PUCO approves arrangement between Ormet and AEP-Ohio

COLUMBUS, OHIO (July 15, 2009) – The Public Utilities Commission of Ohio (PUCO) today approved an arrangement between Ormet Primary Aluminum Corporation and American Electric Power-Ohio (AEP-Ohio) for electric service to the company’s aluminum producing facility in Hannibal. The arrangement will be in effect through 2018.

“This arrangement will ensure that jobs are retained in Ohio and that the region continues to receive economic benefits from Ormet’s operation,” PUCO Chairman Alan R. Schriber stated. “By approving this arrangement, we are fulfilling the economic development policies set forth in Senate Bill 221 through job retention, as Ormet is a key employer to the Hannibal region.”

The Commission made several modifications to the application filed by Ormet before approving the arrangement today. As modified by the Commission, rates billed to Ormet by AEP-Ohio for the balance of 2009, will reflect an annual averaged rate of $38 per megawatt hour (MWh) for the periods Ormet was in full production, $35 per MWh when Ormet curtailed production to 4.6 potlines and $34 per MWh when Ormet curtailed production to 4 potlines. These rates are contingent upon Ormet maintaining its employment levels at 900 employees for calendar year 2009.

For calendar years 2010 through 2018, the Commission approved the link of Ormet’s rate to the price of aluminum as reported on the London Metal Exchange, but modified the agreement to include a maximum electric rate discount for Ormet and a maximum amount of delta revenue (or the difference between AEP-Ohio’s tariff rate and the rate paid by Ormet) that AEP-Ohio ratepayers will be expected to pay. The Commission also reduced the impact of the arrangement on customers’ bills by including a credit of the provider of last resort (POLR) charges paid by Ormet to AEP-Ohio.

During calendar years 2010 and 2011, the maximum electric rate discount Ormet will receive is $60 million. This discount will be subject to adjustment based upon employment levels at the facility. The maximum amount of delta revenue that ratepayers will be expected to pay during 2010 and 2011 will be between $45.4 million and $54 million, depending on the credit of POLR charges, resulting in a charge to customers’ bill of less than $2 per month. AEP-Ohio will defer the difference between the rate paid by Ormet and the delta revenue collected from ratepayers and will recover the difference at the end of the arrangement.

The Commission also phased down the discount Ormet receives throughout the length of the arrangement. As a result, Ormet’s maximum discount will be reduced to $54 million in 2012. For calendar years 2013 through 2018, the maximum discount will be reduced each year by $10 million.

The Commission further directed that any rate discounts provided to Ormet must be directly related to employment levels. Under the arrangement, Ormet will be required to maintain an employment level of 650 full-time employees. Ormet’s discount will be reduced by an additional $10 million each month for every 50 employees below 650 full-time employees that were employed by Ormet for the previous month. Ormet will be required to provide a monthly report to PUCO staff and AEP-Ohio detailing its employment levels.

Ormet and AEP-Ohio must file an executed power agreement that reflects the modifications ordered today by the Commission. Once the agreement is filed, the arrangement will be effective.

A copy of today’s Commission opinion and order is available at www.PUCO.ohio.gov. Click on the link to the Docketing Information System (DIS) and enter the case number 09-119-EL-AEC.

-30-

09-119-EL-AEC