ArcelorMittal says FirstEnergy and AEP rate increases could "have significant impact" on the company's 3,000 jobs Ohio jobs. The world's largest steel maker and seven Ohio industrial power users have written to the PUCO opposing the increases.
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ArcelorMittal opposes the rate increases FirstEnergy and AEP Ohio are asking state regulators to approve to subsidize older power plants unable to compete with more efficient gas plants and wind farms. The world's largest steel maker says the increases would add $20 million to its electric bills and undermine competitive electric markets. COLUMBUS, Ohio -- The world's largest steelmaker, its largest chemical company and its largest appliance maker oppose FirstEnergy and AEP Ohio's requests to raise rates for up to eight years to subsidize operations of some of their old power plants.
ArcelorMittal, which provides 3,000 Ohio jobs, the chemical giant BASF Corp., with 10 Ohio facilities, and the Whirlpool Corp. which employs 10,000 in Ohio, have each written to the Public Utilities Commission of Ohio in opposition.
The three are among eight Ohio manufacturers objecting to the utility proposals forcing customers -- even those buying electricity from a competitor -- to pay more for electricity to subsidize the older power plants for up to eight years.
The industrial companies argue that competition in Ohio's electric markets has been good for all customers because it has lowered the price of power and has helped businesses grow.
They reason that the deals AEP Ohio and FirstEnergy want will hurt the competitive markets that have driven down power prices.
Here are summaries of their objections as well as links to the company letters.
- ArcelorMittal, already sharply cutting expenses at its U.S. operations in order to stay competitive with imported steel, wrote that the rate increases would add $20 million to its power bills over the next eight years and "undermine the very basis of deregulation." "The timing could not be worse," the steelmaker wrote. "Global steel overcapacity has resulted in a flood of record-level imports that have eroded the increase in demand we would normally experience from an improving U.S. economy. The loss of tens of millions of dollars [in business] over the next several years could have a significant impact on the 3,000 jobs we provide in Ohio, take away from innovation and reduce scarce capital investments, hurting the long-term viability of our Ohio facilities and our USA business."
- BASF wrote that chemical manufacturing is inherently energy intensive and that the FirstEnergy rate increase would impact operations at is Elyria factory, which makes parts for lithium ion batteries.
- Whirlpool wrote that Ohio's competitive electric markets have been effective at lowering the price of power at its five Ohio factories and argued that FirstEnergy and AEP Ohio customers should not be forced to subsidize power plants that can't compete. "Competitive electricity markets in Ohio are working for the benefit of all Ohio electricity customers; these deals would be a major setback," the letter said in part.
- William Sopko & Sons Co., a Euclid-based maker of precision parts for industrial grinding equipment, wrote that the rate increases would hurt Ohio industry as well as consumers. "These deals will put an unnecessary and anti-competitive layer of costs on customers with no commensurate benefits, constrain competition, and dampen technological innovation in Ohio. In addition, both settlements contain other provisions that will increase costs to consumers," the letter said in part.
- Summitville Tiles, a Columbiana County-based maker of building and paving brick as well as floor and roof tile, blasted the "sweetheart settlements" FirstEnergy and AEP Ohio reached with the staff of the PUCO and said its price of electricity has increased by 50 percent in the last six years and its delivery charges by 100 percent. The proposed increases to subsidize old power plants "will make Ohio uncompetitive even with neighboring states, and put a dagger in the heart of everything [Gov] John Kasich has done to make Ohio strong again."
- The Belden Brick Co. of Canton wrote that the proposed subsidies would cost the company an additional $940,000 over their eight-year run. "Belden Brick did not have the government to turn to during this recent downturn. We do not agree that FirstEnergy and AEP should have this option either once they decided to deregulate their industry.
- Cooper Tire & Rubber Co. wrote directly to Gov. Kasich asking him to stop the PUCO from approving the subsidies because the extra charges will "impede the company's ability to sustain or grow our operations here. These proposed [agreements) serve only to benefit First Energy and AEP while severely compromising the competitiveness of all Ohio manufacturers and other businesses," the company wrote.
- Sheoga Hardwood Flooring and Paneling Co. of Middlefield wrote that the new fees would cost the company nearly $106,000 in extra charges over eight years. "That is real money that could be used on more productive purposes updating our equipment, increasing our inventories and building a new finishing plant for our hardwood flooring products -- ALL OF WHICH [would] BRING MORE TAXABLE INCOME TO THE STATE OF OHIO AND INCREASE OUR CONSUMPTION OF ELECTRICITY."