Kentucky lawmaker to push for bill allowing aluminum producers to buy cheaper power

A Kentucky lawmaker on Thursday said he was prepared to ask Governor Steve Beshear to consider his bill to allow Century Aluminum and Rio Tinto Alcan to buy lower cost power for their smelters in the state from the open market rather than at locked-in costs from Big Rivers Electric.

State Representative Tommy Thompson, a Democrat and chief sponsor of H.B. 211, said in an interview that he was ready to do whatever it takes to prevent the shutdown of Century's 244,000 mt/year Hawesville smelter and RTA's 180,000 mt/year Sebree smelter.

Both companies say the smelters may close within the next year unless they can find a cheaper alternative to the roughly $50/MWh they are paying for about 850 MW supplied by Big Rivers Electric, a Henderson-based generation and transmission co-op.

Big Rivers and Century officials are having high-level discussions about ways to cut the power costs, but have so far not reached an agreement.

Thompson did not call his bill for a vote this week because it faces stiff opposition from legislators who fear H.B. 211 could open the door to deregulating Kentucky's highly regulated electricity industry. The legislature is in recess in its current session until March 25, when it will reconvene in Frankfort, the state capital, for a two-day veto session. It is possible the bill will be voted on then, Thompson said.

If not, Thompson said he would ask Beshear, a two-term Democrat from western Kentucky, to place the bill on a special session agenda.

"Apparently, we're going to be going back in a special legislative possibility [H.B. 211] could be one of the items on the special session agenda."

In Kentucky, the governor has full authority issues to be discussed in a special session. "We would have to ask him and encourage him to do that because the governor has the sole authority to do that," Thompson said.

Beshear is expected to wait until after the current session ends before announcing the date for a special session later this year.

Thompson blamed much of the opposition to his bill on "misinformation" over what it would do. "The rural electric co-ops have done a great job of fear-mongering and putting fear in legislators that this legislation will cause deregulation of the state's electric industry, which is untrue, and that it will raise rates across Kentucky," he said.

"If we don't get this legislation, three things are going to happen: the smelters undoubtedly are going to close, resulting in 3,000 direct and indirect jobs being lost; Big Rivers may have to close at least one power plant built to serve the smelters; and when Big Rivers loses 70% of its rate base, the remaining customers will be hit with tremendous rate increases."