The Kentucky Public Service Commission has approved agreements that Century Aluminum of Kentucky says are necessary to keep operating a western Kentucky smelter.
The agreements allow the smelter to be supplied power purchased on the open market by Kenergy Corp. rather than power generated by Big Rivers Electric Corp.
The PSC said in its order Thursday that the agreements are substantially the same as those it approved in August for the Century smelter in Hawesville.
The Hawesville smelter has about 700 employees and the Sebree smelter about 500.
Big Rivers has a pending rate increase request to compensate for revenue it will lose when it is no longer producing power sold to the Sebree smelter. In October, Big Rivers was granted a rate adjustment to compensate for lost revenue from the Hawesville smelter.
Three industries have filed notice that they intend to appeal a recent decision allowing Big Rivers Electric Corp. to increase rates.
Last month, the Kentucky Public Service Commission approved agreements allowing Century Aluminum - the utility's biggest customer - to leave the Big Rivers system and purchase power on the open market. That led Big Rivers to request a rate increase for its remaining 112,000 customers in western Kentucky.
The PSC hasn't approved the increase, but it did allow the utility to begin charging higher rates subject to refunding customers money if a smaller hike is approved.
The Gleaner reports that Kentucky Industrial Utility Customers filed the notice of appeal with Franklin Circuit Court on behalf of Kimberly Clark paper mill, Domtar paper mill and Aleris aluminum rolling mill.
An aluminum smelter in Hancock County will be supplied with electric power purchased on the open market under a plan announced Wednesday by the Kentucky Public Service Commission.
Century Aluminum of Hawesville says it needed the arrangement in order to remain open. The smelter employs 700 workers and has traditionally purchased power generated by Big Rivers Electric Corporation in Henderson. But Century officials say using electric power purchased on the open market by Kenergy Corporation will be much cheaper.
The PSC said in a statement that the plan tries to achieve a “delicate balance” between keeping the Hawesville smelter open and not imposing high costs on Big Rivers customers beyond those that would occur if Century Aluminum closed.
A coalition of western Kentucky businesses and residents has formed in hopes of minimizing the fallout of an electricity rates deal between Big Rivers Electric Co-Op and western Kentucky aluminum smelters.
The coalition is worried the deal will lead to higher utility bills for residents and businesses.
Aluminum prices have been low in the past few years, and across Kentucky, aluminum smelters have sought to save money on their electricity bills.
Earlier this year, Big Rivers cut a deal with two Western Kentucky smelters, allowing them to buy their electricity on the open market. The smelters said the change was necessary to stay in business, but the deal cost the electric company more than half of its customer base.
To make up for that, Big Rivers is asking the Kentucky Public Service Commission to approve a 30 percent rate increase for its remaining customers.
Century Aluminum in Hancock County and Big Rivers Electric Corporation have reached a tentative agreement that will allow the electricity supplier to buy market-priced power for the Hawesville smelter.
The Owensboro Messenger-Inquirer reports Century Aluminum also announced today that it is purchasing the Webster County smelter Sebree Works-Rio Tinto Alcan.
The moves appear to at least stabilize the aluminum industry in the northwestern Kentucky region, which employs about 1,200 people.
Legislation introduced in both the Kentucky House and Senate is designed to help keep aluminum smelter jobs in the northwestern Kentucky region of Daviess, Henderson, Hancock, and Webster counties.
The Owensboro Messenger-Inquirer reports Sen. Joe Bowen and Rep. Tommy Thompson, both of Daviess County, have introduced identical bills in their respective chambers. Bowen told the newspaper the legislation is aimed at allowing Century Aluminum in Hawesville to buy electricity on the open wholesale electricity market.
That is currently not allowed under state law.
Last summer, Century, which employs 700 workers, announced it would shutter its smelter unless either the price of metal went up or its electric rates dropped. The smelter terminated its contract with Henderson-based Big Rivers Electric Corp. Before that, Century was Big Rivers largest customer.
Another western Kentucky aluminum smelter has given notice that it intends to shut down in a year because of increasing electric rates.
Media reported the Rio Tinto Alcan aluminum smelter in the Webster County town of Sebree gave notice Friday of its intention to follow the lead of Century Aluminum in Hawesville. Century filed its notice in August.
The notice from Rio Tinto Alcan comes as Big Rivers Electric Corp. seeks a substantial rate increase citing the impending loss of Century, its biggest customer.
Rio Tinto Alcan spokesman Kenny Barkley said Big Rivers is seeking a rate increase from $50 per megawatt now to $60 per megawatt, and that rate isn't sustainable. The smelter has 488 employees.
An aluminum company operating a western Kentucky smelter has given notice to terminate its power contract with Big Rivers Electric Corp. The move signals that the nearly 700-employee smelter at Hawesville is in jeopardy.
A Hancock County aluminum smelter is warning it might have to shut down its 700-employee operation if it can't negotiate better electric rates. Century Aluminum and power producer Big Rivers Electric Corporation appear to be at an impasse in their efforts to find a solution.