smelter

Commission Approves Agreements on Hancock County Smelter

Jan 31, 2014

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.

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.

With only two days left in this year's Kentucky General Assembly session, time is running out for supporters of legislation meant to keep two western Kentucky aluminum smelters—which employ about 3,000 people—from closing.

Under state law, the smelters are required to purchase electricity from the nearest company—Big Rivers Electric, in this case.  The smelters say lower aluminum prices have them struggling to pay the bills; they're asking for more options for where they get electricity.

Their legislative supporters want to let the smelters purchase electricity on the open market.

Opponents argue that giving the smelters lower rates or open market options would increase prices for the average customer.

Preliminary findings from a study commissioned by lawmakers to help find a solution to a rate dispute between two western Kentucky aluminum smelters and a regional utility painted a grim outlook.

Hancock County leaders are trying to stay optimistic about the future of a major employer in their area. Century Aluminum smelter announced this week it has given Big Rivers Electric Cooperative a 12-month termination notice. That puts the smelter’s ability to operate in jeopardy.