Steel Mills

Warren Steel Looks to PUCO to Improve Competiveness & Restart Operations

June 10, 2014

We included this article in tonight’s issue because we saw evidence of confusion between the defunct Warren Steel of RG Steel fame and that of Warren Steel Holdings which is a long products mill also located in Ohio.

Long products producer Warren Steel Holdings, LLC (not to be confused with the former Warren flat rolled steel mill which was part of RG Steel) has requested an electricity rate discount from the Public Utilities Commission of Ohio (PUCO) to increase its desirability as a “strategic partner” and restart production.

Warren Steel idled steelmaking production last March after continued operating losses resulting from factors that included high energy costs.

In the PUCO application, Warren said it was paying $75/MWh on average while its competitors were paying an average of $48/MWh. A competitive power rate, said Warren, is necessary to restart operations.

The company said it is currently negotiating a “strategic partnership with a major steel producer to supply product out of Northern Ohio.” A Southern US competitor for that partnership has been offered a rate of $50/MWh from its utility provider, providing a significant savings on operation of its electric arc furnace.

Warren Steel, also an electric arc furnace facility, needs a competitive rate to compete with the Southern mill as well as to take advantage of a second strategic opportunity with an Ohio-based company.

Warren Steel told PUCO in its request that saving on electricity would allow the plant to reopen and undertake a $2.1 million upgrade to its substation and a $600,000 modernization to its EAF that would provide significant additional electricity savings per month.

Warren Steel is requesting a six year term with Ohio Edison that will begin with a rate of $50/MWh. Warren also requests expedited approval from the Commission within 30 days in order to secure the partnership with the Ohio-based company and restart operations without layoffs.

A source at Warren told SMU, “Warren Steel Holdings, LLC has filed an application for a Reasonable Arrangement with the Public Utilities Commission of Ohio. There is an administrative process we will follow as we seek a quick decision on our application for a Reasonable Arrangement.”

First Energy spokesperson Tricia Ingraham said in an email to SMU, “We will not oppose the arrangement that Warren Steel filed with the PUCO.”

Warren Steel Holdings, LLC operates an electric arc furnace melt shop and casting facility capable of producing 1 million tons of long steel products annually. The company services specialty steel consuming industries including energy, construction and automotive. Its past annualized rate was 240,000 tons but the company hopes to boost initial production to 70,000 tons per month and achieve full capacity in the next 3-4 years. Warren Steel currently employs 309 workers but anticipates increasing that total to 374 as production increases.