Fighting for an electric rate break

CHAMPION – If the idled Warren Steel Holdings mill gets the utility rates break it is requesting, it could back up and running by August, turning out tubular products for use in natural gas and oil drilling.

Michael Salamon, president and chief operating officer for Optima Steel, which oversees the Champion plant, testified last week that the company has been promised orders from three customers, including one to produce Oil Country Tubular Goods now being produced in Europe or South America.

Salamon testified Thursday at a Columbus hearing held in response to Warren Steel’s application with the Public Utilities Commission of Ohio for a reduction in its electric rates.

The company, which shut down March 24, filed documents with the PUCO saying it will not be able to reopen without a break in its utility rates because the mill is paying electricity rates much higher than its competitors.

An economic impact study outlined during Thursday’s hearing indicates that restarting the facility will mean 180 direct labor positions at the facility and 66 contractors, for a full-time equivalent of about 309. That number is projected to increase to 374. Indirect jobs related to the mill’s operations are expected to grow from the present 1,128, at a $53.2 million payroll, to 1,466, generating $62.9 million in payroll.

Salamon said today the plant produces about 240,000 tons of steel, a number also projected to grow. In fact, over the long-term, production is expected to reach about 1 million tons, he said in his testimony.

“The tons that are brought to Ohio and northeast Ohio will come from outside of Ohio and outside of the United States, so we’re growing the steel business in our region,” Salamon said. “These are high-paying, technical jobs that have a long-term effect on the families and the people that can attach to good things.”

Since its shutdown, the company has not laid off any of its workers, but instead has reassigned their duties to maintenance and housekeeping work. That work will not be sustainable for long, company officials have said.

According to the PUCO filing, Warren Steel Holdings says its electric costs stood in excess of $75 per megawatt hour, or MWh, while competitors are paying less than $50 MWh.

Warren Steel Holdings is requesting a six-year rate reduction beginning at $50 MWh for the first year with fixed-rate percentage increases over the course of the term, all below Ohio Edison’s “non-shopping price.”

“Warren Steel cannot sustain its current losses indefinitely and needs a competitive electric rate in order to remain in business,” the company wrote in its filing. “After scrap metal and labor, electricity is the third largest expense for an electric arc steel manufacturer.”

Letters of support were sent to PUCO from U.S. Sen. Sherrod Brown, D-Ohio; U.S. Rep. Timothy J. Ryan, D-Howland; Ohio Sen. Capri Cafaro, D-Hubbard; and State Rep. Sean O’Brien, D-Brookfield.

PUCO commissioners are reviewing the case, and are aware of Warren Steel Holding’s request for an expedited response, said PUCO spokesman Matt Schilling.

“The only intervener in the case is Ohio Edison, which allows us to work more quickly,” Schilling said. An answer could be released as early as July 23.

Since 2006, Warren Steel Holdings has operated an electric arc furnace melt shop and casting facility in part of the former Copperweld Steel Mill on Mahoning Avenue.

The company manufactures billets, or solid tubular products, among other products, that are shipped to other facilities to be hollowed for use in the oil and gas industry, automotive, heavy equipment, rail and other industries.