Ormet forced to shut down operations after PUCO transition plan ruling

By Caroline Salls

Pittsburgh, Oct. 4 - Ormet Corp. said it cannot emerge from bankruptcy and must immediately shut down operations after the Public Utilities Commission of Ohio denied the majority of the company's request for an energy transition plan that would allow it to operate while constructing an onsite natural gas based power generation facility.

According to a company news release, PUCO's decision came on Oct. 2.

Ormet said an estimated 600 additional people will be affected under its existing Worker Adjustment and Retraining Notification (WARN) Act notice.

The company said it was forced to file bankruptcy in February 2013 as a result of historically low metal prices and exceedingly high and uncontrollable power costs.

The Ohio Power industrial rate, which establishes the base rate for Ormet to procure power, has increased to $60.83/MWH in September from $39.66 per MWH in 2009, the release said.

During the same period, the company said wholesale power costs in the region have decreased by more than 10%.

At full operations, Ormet said its projected 2014 energy cost would reflect an increase of $108 million, before a potential $54 million discount provided for in the PUCO ruling.

"The economic impact of PUCO's decision is simply a restructuring of the existing economic incentives already pledged to Ormet for maintaining the jobs and does not address the continued rate increases," Ormet chief executive officer and president Mike Tanchuk said in the release.

"It is not sufficient to maintain, let alone increase, operating levels at [Ormet's Hannibal, Ohio, plant] and begin construction of an onsite power plant.

"The chairman and one of the commissioners went out of their way to insult Ormet's efforts to reduce costs. I want to set the record straight and recognize that the USW and secured creditors have coordinated in a collaborative effort with the company to reduce the company's financial liabilities by almost $300 million."

The company said a restart of the Hannibal smelter in the future would be contingent upon obtaining a long-term economical power supply and an improving aluminum pricing environment.

As previously reported, PUCO's approval of the company's electricity supply agreement is needed before the $130 million sale of substantially all of Ormet's assets to Smelter Acquisition LLC can close. The sale was approved by the bankruptcy court in June.

Ormet, a Hannibal, Ohio-based producer of aluminum, filed for bankruptcy on Feb. 26, 2013 in the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 case number is 13-10334.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.