Warren Steel is asking Ohio regulators for an electricity rate discount the company says could allow it to attract "strategic partnerships" and reopen its Warren steelmaking plant that was shut in late March.
Warren is the latest in a series of US aluminum and steel producers pursuing state-authorized power rate incentives in an effort to make their plants more cost-competitive.
In Warren's case, it told the Ohio Public Utilities Commission last week that is it negotiating a strategic partnership with with an unidentified major steel producer to supply steel out of northern Ohio. To do so, though, Warren, which operates an electric arc furnace melt shop and casting facility in the northeast Ohio city, said it must compete "with an electric arc furnace operation in a Southern state that has been offered $50/MWh fixed pricing from its fully-regulated utility supplier."
The competitor was not identified and Warren officials could not be reached for immediate comment on Monday.
Under its request for a "reasonable arrangement" with FirstEnergy unit Ohio Edison, Warren is seeking a six-year power rate discount that starts at $50/MWh in the first year and gradually rises each following year. Warren's existing rate was not disclosed.
The steelmaker told the PUC that in the deal's sixth and final year it wants a rate that is 5% below the applicable Ohio Edison non-shopping price for electricity.
According to Warren, maximum annual rate relief would be capped at $10 million.
FirstEnergy spokeswoman Tricia Ingraham said Monday that the utility will not oppose the special power arrangement sought by Warren Steel.
The filing said Warren has plans to improve operational reliability, quality, expand its product offering and increase production at its Ohio plant. While the company was producing at an annual rate of 240,000 tons a year when the facility closed, the company said it it capable of producing 1 million tons/year.
But it added that capital expenditures of about $10 million in the first year and up to an additional $33 million in the next three to four years would be required to achieve full capacity.
Competitive electric pricing also would enable Warren to undertake a $2.1 million upgrade of its substation, which could save nearly 1.2 million MWh annually, based upon 70,000 tons per month of steel production, the company said.
The plant had about 310 employees when it was idled and none has been laid off yet, Warren said. At higher production levels, Warren said it anticipates the total workforce rising to 374 full-time positions.
John McKenna, a Warren spokesman, said in a Friday email that Warren is "exploring the best course of action to restart operations and ensure [the company's] long-term viability."
Warren is hoping for a quick decision from the PUC, he added.
