Energy Conservation David Pruss – Sr. Electrical Engineer Chuck Stewart – Energy Management Engineer Nathaniel Adams –

1. Energy Conservation David Pruss – Sr. Electrical Engineer Chuck Stewart – Energy Management Engineer Nathaniel Adams – General Counsel

2. North American Stainless (NAS) Profile: • Established in Kentucky in 1992 by parent company, Acerinox, a Madrid public company. • Located on the banks of the Ohio River, about halfway between Cincinnati and Louisville. • NAS employs 1400 employees and 600 contractors: Largest employer in Carroll County and the mid-Ohio region. • Acerinox chose Kentucky based largely on historically low electrical energy rates, planning to establish an electric arc furnace melting shop facility. • Electrical usage: Largest KU customer: 100 million kWh per month total; 45 million kWh per month in the Melt Shop and 55 million kWh per month in the rest of the plant’s facilities. • Electrical energy represents about 15% of variable costs of producing its products. • Structure of electrical energy costs: • Firm demand in rolling mills – “Retail Transmission Service” Tariff. • Interruptible in Melt Shop – “Fluctuating Load Service” Tariff with “Curtailment Service Rider – 10” Tariff.

3. NAS Energy Management Strategy: • Goals are set by Acerinox for each of its global companies to reduce power and natural gas consumption – Goal is set at 2% for program period lasting 2 years • Energy is discussed daily in Each Mills morning planning meetings • Each Mill Manager is responsible for reducing Energy and Natural Gas consumption in their Mills and reports on that progress in a monthly top managers energy meeting and in the monthly cost of quality meeting which both are chaired by the company president • Energy projects are coordinated through the Energy Management Team • Energy Management is discussed in the Board of Directors meeting by each companies president to influence improvement • Energy has been taken very seriously at NAS as it is a significant cost to the business as well as their commitment to continuous improvement. • This year each Acerinox subsidiary company will send an Energy Management representative to Spain to discuss how improvement were made in their respective companies and to bench mark their performances against each other.

4. Improvements Through Visibility and Awareness • In 2008 started off by taking readings in each available meter at individual lines and recording kwh and tons • Progressed to Monthly kwh/ton performance marks at each line • In the past 3 years we have installed many automated meters and have bought energy management software that sends meter data to a network where we report daily kwh and kwh/ton data to each line through our intranet based HMI • Daily Mill Reports are also sent out to help mills understand their usage • Findings Through Reporting: • Although we were able to make some hardware upgrades to reduce kwh/ton, much of the progress has come through; scheduling, maintaining equipment, yield improvements, and shutdown planning.

5. Example of Internal Initiatives • The Electric Arc Furnaces (EAFs) are our largest consumer of electricity and represents almost half of all electrical use at NAS. • Through arc regulation, process planning, yield improvements, and operator energy awareness, we were able to reduce the power consumption by 23% • Many other improvements were made in the facility through process flow improvements.

6. Suggested Optimization From Energy Professionals: • Compressed air system optimization – Represents about 3.5% of NAS Energy • Lighting Optimization – Represents about 1% of NAS Energy • HVAC optimization – Represents < 1% of NAS Energy • Although we do not ignore these items and make improvements were we can, you can see the standard items that consume energy in most commercial facilities do not apply for our industry. • Here are some of the strategies that we use to reduce energy: • Electricity: • Increase throughput on lines and use shutdown procedures to minimize kwh usage when line is not needed. - Can save up to 10% depending on schedule. • Minimizing unplanned delays in the mills. • Increase product yield and minimize scrap in Mills– Using Energy to make something that is not going to be used is worse than not making it at all. • Exhaust fan optimization – using dampers or VFD’s to control exhaust fan power when not needed. • Reduce Energy peak kW usage through the EAF’s, Cold Mill, and Hot Mill during peak power periods to keep kW load to a minimum during this time. • Reduce Power in electrolytic pickling when not needed – Can save as much as 10% on AP lines. • Natural Gas: • Optimize furnaces … optimize pressures, O2 levels, throughput, burner controls, maximize combustion air temps (where recuperators are present), reduce furnace leaks… • Optimize boilers – Reduce steam leaks, condensate return, use economizers, Boiler efficiency studies… • Control area heating - reduced area heating when not needed (controls put in place)