Jobs at Century and Alcan at risk without cheaper electricity

In the final days of the 2013 legislative session, lawmakers are wrestling with the possibility that well over 1,000 good jobs in Western Kentucky will be lost as electric bills soar for about 112,000 homes and businesses in the region.

Two aluminum smelters that employ 1,200 have said they will close the facilities because what they pay for electricity from Big Rivers Electric Corp.

If the aluminum companies can buy their electricity in the open market for about 30 percent less, they say they’d keep the smelters open.

State law currently requires the companies to buy from Big Rivers, but bills sponsored by Democratic Rep. Tommy Thompson, D-Owensboro, and Sen. Joe Bowen, R-Owensboro, would change that.

The sponsors say the bill would save the jobs of those who work at the smelters as well hundreds of others indirectly dependent on the plants. Smelting transforms refined bauxite ore into metal using electrolysis and huge amounts of electricity.

“This bill is needed to keep people working. This bill is needed to keep the smelters in our area open. This bill is to make sure that the aluminum smelting business stays not just in Kentucky, but the United States," Bowen said.

But two big business organizations – the Kentucky Chamber of Commerce and the Kentucky Association of Manufacturers – joined with the Kentucky Resources Council on Monday to announce opposition to the bills letting the smelters buy power from the open market.

The bills at issue are House Bill 211 and Senate Bill 71. And they stem from a conflict that has lasted well over a year primarily between Century Aluminum, which operates a smelter in Hancock County, and Big Rivers. Also in play is the Rio Tinto Alcan smelter in Webster County.

Century Aluminum says its current electric rates are about 30 percent higher than it could find on the open market and too high to continuing operating.

Last August Century Aluminum gave notice that it will terminate its power contract with Big Rivers and close the smelter unless it can get cheaper power. Rio Tinto Alcan served notice in January that it would close in one-year for a similar reason.

The three organizations opposing the bill suggested Monday that some alternative solution involving state incentives could ease the costs paid by the smelters. “We should utilize the incentives that are created under our tax code,” said FitzGerald.

If Century Aluminum and Rio Tinto Alan are given incentives, FitzGerald said, it would be important to require them to retain the jobs.

Thompson and Bowen said negotiations continued on Monday, but said Big Rivers has resisted compromise. They said some agreement must be reached very soon because the session is nearing its end and they must act within the next day or two.