CHARLESTON, W.Va. - West Virginia's largest industrial power consumers seem to be satisfied with the state Public Service Commission's decision to grant a special power rate for Century Aluminum's Ravenswood plant.
The PSC handed down a nearly 80-page ruling last week granting Century a special power rate structure that would reflect shifts in aluminum prices.
Century officials said they needed a special rate structure to restart the shuttered Ravenswood aluminum smelter. The plant closed in 2009, resulting in the loss of more than 650 manufacturing jobs in Jackson County.
The PSC rejected Century's proposal to shift some costs to other ratepayers when aluminum prices were low.
That was welcome news to those who opposed Century's rate-shift plan. While Century will still get special power rates, critics of the company's original plan say they can live with the PSC ruling.
"It is a complicated decision, but our initial reaction is generally positive," said Derrick Williamson, attorney for the West Virginia Energy Users Group.
The group is made up of several large industrial companies, including ArcelorMittal, Bayer CropScience, Novelis and DuPont Co., that do business in the state. It strongly opposed the company's cost shift proposal.
Williamson, a Spilman Thomas & Battle attorney who represents the group, said during hearings in July that the idea was "beyond the pale of reason."
Part of Century's plan was to shift costs to other ratepayers to make up for reduced rates it would pay when aluminum prices were low.
Century maintained aluminum prices are predicted to rise over the long term, reducing the impact on other ratepayers. Critics, including the Energy Users Group, said the proposal involved far too much risk.
In a case filing, Williamson described Century's proposal as "a Las Vegas roulette gamble that imposes upon these ratepayers all of the stakes without requiring any 'skin in the game' from Century."
In the end, the PSC sided with critics and rejected Century's proposed rate shift.
The ruling calls for a minimum rate that Century's power payments would have to hit over a 10-year contract period. But the company's actual monthly payment would rise or fall based on the market price of aluminum.
If aluminum prices were low, the company would be allowed to pay less than the minimum rate. If aluminum prices were high, the payment would be higher.
At the end of the 10-year term, Century would have to pay the power company any amount by which it had fallen short of the minimum rate.
The plan essentially gives Century the lower rate it wanted to restart the plant. But it puts all the risk on Century's back by making the company - not ratepayers - pay at the end of the 10-year period.
Williamson said it was important to keep the burden on Century because other manufacturers already had seen their power rates jump 70 percent since Century closed in 2009.
"Our concern has been protecting large commercial and industrial customers in West Virginia - who have continued to provide jobs and support the West Virginia economy while Century has been shut down - from having to further subsidize Century and bear related rate increases at a time when those customers are trying to remain competitively viable in their own business markets," Williamson said.