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Ormet Waits For Ruling

By Staff | Sep 11, 2013

Only the five members of the Public Utilities Commission of Ohio can decide whether Ormet Corp. will be able to stay open, as company officials say they need a break on American Electric Power rates to remain in operation.

Monroe County officials and local leaders, including state Rep. Jack Cera, D-Bellaire, know just how vital the company’s aluminum reduction facility is to the Upper Ohio Valley economy. At least 600 jobs also hang in the balance. Ormet has already curtailed operations, running just two of its six potlines to reduce power costs. The company also has the option to shut down completely by the end of the year, according to a Worker Adjustment and Retraining Notification Act notice.

“The commission recognizes the situation. They are working on an expedited process,” said PUCO spokesman Jason Gilham.

Monday was the final day for public comment in the case between Ormet and AEP, officiated by PUCO attorney examiner Sarah Parrot. Ormet wants to generate its own electricity by late 2015 via a planned natural gas-fired power center, but President and Chief Executive Officer Mike Tanchuk said the company needs a break on AEP rates until then.

“If we cannot get this discount, we will be forced to liquidate,” he said, noting he hopes the commission will rule in Ormet’s favor by October.

Gilham said Commissioners Todd Snitchler, Steven Lesser, Lynn Slaby, M. Beth Trombold, and Asim Z. Haque do not yet have the Ormet/AEP matter on their agenda.

He said the commission usually meets at 1:30 p.m. each Wednesday at 180 E. Broad St. in downtown Columbus.

Tom Byers, president of USW Local 5724 at Ormet, said he presented a petition of nearly 7,000 signatures to the commission expressing support for the company.

In February, Ormet filed for bankruptcy in U.S. District Court in Delaware. The company later announced a planned $221 million sale to Minnesota-based Wayzata, but emphasized the transactions required convincing the PUCO to allow Ormet to have lower AEP bills until it can begin generating its own power.

However, officials with AEP and the Ohio Consumers’ Counsel said granting Ormet additional power discounts could result in higher rates for about 1.4 million customers across the Buckeye State, many of whom live hundreds of miles away from the Hannibal facility.

James Burns Riley, chief financial officer for Ormet, said he was “not qualified” to speculate about AEP’s future business plans when asked if he expected AEP to raise power rates on other customers to compensate for the loss of Ormet as a ratepayer.

However Cera, in an official statement to the PUCO, said he believes this is the case.

“It is likely AEP will request rate relief from the PUCO for losing its largest, single customer. Therefore, AEP ratepayers will be hit with the cost of Ormet’s power whether it is operating or not,” Cera stated.

Cera also noted the instability of the Switzerland of Ohio Local School District as a reason the PUCO should grant Ormet’s request. As an already struggling school district that has lost 1,200 students over the past 23 years, the district that operates Monroe Central, River, and Beallsville high schools stands to lose more than $100,000 per year in property taxes if Ormet were to completely shut down and liquidated, according to district Treasurer Lance Erlwein.

“Simply put, this area of our state will suffer another blow to its economic well-being-families will be devastated,” Cera added.