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PSC seeking details on Century Aluminum counter-proposal

CHARLESTON, W.Va. -- The state Public Service Commission on Monday asked for additional detail on its Consumer Advocate Division's counter-proposal in Century Aluminum's special power rate case.

The head of the division said he hoped this was a sign the commission was giving thought to alternatives to the controversial proposal Century officials have offered.

"The optimist in me says they're sincerely considering my proposal," Byron Harris said. "But the realist in me says they may be just trying to clarify the details of our proposal."

The commission asked Monday for more clarification on how Harris' plan would use up to $20 million in annual tax credits designed to lower Century's power bill.

Century wants the PSC to approve a special rate plan to help it reopen the Ravenswood plant, which shut down in 2009 following a dramatic plunge in aluminum prices.

The tax credits are just one tool lawmakers, company officials and regulators have proposed to help ease power costs for the idled plant.

The Consumer Advocate Division's plan is one of three proposals offered in the case.

Century's proposal is designed to last 10 years and consists of three parts.

The first uses $20 million in annual tax credits for Century's power providers that would be passed on to Century in the form of lower rates. Those credits were approved by the Legislature earlier this year.

The second would have other ratepayers continuing to pay $17.3 million per year in fixed costs passed on to them by Appalachian Power when the Century plant closed.

The third part is the most controversial. It would have other ratepayers pick up the tab for some of Century's power costs when aluminum prices fell.

Critics have said ratepayers should not be forced to subsidize Century's power bill.

During hearings in July, PSC Chairman Michael Albert asked Appalachian Power regulatory services director Steven Ferguson to draft a modified version of Century's plan.

Ferguson's plan would cap the amount other power customers could pay for Century's power bill at $60 million over the first three years of the rate plan while still giving Century some discounts.

Harris then offered a third proposal, dubbed the "do no additional harm" plan. It essentially eliminates the third part of Century's plan.

While Century's power rate would be allowed to fluctuate as aluminum prices rose and fell, the proposal includes a minimum rate that would prevent other ratepayers from being forced to pick up some of Century's costs.

The minimum rate, $36.97 per megawatt hour, would kick in when aluminum traded at or below $2,124 per ton — roughly $30 above what it traded at Monday.

The PSC asked the Consumer Advocate's Division on Monday to clarify if this minimum rate included the $20 million in tax credits approved by the Legislature.

Harris said Monday afternoon it did not.

He said the $36.97 rate is what would need to be paid to Appalachian Power to ensure other customers didn't have to pay more. He said it could be paid either by Century or through the use of the credits.

"The rate could be lowered by the tax credit," Harris said.

The plan would still involve having other ratepayers continuing to pay the $17.3 million a year in costs they already are paying. Harris said allowing that alone would be an unprecedented action.

The Consumer Advocate Division must file a formal response with the PSC by 5 p.m. today. Officials still believe the commission could make a final decision in the case by the end of this week.

Harris said he knows the commission has been heavily deliberating all three plans in the case. He expects whatever proposal the commission chooses to be complex.

"They're taking this very seriously — they want to make sure they've got their I's dotted and T's crossed," he said. "I'm sure it's going to be a complicated proposal, no matter what."

Contact writer Jared Hunt at jared.hunt@dailymail.com or 304-348-5148.


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