Who gets blamed for Ormet?
HANNIBAL – Legislators Lou Gentile and Jack Cera blame Ohio Gov. John Kasich for not doing more to keep Ormet in business, but the governor’s spokesman said the state offered more than $300 million worth of assistance to a company with many out-of-state employees.
After Ormet’s announcement Friday that it would cease operations due to high electric bills – a move that will cost about 750 workers their jobs in addition to the 250 who were already laid off – elected officials are pointing fingers at one another over the aluminum plant’s closure.
Ormet President and Chief Executive Officer Mike Tanchuk said the company would be forced to halt all production following the Public Utilities Commission of Ohio’s decision to lower the company’s electric costs from $60 to $50 per megawatt-hour, rather than down to $45.89 per megawatt-hour as Ormet requested.
“The workers and retirees at Ormet have made significant concessions in wages and benefits to put this company in a position to be successful,” said Sen. Gentile, D-Steubenville. “The Kasich administration failed to uphold their end of the deal. The workers, families and communities in the Ohio Valley deserve better.”
Cera echoed Gentile’s statement.
“For nearly a year, I have expressed to the Kasich administration the importance of these jobs and the devastating impact it would have if they did not provide Ormet with a reasonable power agreement,” Rep. Cera, D-Bellaire, said. “Now, their actions have jeopardized nearly a thousand jobs, the future of the Switzerland of Ohio School District and the stability of local governments that rely upon Ormet’s tax base.”
However, Rob Nichols, press secretary for Kasich, said nearly half of Ormet’s employees live in West Virginia, yet the Mountain State did not offer any financial support for the company.
“(Ohio) has approved more than $300 million in assistance for Ormet. That is $300 million more than any other state has provided to them,” Nichols said.
Nichols said the administration sent about 10 people to Monroe County on Monday to meet with local officials and Ormet employees. He said officials are determined to help eastern Ohio cope with the loss of Ormet as much as they can.
“This is the start of a process that will continue because the governor is committed to continuing to work with Monroe County to find the right solution moving forward,” Nichols said.
Nichols said the administration also offered advice and support Monday to those at the Ohio Department of Job & Family Services One Stop center in Woodsfield. The center can help to provide job training and information on available positions for those looking for work.
Meanwhile, American Electric Power officials Monday expressed disappointment that Ormet will close, but are not yet sure if they will seek to raise rates on other Ohio consumers to compensate for the loss of what had been their largest customer.
The company may seek permission from the PUCO to increase power rates on other Ohio consumers to make up for the money it stands to lose because it will no longer be selling electricity to Ormet. However, AEP spokeswoman Terri Flora said company officials have not determined if they will seek a rate increase.
“AEP Ohio and Ormet have a long history. It is unfortunate and disappointing that they can’t find a way to continue operating in this challenging aluminum market,” she said.
In February, Ormet filed for bankruptcy in U.S. District Court in Delaware. The company later announced a planned $221 million sale to Minnesota-based Wayzata, but emphasized this transaction required convincing the PUCO to allow Ormet to have lower AEP bills.
The stipulations for Wayzata to purchase Ormet included: securing the lower AEP rates; securing a working agreement with the USW; and moving the pension debt to the federal Pension Benefit Guaranty Corp.
The USW Local 5724 approved the new working agreement, while the PBGC will likely take over the pension debt. However, Tanchuk said the electricity rate of $50 per megawatt-hour is not low enough.
The commission denied Ormet’s request to transition to retail choice for electricity purchases in 2014, ordering the company to honor its current contract with AEP through December 2018. Tanchuk had wanted Ormet to generate its own electricity by late 2015, via a planned natural gas power center.