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NEW MADRID, Mo. • Surrounded by some of the best farmland in Missouri, a sprawling industrial park is the closest thing to a skyline in this portion of the Mississippi Delta.

There, far from the majority of its ratepayers in the St. Louis region, is Ameren Missouri’s largest customer, Noranda Aluminum Holding Corp.

For some 45 years, Noranda’s aluminum smelter and its hundreds of employees have tied the area’s economy to more than the price of soy, rice, cotton and wheat. Now, the region and the 900 workers at the plant watch the global price of aluminum and, almost as closely, the price of electricity.

Every day of the year, every hour of the day, Noranda needs 485 megawatts of power — 10 percent of the power Ameren Missouri produces and roughly equivalent to the electricity needs of Springfield, Mo., the state’s third-largest city.

Noranda can do little to influence the price of aluminum. But it can affect what it pays for electricity, and it’s asking Missouri regulators to lower its bill.

The fate of the New Madrid smelter, and the region’s economy, hangs in the balance, Noranda says. Lower aluminum prices in recent years mean it needs lower electricity costs or the plant could be forced to close, putting hundreds of people in a poor region of the state out of work.

“They’re the greatest thing that ever happened to Southeast Missouri, in my opinion,” said Carlis McHugh, who owns the New Orleans Inn and Billy’s Steakhouse in nearby Portageville. “If that thing were to close up, God forbid, they’re not gonna go back to farmwork making $7 or $8 an hour.”

Ameren argues that Noranda’s request amounts to a cost shift to its other customers from a company whose largest shareholder is a New York private equity fund.

“We recognize the importance of the plant to the economy in that area, but if their long-term viability depends on hundreds of millions of dollars of subsidies from our other 1.2 million customers, I think that’s a very concerning policy path to go down,” said Warren Wood, Ameren Missouri’s vice president of legislative and regulatory affairs.

The smelter’s request for a 25 percent cut in the special rate it pays Ameren is the latest battle between it and the utility. The two have sparred in Jefferson City and the courts frequently over the years. This time, rather than fending off rate increases, surcharges and new state rules pushed by Ameren, Noranda is on the offensive.

If the Missouri Public Service Commission grants its request, Noranda would pay an estimated $47 million less on its $170 million annual electric bill. That could mean other Ameren ratepayers pay nearly 2 percent more to make up the difference — about $2.25 per month for the average household.

Rather than draw the ire of consumer groups, Noranda has drawn them into its corner by filing another case in front of the regulator, this one accusing Ameren of earning $67 million more than it should have last year.

That has kept consumer groups on its side because the separate filing could reduce the bills of Ameren ratepayers if successful. But the two cases have ginned up a political back-and-forth that has drawn in St. Louis Mayor Francis Slay, Wal-Mart Stores Inc., organized labor and other large power users.

Amidst all the political wrangling, the issue comes down to whether the company can survive paying what it does now, and whether Ameren would be better off selling that 485 megawatts of power on the open market. Noranda says 150 to 200 layoffs will happen this year if the PSC denies its request. Eventually — it won’t say when — the plant will close if nothing changes.

Time will tell whether that’s true. But it is true that the global price of aluminum has been trending lower for the last three years, and it’s also true that Noranda’s power costs have edged higher after Ameren rate increases. There is a glut of aluminum in warehouses, and U.S. smelters have been closing while countries such as China add more aluminum production.

“There were 32 smelters (in the U.S.) about 25 years ago, there were 15 smelters six years ago and there are nine today,” Noranda’s CEO Layle “Kip” Smith said in an earnings call with analysts last month, after the company posted a $16.8 million loss for the first quarter. “And as we have looked at those shutdowns, we haven’t seen one that did not cite uncompetitive power as the primary cause or a primary cause of the closure.”

KEY EMPLOYER

Luckily for the region, making aluminum is labor-intensive.

If the plant stops running, it costs tens of millions of dollars to restart. Therefore, the plant needs around-the-clock shifts on its primary aluminum lines, which consume nearly all of its huge power needs.

It also runs facilities that make aluminum wire and rods for use by utilities and the steel industry. An aluminum products division forms the aluminum into alloys or pieces of pure metal to ship to its customers, most of them in the Midwest. It sells to Kohler, for instance, for use in shower doors, and Chrysler uses it for auto parts.

What it doesn’t sell directly to its customers, it supplies to one of its rolling mills in the South, which fabricates aluminum into the finished product used in foil, air conditioners and the aluminum pans used to cook the Thanksgiving turkey.

About 800 of the 900 people who work at the plant are union employees who are hired at good wages for the region, often about $48,000 to $50,000 a year for a starting employee when overtime and holidays are included. Total annual payroll at the plant was $95 million in 2013, the company says.

“Just like any job, you have your good days and your bad days, but most have been good for me,” said Rick Nave, 67, who walked into the United Steel Workers Local 7686 hall in Marston late last month to pick up his complimentary Steelworkers jacket. He had just retired after 18 years as a maintenance mechanic in the plant.

The plant paid $3.7 million in property taxes last year — nearly 18 percent of the county total.

There just aren’t as many jobs in farming as there used to be. Mechanization long ago reduced the demand for labor. And much of the ground, the region’s best natural resource and economic engine, is owned by absentee landlords, said Portageville Mayor Denis McCrate, so a lot of the harvest income leaves.

McCrate’s best guess is that 50 to 100 Noranda employees live in his town of about 3,200. But the factory draws workers from a 60-mile radius or more, and those who don’t live there spend money in town before and after work.

If the plant closes, “I’d become an instant retirement community with no income and no tax base,” McCrate said.

SOURED RELATIONSHIP

The decline in farming jobs is what led Sam Hunter Jr. to take a yearlong sabbatical and pursue a long-shot economic development project in the late 1960s.

“He knew we had to have some kind of industrialization down here to keep people here,” said his son, Sam Hunter III, who succeeded his father as the president and CEO of the Bank of New Madrid. “Compared to 40 years ago, (farmers) use one man where they used to use 15 or 20.”

Hunter’s father is also one of the main reasons that, ironically, a huge power plant sits right next to Noranda’s aluminum facility. It’s owned by Associated Electric Cooperative.

Both of them came to New Madrid County at the same time, one dependent on a huge power customer and the other dependent on a dedicated source of cheap electricity. For 30 years, Associated supplied power to Noranda.

When their contract expired, Noranda looked elsewhere for its electricity, and Associated was free to sell to other customers. A state law backed by Noranda allowed it to shop for the best power price, something normal utility customers can’t do.

In 2005, it struck a deal with Ameren Missouri. Noranda wanted lower costs, and Ameren saw value in constant demand. The utility even used some of the same language Noranda is using today, calling Noranda’s operation “critical to the region, and indeed, to the state of Missouri.”

The enthusiasm has since waned. In recent years, Noranda has fought Ameren in front of the PSC and in the courts over its rate increases. It’s stymied the utility’s efforts at bills in Jefferson City that would allow it to recoup infrastructure upgrades from ratepayers more quickly.

While many aluminum plants have electric rates tied to the price of the metal, Noranda has a regulated rate. That means Ameren’s rate increases have brought its rate per megawatt hour to $41.44 per megawatt hour today from $32.50 when it joined the system.

That runs both ways, though, and now Noranda is asking for the change in rates to $30 per megawatt hour, below what it originally received.

On Friday, the PSC’s staff recommended against Noranda’s rate proposal, saying it wasn’t enough to cover the utility’s costs of serving it. The PSC, which had the final say, is expected to rule on the request this summer.

COMPETITIVE PRESSURE

Noranda is in the midst of a cost-cutting program that has included layoffs in addition to its current rate request. In December, it reduced its companywide workforce, including about 29 people in New Madrid, by enough to save $15 million a year.

The union has made concessions on salaries, health care and pensions over the years, Stan Ivie, president of the local, said.

“It’s made a comfortable living for a lot of people over its 40-year history,” he said. “We’ve had to pull out a lot of stops to keep it running.”

Union leaders and others at the plant point to the closure of Ormet Corp’s Ohio smelter in October. It also attempted to negotiate a rate cut with state regulators. After that failed, it shuttered the plant.

Putting pressure on U.S. smelters is a huge rise in the supply of warehoused aluminum that has pushed down the price of the metal to below $1,800 a ton this year from $2,470 a ton at the beginning of 2011. Meanwhile, Chinese production has shot up to more than four times what is produced in North America, according to the International Aluminum Institute.

“What we have our eyes on is the decline of the aluminum industry in the United States,” said Cameron Redd, assistant chief steward of the local. “They dump that product on our market.”

If the PSC grants Noranda’s request near the beginning of August, the smelter would save about $47 million a year, not including rate increases. Its request would limit those to a maximum of 2 percent during Ameren rate increases.

Because it takes much less work to serve one giant customer than thousands of smaller ratepayers, Noranda argues that its proposal is justified and will cover the utility’s costs. It already pays more for electricity than most smelters in the country, it says.

Between lower aluminum prices and higher electricity prices, the current cost structure of its New Madrid plant is “unsustainable,” Smith, the chief executive, told investors on a conference call in February.

“We’ve always been very pleased with our contract with Ameren,” he said on the call, “but there has been a pretty dramatic change in the competitive circumstances in the U.S. aluminum business,” he said on the call.

Closing the smelter would leave Noranda with a huge hole in its vertically integrated company structure. As its only primary smelter, it would have to sell the raw materials it uses to other producers.

Ameren says the situation is not so dire as Noranda makes it out to be. It points to the company’s largest shareholder, private equity fund Apollo Global Management, for causing many of the company’s issues. Apollo acquired the company in 2007, and Noranda incurred $1.01 billion in debt in the process, according to Securities and Exchange Commission filings. Shortly after, in June 2007, Noranda paid $216.1 million in dividends to its shareholders. A year later, it paid another $102.2 million.

After Apollo took the company public in 2010, it maintained the largest number of shares and resumed paying dividends the next year, paying about $160 million over the next three years.

Noranda has since paid down its long-term debt, to $658 million in its most recent SEC report. But in a note to investors this month, Citigroup Global Markets noted Noranda’s leveraged balance sheet and majority ownership by Apollo as two of the reasons it was rated “high-risk.”

HIGH-STAKES POKER

Ameren says the question comes down whether it is better off selling the power Noranda buys to someone else. Noranda argues that the utility won’t get the price it does now, and rates will go up after Ameren is hit with a loss in demand.

Wood doubts that. “As you take any sort of market forecast on future power prices, their proposal is well below market,” he said.

Would Ameren be better off without Noranda, free to sell to whom it chooses? Wood wouldn’t say.

Would Noranda consider going back to the market to buy power, or could its deep-pocketed owner just make the company even more vertically integrated and buy the Associated Electric plant next door? Smith said the company’s energy options were proprietary.

Until the PSC acts, the residents of the Bootheel and Ameren’s ratepayers can do little but watch the high-stakes poker game.

Many, like Hunter, at the Bank of New Madrid, aren’t sure whom to believe.

“I still feel like they still got just a huge investment out there that would be hard to walk away from,” Hunter said. “But if the economics of the power don’t work out there, they may have no choice.”

Jacob Barker is a business reporter for the Post-Dispatch. 314-340-8291