By Carole Vaporean
NEW YORK Aug 1 Ormet Corp was
beginning on Thursday to shut down half of the existing
operations at its lone 260,000-tonne-per-year aluminum smelter
at Hannibal, Ohio, according to documents filed a day earlier
with Ohio state utility regulators.
Low metal prices and high power rates prompted the decision,
Chief Executive officer Mike Tanchuk said in a notice posted on
the aluminum producer's website. On Wednesday, the Public
Utilities Commission of Ohio denied Ormet's request for an
emergency reduction in electricity rates.
While it did not grant the emergency reduction, the
commission still plans to consider lower rates for Ormet at a
full hearing on Aug. 27.
Late on Wednesday, Ormet submitted a motion asking that
payment of its August and September power bills be deferred to
provide liquidity for the aluminum producer to operate its
Hannibal, Ohio aluminum smelter.
Deferral would also give the commission time to conduct a
full hearing on Ormet's requested relief, regulatory documents
Ormet, which has filed for bankruptcy protection, needs
"immediate relief from AEP Ohio payments due in August and
September, 2013 to continue operating on a limited basis at its
facilities in Hannibal, Ohio," and to keep it from shutting down
all remaining operations by early September, the filing said.
The Ohio facility is Ormet's only aluminum smelter. The
company also operates an alumina refinery in Burnside, Louisiana
that is not affected by the AEP Ohio power agreement.
Ormet had sought an expedited ruling to cut its power rates,
but the commission denied the request for emergency relief and
affirmed its agreement with AEP Ohio, a unit of American
Electric Power Service Corp.
At Wednesday's hearing, the PUCO commissioner said the
commission thought the issues pertaining to Ormet's power rate
application required more in-depth discussion at the formal
hearing set for Aug. 27.
"The consequence of this decision is Ormet must immediately
begin the shutdown of half of our existing operations to
conserve cash," said Mike Tanchuk, Chief Executive Officer and
President in its website posting.
Ormet filed for bankruptcy on Feb. 25, 2013 due to low metal
prices and high power costs.
The Ohio Power industrial rate, which establishes the base
rate for Ormet to procure power, increased to $62.83 per
megawatt hour in June from $39.66 per megawatt hour when the
company's Unique Arrangement was established in 2009 with AEP
Ohio, according to Ormet's notice.
Lowering those rates is one of several requests that will be
considered on Aug. 27 in its efforts to restructure its power