Century would profit at ratepayers expense: Consumer advocate

In a brief filed Tuesday, Century Aluminum officials said its shuttered aluminum smelter in Ravenswood "simply will not restart or operate" under a plan proposed by the Public Service Commission's Consumer Advocate Division.

But if the PSC were to accept Century's special electric rate proposal, the company would profit "wildly" at the expense of other ratepayers, Byron Harris, director of the CAD, said Tuesday.

"They would make approximately $34 million a year and recover all their expenses in making aluminum, and basically bear no risk at all for an investment in the plant of an initial $52 million and $5.5 million per year after that," Harris said. "That's a hefty return on a very minimum investment."

Harris argued that because Century has said no to any other rate proposal but its own, the PSC should reject Century's proposal. The company's rate proposal would be to onerous for Appalachian Power's other customers, Harris said.

Century's plant in Ravenswood has been closed since 2009. Company officials want to restart the plant but say they need a special rate on electric to do so.

Century has asked that its electrical rate be based on the cost of aluminum. Company officials will benefit from a 10-year, $20 million tax credit that's already been approved by the state Legislature. Century officials also have proposed that Appalachian Power shareholders offer a $2.7 million discount to Century, which pays a $20 million share of Appalachian Power's fixed costs over 10 years.

The CAD, which opposes Century's rate proposal, has proposed another special rate, which Century again rejected in its reply brief Tuesday.

"The smelter simply will not restart or operate under CAD's rate proposal," Century officials said in the brief. "A critical purpose of the proposed special rate is to allow the price of electricity to rise and fall with the price of aluminum, allowing deficits and surpluses to be offset over the term of the special rate. The minimum rate proposed by CAD is set too high and would preclude both restart and continued operations over an entire business cycle."

The CAD's proposal would give Century a special electricity rate that would fluctuate with the price of aluminum. But it would also include a minimum rate that would kick in when aluminum trades at or below $2,124 per ton. The minimum rate would prevent other ratepayers from covering Century's costs.

Ratepayers would still pay the $17.3 million a year in fixed costs they are currently paying, Harris told the Gazette previously. But according to the filing, they would not be forced to pay for additional subsidies to Century.

Appalachian Power, in its reply brief also filed Tuesday, said Century's rate proposal would put too much burden on its other customers.

"The special rate proposed by Century in this proceeding... attempts to shift far too much of the burdens and business risks properly borne by Century to APCO and APCO's other customers," APCO's reply stated. "By doing so, Century's proposal fails to satisfy the statutory requirements for a special rate."

Century has argued that its rate proposal is in keeping with state law.

Century officials have said they expected a decision from the PSC by mid-September, though the PSC has no statutory deadline for such a decision, officials have said.