RELEASE: ICYMI – St. Louis Business Journal Editorial: Hostage crisis
The battle between Noranda Aluminum and Ameren is nasty and expensive but its resolution could be even more costly for Missouri taxpayers.
Holding the workers at its New Madrid smelter as hostages, Noranda is demanding a rate decrease to $30 per megawatt-hour below the bargain basement rates it already pays that are 60 percent lower than those paid by the average Ameren Missouri residential customer.
This is a dangerous policy precedent as well as a potentially damaging decision based on economics.
Noranda wants to turn the Missouri Public Service Commission into an economic development agency, using rate structures as an employment incentive. Granted, Missouri could use a boost on the economic development front but it should come from the governor, Legislature or myriad of local and state agencies so charged. Indeed, last December’s efforts to woo Boeing to St. Louis demonstrated what happens when all those concerned cooperate. The PSC was not part of that process and should not become the default economic development machine for Missouri. Not only is it not in its jurisdiction, it also has no enforcement mechanism when it comes to monitoring employment levels. There are a host of tax subsidies and incentives to woo investment in Missouri but they are not in the purview of the PSC.
Indeed, the PSC’s full-time charge is to regulate utilities in Missouri. Its staff has “no connection with any utility regulated by the Commission, and may not own utility stock or bonds, or have any other monetary interest in a regulated utility,” according to regulations. So when the staff filed a rebuttal to Noranda’s charges of Ameren Missouri’s over earnings, they composed a powerful statement in support of Ameren Missouri.
Acknowledging that Noranda is Ameren Missouri’s largest customer, the staff recommendation says “if Noranda was no longer an Ameren Missouri customer, the loss of Noranda as a customer would raise other Ameren Missouri customer’s rates by about $10 million to $20 million dollars a year, but that if Noranda was given the full reduction it has requested, paying for that reduction would raise other Ameren Missouri customers rates by at least $27 million dollars a year.”
So it seems Noranda is holding more than New Madrid and the Bootheel hostage. Noranda’s business plan is written on the backs of Missourians. Apollo Corp., a New York hedge fund, invested $221 million in 2007 for a controlling stake in Noranda. It’s not up to Missouri to make that investment worthwhile and it sure as heck isn’t up to Ameren.
The Missouri Public Service Commission should stick to its charter and uphold Ameren’s rate structure. After all, it’s charged with protecting Missourians in a regulated utility environment.
