Ormet discounts costing AEP customers

HANNIBAL – As the Upper Ohio Valley waits to see if Ormet Corp. will continue operating, a state agency believes other American Electric Power customers are subsidizing the company with $305 million in electricity discounts.

“We support economic development, but there must be a balanced approach,” said Maureen Grady, counsel of record for the Ohio Consumers’ Counsel. “That is a lot of money for ratepayers to be giving to a corporation.”

The counsel is the statewide legal representative for Ohio’s residential consumers in matters related to utility services. It advocates for residential consumers before the Public Utilities Commission of Ohio with a nine-member, bipartisan governing board.

AEP spokesman Jeff Rennie said his company could not “speculate on the amount that customers might have to pay under the Ormet unique arrangement.”

“There are several variables including future fuel costs and customer usage that we cannot predict and that would substantially impact the total,” Rennie added.

In a November filing with the PUCO, the Ohio Consumers’ Counsel states Ormet originally got the discounted electricity rate in July 2009 for a period of 10 years.

“The customers of AEP Ohio were ordered to fund the discount, reimbursing AEP Ohio for the discount to Ormet. Over the term of the arrangement, the discount customers are expected to pay is $305.7 million,” the counsel’s filing states.

“Our agency had to get involved – Ormet asked for a whole lot more,” Grady said. “This was only supposed to be a stop-gap measure.”

The filing also states Ormet “must maintain 650 full-time employees for Ohio” in order for the electricity program to continue.

This summer, Ormet issued a Worker Adjustment and Retraining Notification Act notice stating the company may lay off nearly 1,000 employees by the end of the year. Ormet cited a PUCO ruling that would increase its AEP bills by about $20 million per year – as well as low aluminum prices on the London Metal Exchange – as reasons for the company’s difficulties.

Tom Byers, president of United Steelworkers Local 5724 at Ormet, confirmed that 102 union workers received layoff notices in September, but later said some of those workers had returned to the job. He could not be reached for comment for this report but said in November that employment levels have remained fairly stable with about 82 workers now displaced.