Special electricity rate for Century might not affect average customer

An attorney representing Century Aluminum on Monday said the company's rate change proposal might not raise rates for other Appalachian Power customers.

Century's aluminum plant in Ravenswood has been closed since 2009. Officials hope to restart the plant, but say they can't operate it at the current rate for electric. They've asked the Public Service Commission for a special rate, saying it's necessary to offset the volatile price of aluminum.

Tom Heywood, an attorney for Century, said at a meeting of the Rotary Club of Charleston that the company's rate change proposal is not meant to raise power bills for other state customers.

Based on predictions of aluminum prices from CRU, an independent market analysis group that focuses on mining, metals and fertilizers, the rate change would not mean a higher rate for other customers, Heywood said.

"We didn't engage an expert to say what we wanted to say," Heywood said of CRU. "We went out and built the rate around what they said would be the long-term price for aluminum. At the prices that are projected, there would be no rate shift to any other rate payer."

If the prices are lower than expected, though, the costs of Century's lower power rate would need to be shifted somewhere.

Century has asked that its electrical rate be based on the cost of aluminum Company officials have also asked for a 10-year, $20 million tax credit that's already been approved by the state legislature. Company officials have also proposed that Appalachian Power shareholders pick up $2.7 million of Century's $20 million share of Appalachian Power's fixed costs over 10 years.

Byron Harris, director of the Public Service Commission's Consumer Advocate Division, has said that under Century's rate change proposal, the average resident's bill would increase over three years between $3.35 a month and $5 a month.

The PSC held hearings on the matter last week.

Heywood said the company expects a decision from the PSC on Sept. 9.

Century is Appalachian Power's largest customer. At the time it shut down in 2009, it paid $108 million a year and used 10 percent of APCO's electric, Heywood said.

At the current rate, Century would have to pay $148 million a year unless the PSC agrees to the rate change.

When it shut down, the plant employed 660 workers. If the plant gets it electric rate and is able to restart, it would initially employee between 450 and 470 and later hire another 70, Heywood said.

Heywood said Century's proposal is not unique among aluminum plants.

"A majority of plants operating today in the world have special rates that are along the lines of what we're proposing," Heywood said. "And that is rather than pay a rate that's tied to APCO's cost of production, we actually would have Century paying tied to the price of aluminum, that's the essential difference."

If Century gets its rate change, company officials hope to restart the plant by June 2013, Heywood said.