Mini-Mill Operator In Utah Blasts Bill Aiding Steel Maker

A bill passed by the Utah Legislature to assist Geneva Steel is generating criticism from Nucor Steel, which operates a minimill in Utah

The Industrial Electrical Infrastructure Act approved was approved earlier this week by the state’s Legislature. The goal of the bill is to help Geneva Steel, which has been struggling with its operations, reopen its idled steel mill in Utah. The hope is that the program would allow Utah Power to build a electrical substation adjacent to the steel maker if it is able to emerge from Chapter 11 bankruptcy and begins operating as a mini mill.

Nucor, in its opposition, fears that if Geneva begins to operate its own mini-mill, the price of the scrap steel source material will increase in the Western states.

Geneva, which has been closed since November, filed Chapter 11 bankruptcy in January. It is trying to meet a mid-June deadline to apply for a $250 million loan backed by the U.S. government's Emergency Steel Loan Guarantee Program.

The Act recently passed was written to soothe Utah Power's fears that if it builds the new $20 million substation several years ahead of schedule for a company in Chapter 11, regulators some day may question whether the cost of the facility should be part of its rates.

Geneva is promising Utah Power it will pay for its share of the substation cost, an estimated $7 million to $8 million.

But under the pending law, if Geneva eventually goes out of business or fails to make its payments, its share of the plant's cost will be picked up by other Utah Power customers.

"If it [the substation] is such a good deal, why isn't Utah Power putting it in?" said Jay Bowcutt, Nucor’s Utah general manager. When Nucor needed a substation, he said, it paid for the facility itself.

Bowcutt appeared before the Public Utilities and Technology Interim Committee in an attempt to block the act from going before the Legislature for a vote.