Ohio Aluminum Smelter Claims Shutdown "First Major Casualty" of "Transition to Market"

Blaming Ohio's "energy policy transition to market," Ormet announced that it was shutting down its Hannibal, Ohio aluminum smelting plant after the Public Utilities Commission of Ohio declined to fully grant Ormet's latest request for subsidized electric rates.

Ormet is currently served under a unique arrangement with AEP Ohio, which provides discounts to the otherwise applicable tariffed rates. Ormet said that under this agreement, the Ohio Power tariffed industrial rate which establishes the base rate for Ormet increased from $39.66 per MWh when the unique arrangement was established in 2009, to $60.83/MWh in September 2013, an increase of over 53 percent. During the same period, wholesale power costs in the region have decreased by over 10 percent.

Notably, these rate increases are attributable solely to AEP Ohio tariffed commodity pricing, not market-based procurements of generation supplies (which have yet to start at AEP Ohio). Indeed, as part of its sought modifications to the unique arrangement, Ormet was seeking authorization to purchase supply from a competitive retail supplier (which is currently prohibited by the unique arrangement).

Despite this history, Ormet said that, "Ohio’s energy policy transition to market has massively increased energy costs."

Specifically, Mike Tanchuk, Chief Executive Officer and President of Ormet Corporation, said that, in granting only part or Ormet's requested relief, "The PUCO Commissioners never mentioned in their comments that Ohio’s energy policy transition to market has massively increased energy costs and is misguided, with its first major casualty being Ormet. How can this Administration justify an energy policy that puts thousands of people out of work?"