Ameren in talks with state lawmakers to save Noranda's Missouri aluminium smelter

St. Louis based energy utility service provider Ameren Missouri is in talks with the state lawmakers to help its largest customer, Noranda Aluminum find some way out to evade possible closure of its Southeast Missouri aluminum smelter, reported sources close to both the companies.

The smelting facility buys roughly 10 percent of Ameren Missouri‘s power; hence, its closure would mean huge loss for the power utility as well. No wonder, the company has stepped in to find a solution to the situation despite the fact that they have never got along with Noranda Aluminum in Jefferson City. Sources say, Ameren is seeking changes in Missouri utility law that would give it more certainty when it files for rate increases.

While no bill has been filed yet, it is reported that Ameren Missouri wants a regulatory regime similar to that of Illinois, where its sister utility is allowed near-automatic, annual rate increases in exchange for more investment in the electric grid. Such a change would give the Missouri Public Service Commission less discretion over the utility’s rate structure and require it to approve rate adjustments if utilities meet certain criteria.

A week after Noranda announced an electric outage had idled two of three aluminum production lines at its smelter in the Missouri Bootheel, Ameren disclosed it was working with its longtime adversary. Rather than considering a restart of its production lines while low aluminum prices still persist, Noranda said it would lay off nearly 500 of the 850 workers at the smelter by February. After that, Noranda will further curtail the smelter’s remaining operations by March 12 unless it can “secure a substantially more sustainable power rate for the smelter.”

In a disclosure to the investors Tuesday, Ameren said it had been working with Noranda and legislators before the outage and layoffs. With much of Noranda already idled, Ameren said, it will try to sell the excess power on the wholesale electricity market.

Customers in the wholesale electricity market could see an impact from Noranda’s woes when the Missouri Public Service Commission next adjusts Ameren’s rates.