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PSC denies special power rate for Century Aluminum

By Megan Workman

CHARLESTON, W.Va. -- The state Public Service Commission denied both alternatives Century Aluminum offered in October in its special electricity rate case because the company's proposals still place the risk on Appalachian Power's customers, the PSC ruled Friday.

But the commission proposed that Century may negotiate with other parties involved, like Appalachian Power and the West Virginia Energy Users Group, to try to negotiate a special electricity rate.

The aluminum plant in Ravenswood has been shuttered since early 2009. Century has asked for a special rate for electricity based on the price of aluminum.

The PSC and its Consumer Advocate Division have repeatedly rejected putting an unreasonable risk on ratepayers and reiterated that notion Friday.

"The most odious element of the 'immediate restart plan' Century proposed is the potential shift of up to an additional $185 million in Century electric costs to other ratepayers," the PSC wrote in its filing. "The Commission previously rejected transferring any further payment obligations from Century onto other customers beyond the value of the substantial fixed cost credit that other ratepayers currently bear."

Century Aluminum officials are still reviewing the PSC's order.

"We will be prepared to discuss the PSC's decision and how it impacts our restart efforts once we have a more thorough understanding of that order," Century officials said in a statement.

The PSC said that its Oct. 4 order remains "in full force and effect." In that order, the PSC rejected parts of Century's initial proposal but said the Ravenswood company could receive a special rate for electricity but not at the expense of other Appalachian Power customers.

The PSC found neither of the two rate proposals that Century offered on Oct. 26 acceptable.

The PSC said in its order that one of the alternatives -- an "immediate restart modification," is "fatally flawed because it imposes an unreasonable burden on other ratepayers." That proposal could allow the Ravenswood plant to open sometime in 2013, Century has said.

The PSC said the immediate restart option represents a "completely different plan" from what the PSC ordered on Oct. 4.

The commission called the immediate restart option "unreasonable" and "not acceptable."

The second alternative is a "future restart modification," which Century said would allow the plant to open "sometime in the future when [aluminum] prices materially increase." The PSC said that option also is "unacceptable because it fails to account for changes in electric rates," the PSC said in its order.

The future restart option "potentially deprives the special rate mechanism of funds to offset periods of low aluminum market prices," the PSC said.

This future restart option is more similar to the PSC-approved special rate case than the immediate restart option, the order states.

The modifications proposed by Century in the future restart option represent "major changes to the Commission-approved plan and we believe they would be best considered in a new proceeding," the PSC said.

That proceeding shouldn't be filed until the smelter company has "attempted to discuss and resolve a plan with" Appalachian Power, the PSC said.

Century has options, according to the PSC.

Susan Small, a PSC spokeswoman, said now is the time for Century to meet with the other parties involved -- and negotiate -- if the Ravenswood plant is to reopen.

Those other parties are Appalachian Power, the PSC's Consumer Advocate Division and the West Virginia Energy Users Group.

"Nothing ... precludes Century, [Appalachian Power] and others from continuing to discuss a more acceptable special rate mechanism," the PSC said.

The PSC wants the smelter to start doing business again.

"The Commission wants the Ravenswood plant to resume operation, and we hope to facilitate an acceptable power contract by describing some of the problems that we have with the Century proposals," the PSC wrote.

"The PSC is not shutting the door and saying they can't open the plant. What Century had done was, they put two new offers on the table, and this is not how this process works. They need to negotiate with the other parties," Small said.

In its filing, the PSC responded to nine modifications that Century had requested to "enable Century to consider a future restart of the Ravenswood production facility," the PSC wrote.

For example, Century said that the implementation of the special electricity rate shouldn't require the company to restart the plant at any specific time within a 10-year window that the special rate would be in effect.

The PSC responded by saying it would not approve a special electricity rate and contract that may be exercised at any time in a 10-year window because "a 10-year option ... is not reasonable, particularly considering the size of the Century load."

Byron Harris, director of the Consumer Advocate Division, said Friday that Century has 30 days to appeal the commission's order to the state Supreme Court, but he doesn't see that happening.

"There's not much grounds for an appeal. I'd think it'd be extremely difficult to find the commission made an error," Harris said. "The commission stood by its original decision, which tried to balance all of the interests in the case. I'm glad they stood by that decision, and now it's up to Century to see if they're willing to take on the risk of running their own business."

Reach Megan Workman at megan.workman@wvgazette.com or 304-348-5113.


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