A power deal: AmerenUE, Noranda reach agreement

MARSTON - AmerenUE and Noranda Aluminum Inc. officials and local legislators gathered Friday to announce a first-of-its-kind agreement for the utility company to supply power for the aluminum plant.

The two companies signed a letter of intent outlining the terms of a multi-year agreement to supply Noranda's primary aluminum smelter in Southeast Missouri. The agreement is slated to become effective June 1.

Noranda's aluminum complex is located on the west bank of the Mississippi River five miles south of New Madrid. It is the largest energy user in Missouri, requiring as much electrical power as a city the size of Springfield.

"We are pleased to have the opportunity to serve Noranda - a company that has been a leading employer in this region for more than 30 years," said Gary L. Rainwater, chairman and chief executive officer of Ameren Corporation. "We also appreciate the tremendous support of the elected officials of Southeast Missouri - particularly Sen. Peter Kinder - who led the way in getting legislation passed that enabled Noranda to choose the electrical power supplier that could best meet its needs, AmerenUE."

Noranda President Bill Brooks also expressed his thanks to local and state officials for making the new power contract possible.

"Ours is an energy-intensive operation that must compete in a challenging global marketplace," Brooks said. "A reliable, low-cost supply of electricity is critical to our ability to succeed in this intensely competitive arena."

Kinder said it took a "strong bipartisan effort in Jefferson City on your behalf" to pass the special legislation allowing Noranda to purchase power on the wholesale market and highlighted Noranda's importance to the economy of the state and region.

Brooks and Rainwater outlined the next steps that will allow Noranda to become a full-requirements customer of AmerenUE on June 1.

A key condition is that the Missouri Public Service Commission grants authority for AmerenUE to extend its Missouri service territory to include the area where the Noranda facility is located. AmerenUE plans to file that request before the end of the year.

Another key condition is regulatory approval to transfer the non rate-regulated, Illinois-based combustion turbine generating units at Kinmundy and Pinckneyville to the Missouri-based, rate-regulated operations of AmerenUE by June 1. In a July 28 order, the Federal Energy Regulatory Commission approved the transfer of these generating units with a total capacity of 550 megawatts; however, this transfer is still subject to approval by the Securities and Exchange Commission under the Public Utility Holding Company Act.

The proposed acquisition of the of combustion turbine units would help ensure AmerenUE's ability to cost-effectively supply Noranda's electric load requirements and partially satisfy a commitment in AmerenUE's 2002 Missouri electric rate case settlement to make certain infrastructure investments prior to June 30, 2006.

Noranda's aluminum reduction plant at Marston, which incorporates the most advanced environmental control technology, is designed for an annual metal production capacity of 250,000 metric tons.

AmerenUE is the largest electric utility in Missouri and the state's third largest supplier of natural gas.