PUCO grants Ormet chance to undergo sale
COLUMBUS, Ohio – The Public Utilities Commission of Ohio on Wednesday granted Ormet Corp.’s request for lower electricity costs, from $60 to $50 per megawatt-hour.
Now, the decision for Minnesota-based Wayzata, the company seeking to purchase Ormet, will be if the rate is low enough for Ormet to be profitable, as the company had been seeking an average fixed-rate cost of $45.89 per megawatt-hour.
Following Wednesday’s ruling, Ormet employees also wondered if the lower rate would help them keep their jobs.
“It’s all up to Wayzata now,” said Tom Byers, president of United Steelworkers Local 5724. Wayzata agreed to buy the aluminum producer out of bankruptcy for $221 million earlier this year, pending Ormet’s ability to lower its electricity bills from American Electric Power.
If Wayzata chooses to not purchase Ormet, it could mean the end of the aluminum producer and the 1,000 jobs it provides.
Wayzata officials did not immediately return messages seeking comment Wednesday. Ormet President and Chief Executive Officer Mike Tanchuk also could not be reached for comment.
“People need to be able to know what is going to happen. Now, we just need an answer from Wayzata to see if this is going to be enough for them to follow through on their end,” Byers said.
“The ball is truly in (Wayzata’s) court now,” USW Staff Representative John Puskar added.
Emphasizing that Ormet has many employees who live in West Virginia, PUCO commissioners questioned the long-term viability of one of the Upper Ohio Valley’s largest employers – and wondered why Ohio electricity customers should support people who live in another state.
“Ohio continues to take the lead on providing support that benefits all of the company’s workers,” said PUCO Chairman Todd Snitchler. “It’s my hope, however, that at some point there is a recognition from other states of the extraordinary support that Ohio and Ohio ratepayers have provided to these other states’ citizens.”
The commission said it recognized Ormet’s economic importance to the region, but wanted to balance those interests with the concerns of local ratepayers, who would be subsidizing part of Ormet’s power costs with increases to their own bills.
Officials with AEP and the Ohio Consumers’ Counsel have said granting Ormet additional power discounts could result in higher rates for about 1.4 million Ohio customers, many of whom live hundreds of miles away from the Hannibal facility.
“I sign today’s order not because of any confidence in Ormet’s management, but because of the potential devastating impact of the region’s largest employer closing,” added Commissioner Steven Lesser.
Snitchler said the commission has approved $346 million in financial support for Ormet over the past four years, calling this “extraordinary.”
The commission also modified Ormet’s discounts so that AEP Ohio ratepayers would receive a refund if benchmark aluminum prices exceed Ormet’s break-even level of $2,200 per ton. If aluminum rises above $2,500 a ton on the London Metal Exchange, Ormet will pay Ohio ratepayers at 108 percent of the rate.