Ohio Regulator Says AEP Must Supply Power to Ormet Facility

   Stephanie Gleason 
 

Ormet Corp. (ORMTQ) received a ruling from the Ohio utility regulator that will keep the power turned on at its aluminum smelter in Hannibal, Ohio, which was slated to go black Friday, preventing arsenic and cyanide from leaking into the groundwater.

The Public Utilities Commission of Ohio, or PUCO, approved Ormet's request to allow it to prepay weekly for the minimal amount of electricity drawn by its shuttered smelter, according to the PUCO order, even though Ormet hasn't paid its electricity bill for previous months.

"AEP Ohio is, therefore, directed to provide electric service to Ormet throughout the remainder of Ormet's bankruptcy proceeding, subject to Ormet's payment for such service, at the applicable tariff rate, weekly in advance," Ohio's utility commissioners said, calling Ormet's request "for the purposes of complying with the U.S. EPA's consent decree" reasonable.

American Electric Power Co. (AEP), which supplies electricity to Ormet, had said Ormet's promise to pay weekly going forward had no bearing on the fact that it was owed $7.3 million for September and close to $40 million total. It was demanding payment of $1.4 million, the undisputed portion of its September bill, to keep the power on.

During a Monday hearing at the U.S. Bankruptcy Court in Wilmington, Del., AEP said it could turn the power off on Friday, causing a stir among the U.S. Environmental Protection Agency officials.

Ormet maintains interceptor wells on the Hannibal smelter site, which keep harmful chemicals from contaminating the environment. But, those wells require electricity to run and filter out the chemicals.

AEP said in a statement Wednesday "we will abide by the Commission's order and are working with Ormet on a weekly prepayment plan that will apply going forward through the pendency of the bankruptcy proceeding."

The PUCO order serves primarily as a stopgap measure, as Judge Mary Walrath's commitment to attend a bankruptcy judges' conference this week prevented her from holding another hearing before Friday.

AEP had argued the regulator didn't have the authority to issue this ruling, but PUCO disagreed. However, the regulator did recognize in the order that the U.S. Bankruptcy Court retains the authority to change the its decision.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com.)

Write to Stephanie Gleason at [e-mail].

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