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Century power rate talks at early stage

CHARLESTON, W.Va. - Century Aluminum and Appalachian Power are in the early stage of talks designed to find a power rate structure that could help the company restart its idled Ravenswood plant.

Appalachian Power spokeswoman Jeri Matheney confirmed last week the representatives from the two companies have been discussing potential rate options.

"We're in communication with Century, but we are certainly only in an exploratory phase," Matheney said.

Century has been working for more than a year on restarting its shuttered Ravenswood smelter, which closed in February 2009 after the Great Recession triggered a sharp sell-off in global aluminum prices.

More than 650 workers lost their jobs when the plant shut down.

Last year, state lawmakers passed a Century-backed $20 million annual tax credit package designed to help bring down the plant's power bill.

While the company succeeded in pushing the bill through the Legislature last spring, its restart efforts stalled with the state Public Service Commission last fall.

Because the plant's power bill is its highest single expense, Century executives have said the company needs a flexible power rate structure that will protect it from wild fluctuations in aluminum prices.

The company had asked the PSC to approve a rate structure in which its power rates would rise and fall with aluminum prices. To offset those fluctuations, Century proposed shifting costs onto other Appalachian Power ratepayers to make up some costs when prices were low.

Consumer groups, other manufacturers and state lawmakers blasted that proposal. They said regular ratepayers should not bear the burden of Century's costs.

In October, commissioners approved a special power rate structure for Century Aluminum. They essentially gave Century the rates they wanted but said the company would be on the hook for any short payments to the power company.

Century balked at that idea.

Century asked commissioners to reconsider their decision, but the PSC upheld its decision in December.

While it denied a portion Century's rate proposal, the PSC did encourage Century and APCo officials to consider other options to help the Ravenswood plant restart.

The commission said the two companies should come up with a plan that is more than just a "starting point" - which is how Century described its original proposal - but rather something more concrete that can be reviewed in a future PSC case.

Commissioners said they want to see the Ravenswood plant restart and hoped the companies can work out their differences on their own.

"The Commission cannot overstate the importance of this matter," the ruling said. "We know that it affects the local and state economy, impacts the lives of potential employees and retirees, and requires the protection of the utility and ratepayers from unreasonable rate impact and risk."

Matheney said the two companies are now looking at achieving that goal.

"We are looking at and analyzing different ideas and approaches," she said.

Any agreement hashed out between the two parties would have to go before the PSC for approval. Because the talks are still their infancy, Matheney said she couldn't offer any more details at this time.  

During an earnings conference call last month, Century chief executive Michael Bless reiterated the company's commitment to restarting the plant. He said he and other executives were actively working with power company and state officials to achieve that goal.

"We're now looking at different ways to get to the same place," Bless said.

"We've had great support from Gov. (Earl Ray) Tomblin of West Virginia and other state leaders," he said. "This support, combined with the developments in U.S. power markets . . . should provide the basis for a restart and a significant life for this plant."

Contact writer Jared Hunt at business@dailymail.com or 304-348-4836.

 


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