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PSC: Century's special rate can't put other power customers at risk

CHARLESTON, W.Va. -- If Century Aluminum wants to restart its Ravenswood plant, the company may have a special rate for electricity, but not at the expense of other Appalachian Power customers, the state Public Service Commission ruled Thursday.

Century officials said that in order to restart the plant, which closed in 2009, Century would need a special rate for electricity based on the price of aluminum. The PSC's Consumer Advocate Division of the PSC had argued against Century's proposal, saying that other Appalachian Power customers would see an increase in their bills. 

PSC commissioners Michael Albert, Jon McKinney and Ryan Palmer issued a ruling on Thursday that "rejects Century's proposal to place the risk of revenue shortfalls on other APCo customers," according to a statement from the PSC.

"It places that risk, instead, on Century, and requires Century and its parent company to enter into a corporate guarantee and undertaking with APCo to assure payment of any revenue shortfalls and to otherwise comply with the conditions of the order."

If Century accepts the PSC's terms, the company would have to enter into a contract with the commission until at least Dec. 31, 2021. The contract could also be extended to cover a full 10 years, according to the statement.

The PSC's ruling allows Century to pay a price for electricity based on the price of aluminum, which the company had wanted.

At the end of the contract, if Century paid more for electricity than it should, the first $200 million of the difference would go to reduce rates for Appalachian Power's other customers. Any overage above $200 million would be split, with 75 percent going to Century and 25 percent going to reduce Appalachian Power rates.

If, because of low aluminum prices, Century hadn't paid as much as it should have by the end of the contract, Century would have to make up the difference with Appalachian Power.

"The commission has set a minimum rate for Century but they will allow the cash rate that Century pays to go below that minimum rate," Byron Harris, director of the PSC's Consumer Advocate Division, explained Thursday. "The difference between the cash rate and the minimum rate will be guaranteed to be paid back by the parent company of Century."

Harris said the rate had good points and bad points.

"That corporate guarantee is not perfect," Harris said. "It's a good thing but it's not perfect. Corporations go bankrupt. We're talking about a mechanism that will last for 10 years."

Harris said Thursday afternoon he had yet to "dig in" to the finer points of the 70-page order.

"I can't really say (if his division supports the special rate)," Harris said. "We have 15 days to file for ... the commission to reconsider so I'll be deciding that over the next 15 days -- actually before that because we'd have to get working on a filing."

The commission's approval for the special rate mechanism will expire at the end of the year.

Appalachian Power spokeswoman Jeri Matheny said the company would support the PSC's new rate proposal.

"For the most part we're glad the commission was able to reach what seems like a reasonable plan of action," Matheny said. She added that company officials are especially glad the newly proposed rate will put risk not on other Appalachian Power customers, but on Century.

"The ball is in Century's court for them to make a decision if they can restart under these guidelines," Matheney said.

Calls to Century officials were not immediately returned Thursday.

Earlier this year, state lawmakers approved a tax credit worth up to almost $20 million a year intended to help the Century plant reopen. The PSC said Thursday that its ruling includes that tax credit.

When Century's Ravenswood plant shut down in 2009, more than 650 workers were laid off. Company officials have said about 450 jobs could be returned immediately if the plant reopened, and 200 jobs could be added later.

Hundreds of Century Aluminum retirees lost the health benefits promised to them under union contracts in July 2011. In March of this year, the retirees voted to accept a deal that would restore part of those benefits - a step they hoped would help lead to the reopening of the plant. "Many have asked what this ruling means to the retirees and at this time, we are not sure," Karen Gorrell, a spokeswoman for the Century retirees, said in a statement Thursday. "We do know that the restart of the plant hinges on a special rate that Century can live with and that will help them operate through periods of fluctuating ... prices on aluminum products. How Century will view this PSC decision is the most important question that will have to be answered."

Staff writer Paul J. Nyden contributed to this report. Reach Lori Kersey at lori.kersey@wvgazette.com or 304-348-1240.


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