'Cannot run' at current power rates, Century tells PSC
CHARLESTON, W.Va. -- The West Virginia Public Service Commission continued gathering testimony on Tuesday about Century Aluminum's plans to reopen its plant in Ravenswood if it can get its electric power bills reduced.
Aluminum manufacturing uses especially large amounts of electric power to refine raw materials and roll out aluminum sheets.
In negotiations, Century Aluminum and Appalachian Power could not reach an agreement about Century's proposed rate reductions.
Witnesses testified Tuesday about current market conditions that keep the plant closed and its impact on the city of Ravenswood. But others talked about the downside of saddling West Virginia electricity customers with higher utility bills.
The PSC hearings will end Wednesday; the commission hopes to release its decision later this month.
Michael Albert, chairman of the three-member PSC, said, "This is a difficult case. This will be a difficult decision."
John E. Hoerner, vice president of North American operations for Century Aluminum, testified, "We would like the opportunity to open that plant today. But with existing power rates, we can't open the plant.
"We cannot run that plant with these kinds of power prices. At present market conditions, we would not start that plant."
Century Aluminum President Michael A. Bless had said previously that the company is proposing power rates that would vary as the selling prices of aluminum rise and fall.
Hoerner also testified about expenditures that Century plans to make to reopen the plant, which shut down in February 2009 due to dropping aluminum prices. Prices dropped sharply between October 2008 and April 2009.
If the plant reopens, Hoerner said, it would immediately hire 470 employees, including people who were working at the plant when it closed in 2009 and want their jobs back.
"Century will also hire 140 additional employees to refurbish our facilities and to make the plant more efficient," he said. "At full capacity, the plant would have 674 employees."
If the plant reopens, Hoerner said, Century would make a startup investment of $90 million, then another $44 million for long-term upgrades.
Former Ravenswood Mayor Lucy J. Harbert said, "Century's closing devastated the community of Ravenswood and other small towns.
"Our food banks are regularly emptied. People can't pay their utility bills. There are empty storefronts, and people are using a lot more drugs.
"We have retirees who have lost all of their benefits. I don't think they should have been taken away."
Harbert, the city's mayor for seven years, added, "Aluminum takes a lot of power to make. It is costly. It will come down to what the [Public Service] Commission and the power company do. We need to have this plant reopened. I am willing to pay a little more for my electricity."
Some other people are not.
AARP, for example, has been sending its members to urge residents in different parts of West Virginia to oppose giving Century lower electricity rates, since that is likely to raise rates for all other West Virginians.
Karen Gorrell, whose husband worked at the Ravenswood plant for 33 years, had led the retirees' movement to win back their pension benefits. Gorrell said she doesn't want safeguards for Century regarding its electricity rates to come at the expense of everyday people and their power bills.
William C. Porth, a lawyer with the Charleston firm of Robinson & McElwee, is representing Appalachian Power at this week's PSC hearings.
"The average residential ratepayer would be facing a $12.65 increase in his monthly electric bill to support the special rate proposed by Century," Porth stated in a document he filed with the PSC on May 30.
Porth said APCO could not reach an agreement with Century because the electric power company "felt a serious responsibility to be mindful and protective of the interests of its customers."
Gordon Harper, Century's plant manager, testified that it would take "from six to 12 months to restart and stabilize four pot lines in the plant" if it does reopen.
"We have had pre-negotiating meetings with the union on noneconomic issues," Harper said. "We plan to start [contract] negotiations on Aug. 20. It will not be a difficult contract for us."
On March 15, Century Aluminum reached an agreement with its retirees and their spouses to restore some of the health benefits that had been taken away after the plant closed.
Hoerner said, "We still don't have a contract with the union. We have not sat down with them yet."
In May, the PSC said the failure of Century and Appalachian Power to come to an agreement about reducing power rates "leaves the Commission with the obligation to determine whether or what type of rate recovery is appropriate."
The three members of the PSC are also concerned about the future impact of a ruling that would dramatically reduce power rates for Century Aluminum.
PSC members and others fear it might lead to a slippery slope, where many other large businesses might decide to apply for reductions in their power rates if they are awarded to Century.
Kaiser Aluminum and Chemical Corp. opened the Jackson County aluminum smelting and rolling complex in 1958, operated it until 1989, then sold it to Ravenswood Aluminum.
When Ravenswood Aluminum later sold the facility, it split into two plants. Alcan Rolled Products operated one and Century Aluminum operated the other. Constellium bought the Alcan plant in May 2011.
Reach Paul J. Nyden at firstname.lastname@example.org or 304-348-5164.