OHIO STEEL COUNCIL APPLAUDS GOV. TED STRICKLAND’S PLEDGE TO WORK WITH INDUSTRY AND OTHERS TO REFORM OHIO’S ELECTRICITY MARKETS

COLUMBUS, Ohio (June 7, 2007) –  The Ohio Steel Council today praised Gov. Ted Strickland’s pledge to work with the state legislature, industry, utilities and consumer advocates to reform Ohio’s electricity markets.

Strickland’s promise came in the context of a proposal to create an “Ohio Energy Compact,” an agreement between energy producers and consumers to address a broad range of energy-related issues, from stabilizing electricity pricing to diversifying the state’s energy supplies.

Pat Tatom, president and chief executive officer of WCI Steel, Inc., and co-chair of the Ohio Steel Council said, “We are very happy that Governor Strickland recognizes the gravity of the electricity pricing situation in Ohio and is willing to work with all affected parties, including industry, to address it.”

Tatom noted that Ohio faces a looming crisis in electricity prices with the scheduled expiration of Rate Stabilization Plans (RSPs) at the end of 2008, which could result in skyrocketing prices. He added that in Maryland, where RSPs were allowed to expire, Alcoa was forced to close a plant and eliminate 600 jobs. Later, the company announced plans to open smelters in Brazil and Trinidad.

“Governor Strickland and the steel industry are in agreement that we need to establish broader goals of reliability of the network, and reasonable and fair pricing for consumers and heavy users, by balancing the social responsibility of public utilities with private sector return on investment,” Tatom said.

He added, “We look forward to acting quickly in conjunction with the Governor, Lieutenant Governor Fisher, the governor’s energy advisor Mark Shanahan, and other members of the administration to accomplish this goal and avoid the crisis point some of our neighboring states have already reached with regard to electricity pricing. Other states facing this problem, such as Virginia, have found creative solutions and we are sure Ohio can do the same.”

Ohio’s steel manufacturers comprise the largest industrial energy-consuming sector in the state, spending more than $1.6 billion on energy annually. In March, the OSC passed a resolution calling on the governor, the Ohio General Assembly, and relevant state agencies to:

• - Strongly advocate before Congress and the Federal Energy Regulatory Commission (FERC) to revise "last-bid-in" marginal pricing for electricity wholesale markets, thereby allowing true competitive market-driven electricity pricing; and
• - Allow extensions or successors to the current RSPs until power markets are no longer dysfunctional; or
• - Restructure the electricity industry in order to bring about long-term stability in the price of electricity.

In addition, the resolution calls for the development of a favorable regulatory climate in Ohio for co-generation, self-generation, distributed generation and cost-effective renewable energy technologies.

“The time for a band-aid RSP extension has passed us by,” said Martin Suhoza, chairman of the Ohio Steel Council’s energy subcommittee. “It is time to get on with an immediate and permanent solution.”

Speaking before the Toledo Regional Chamber of Commerce, Strickland noted that energy “is at the core of Ohio’s economic and environmental health.” The state is fifth in the nation in overall energy consumption and spends more than $30 billion annually on energy. Strickland called for all energy stakeholders to work toward an agreement to transform the state’s approach to energy.

The governor added that electricity will remain a dominant force in the state’s economy, but a new approach to pricing is needed because deregulation has not increased competition or lowered prices as it has in other industries. ”Competitive markets simply have not developed. And lower electric rates probably were not a realistic expectation,” he said.

Tatom said the Ohio Steel Council looks forward to working with the governor, the general assembly and state agencies to develop long-term solutions to the challenges posed by electricity deregulation. “These are problems which have been developing for many years, and it will take hard work and a spirit of cooperation to successfully address them, but it must be done this year,” Tatom said.

The Ohio Steel Council is a public-private partnership designed to strengthen ties among the steel industry, the state of Ohio and its citizens. The council’s member organizations are AK Steel Corp., Lorain Tubular Operations (of United States Steel Corporation), Mittal Steel USA, Ohio Department of Development, Ohio House of Representatives, Ohio Senate, PRO-TEC Coating Company (a joint venture of United States Steel Corporation and Kobe Steel, Ltd.), Republic Engineered Products, Inc., The Timken Company, Thomas Steel Strip Corp., United Steelworkers, V&M STAR, WCI Steel, Inc., Wheeling-Pittsburgh Steel Corp., Cleveland State University and The Ohio State University. For more information, visit www.ohiosteel.org.