stock, which will garner a profit of approximately $50 million for the hedge-fund. This sell-off occurs ANNUALLY. Furthermore, the Chief Executive Officer of Apollo reportedly made $500 million last year, moving his rank on the Forbes billionaires list from 299 to 240.”
The sale of Noranda stock shares occurs regularly each March, which has delivered a nearly 500 percent return on the initial $200 million investment Apollo originally made in the smelter.
According to the Prospectus Supplement Noranda filed with the Securities and Exchange Commission (SEC), not a penny of the sale of Noranda stock goes to Noranda, but rather is straight profit for Apollo. Apollo continues to maintain control of Noranda’s board of directors and approve all management decisions.
Just last month, Noranda filed a request with the Missouri Public Service Commission for a reduction in their electric rate, which would shift approximately $500 million onto Missouri consumers over 10 years. If this rate-shift is successful, Missouri residents and small businesses risk subsidizing additional Apollo profits through future sales of Noranda shares.
The magnitude of the potential rate-shift and the serious concern that Wall Street will be profiting on the backs of Missouri residents and small businesses goes beyond the purview of the PSC and should more appropriately be addressed before the General Assembly.
The letter Scissors sent to Dempsey and Jones is available here:
Dear President Pro Tem Dempsey and Speaker Jones:
Last month, Noranda Aluminum filed a claim with the Public Service Commission (PSC). They are seeking a drastic electric rate reduction, which will in turn shift rates onto Missouri residents and businesses. They also seek an expedited process, not allowing for adequate public hearings or proper testimony.
This rate shift will significantly impact ratepayers and the Missouri economy, going beyond the purview of the PSC. As leaders of the Missouri General Assembly, we ask that you consider the extreme nature of this issue and investigate this matter appropriately.
JUST YESTERDAY, Apollo Holding Corporation, Noranda’s parent company, announced a massive sell-off of Noranda stock, which will garner a profit of approximately $50 million for the hedge-fund. This sell-off occurs ANNUALLY.
Furthermore, the Chief Executive Officer of Apollo reportedly made $500 million last year, moving his rank on the Forbes billionaires list from 299 to 240. Weeks ago, Noranda reported a bright financial report to their Wall Street investors, turning a profit and paying dividends to their shareholders. Hardly a case of economic hardship.
Noranda already pays the lowest rate for electricity, almost 60% less than the average customer. They actually pay less for electricity than it costs to provide service. Their claim seeks to further reduce their rate by another 25 percent, shifting costs to consumers totaling more than a half a billion dollars at more than two percent per year for the next decade.
Some customers have had enough. Missouri’s largest retailer, Walmart, filed a motion with the PSC to intervene, recognizing the burden this rate shift places on their electric bills and its impact on customers. Their claim states, “the relief being requested in this proceeding, if adopted, could result in significant changes to Walmart’s cost of electricity, directly and substantially affecting its business and operations in the State of Missouri.”
The economic impact of such a rate shift on Missouri electric consumers should more appropriately be debated before the General Assembly, not the PSC. We again ask your immediate attention to this matter.
Thank you for your time and consideration on behalf of thousands of Missouri electric consumers.
Sincerely,
Irl Scissors
Executive Director
Missourians for a Balanced Energy Future###
Missourians For A Balanced Energy Future | moenergyfuture.org | @MBEF | facebook.com/moenergyfuture
