Counter-proposal created in Century special power rate case

The state Consumer Advocate Division has created a counter-proposal to Century Aluminum's special power rate request that it says will protect customers from higher rates.

Division director Byron Harris said he's dubbed the proposal, filed with the state Public Service Commission Monday, the "do no additional harm" plan.

Century is asking the PSC to approve a special power rate for its Ravenswood plant, which shut down in 2009 after aluminum prices plummeted. The company says current power prices are too high to make the Ravenswood plant a viable operation.

Harris said the Consumer Advocate Division's plan was inspired in part by testimony from Century retiree spokeswoman Karen Gorrell. She testified on the final day of hearings before the PSC last month.

Gorrell and other retirees need the Ravenswood plant to restart for some of their health care benefits to be restored, but they don't like the thought that other people may pay higher power rates to make that happen.

"We want our state to bend over backwards to get that plant restarted but not at the expense of the regular ratepayer," Gorrell said at the time.

"Ms. Gorrell made it all kind of simple in a way," Harris said. "Everyone needs to take a step back and not necessarily decide what is absolutely right, but for what's best for everyone involved."

Doing so has proven to be a complicated affair. The Consumer Advocate Division's plan is now the third proposal offered in the case. Century's plan consists of three parts, each designed to help lower its power costs.

Under the company's plan, other ratepayers would begin paying higher rates when aluminum prices were about $2,350 per ton. Aluminum prices, pushed lower in recent months by economic conditions in Europe, are currently trading at just over $1,800 per ton.

Critics, including the Consumer Advocate Division and West Virginia Energy Users Group, say ratepayers should not be forced to subsidize Century.

During hearings in July, PSC Chairman Michael Albert asked Appalachian Power attorney Steven Ferguson to draft a modified version of Century's plan.

Ferguson's plan would cap the amount other power customers could pay for Century's power bill at $60 million over the first three years of the rate plan while still giving Century some discounts.

However, if the plant does not reopen, other ratepayers will continue paying that sum.

While Century has said its proposal represented the minimum it needed to restart the Ravenswood plant, Harris said the counteroffers still are generous.

Just as with the Ravenswood plant, Century says the power costs in Kentucky are too high to operate the Hawesville plant profitably.

Kentucky lawmakers are studying ways to lower power costs for aluminum plants in that state. Officials there have been looking at what's being done in West Virginia as a model for how possibly to shape power rates in that state.