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Thumbs up: PSC gets it right on special rate for aluminum plant

Dec. 25, 2012 @ 09:25 PM

Credit is due the West Virginia Public Service Commission for seeing through the smokescreens thrown up by Century Aluminum in the company's quest to obtain a special electricity rate.

Century closed its Ravenswood smelter in 2009 after aluminum prices slumped, putting 650 people out of work. The company came back earlier this year saying it would like to reopen its plant -- if it could get a special electricity rate from Appalachian Power that would fluctuate with the ups and downs of aluminum prices.

After receiving a separate state commitment for a $20 million tax break, Century filed a proposal for a special rate with the Public Service Commission. One problem -- and a big one -- was that Century wanted to put other Appalachian Power customers on the hook if aluminum prices remained low and Appalachian Power was owed money for electricity to the plant.

The PSC correctly rejected that notion in a ruling in October. Its order said Century could have a special fluctuating rate, but at the end of a specified period, the company and no one else would have to make good on any money owed Appalachian Power.

Surprisingly, Century Aluminum wasn't done yet. In asking the PSC to reconsider, the company submitted two alternatives, but the PSC decided earlier this month that neither is acceptable. One of them still could have shifted $185 million to other Appalachian Power customers -- essentially ignoring the basis for the PSC's earlier decision.

The PSC also noted that Century Aluminum apparently had little faith in its own projections that aluminum prices would rebound in the next decade and provide for the plant's electricity costs to even out over that period.

The PSC's overriding message couldn't be clearer -- other Appalachian Power customers are not to be taking on the business risk for Century.



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