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Kentucky Business Groups Against Open-Market Electricity for Century

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Lawmakers in Kentucky are struggling with a situation members of the West Virginia Legislature know all to well: how to help Century Aluminum continue employing hundreds of workers without putting a burden on anyone else in the state.

Century's Ravenswood smelter closed in 2009, and rate negotiations started in May 2012, aided with legislation to allow a special rate for Century and any other high-intensity industrial electric consumers that fit the bill.

AEP Spokeswoman Jeri Matheney said this week her company has taken part in sporadic discussions with Century to try to nail down a rate that would allow the aluminum smelter to reopen without shifting costs to any other Appalachian Power ratepayers. That potential shift and its amount was the sticking point in the rate case that closed with the Public Service Commission's order in October.

Century has not agreed to the rate the PSC ordered, but spokesman Mike Dildine said last week restarting the Ravenswood plant is an important priority for the company, and the $45 million startup cost is steep, but the company is continuing to evaluate alternative power supply arrangements.

But back to Kentucky. Lawmakers there are looking at two bills that would give major users of electricity – primarily aluminum smelters – the ability to get power on the open market. State law there requires the two aluminum smelters to buy their power from Big Rivers Electric Corp., and Century has said its electric rates are about 30 percent higher than it could pay by going to the open market.

In August, Century provided the required notice that it will terminate its power contract with Big Rivers and close its plant unless it can find cheaper power.

The Kentucky Chamber of Commerce joined the Kentucky Association of Manufacturers and the Kentucky Resource Council for a media teleconference March 4 to raise their concerns about Century's potential leap into the open market.

Kentucky Resources Council Director Tom FitzGerald said he was worried other customers would be required to shoulder an additional cost burden and suggested the legislature stay out of the electricity discussions. FitzGerald said Kentucky's governor should participate in discussions to offer "the appropriate incentive package," including multi-coal severance dollars.

Greg Higdon, president and CEO of the Kentucky Association of Manufacturers said the two bills could lead to an increase in utility costs for manufacturers, which most cannot afford right now.

"In order to provide the power needed by all of our manufacturers, utilities have had to incur major infrastructure costs and those costs are shared by all of their customers," Higdon said.

Kentucky Chamber President Dave Adkisson said Kentucky's global competitiveness could take a hit if international bond markets take note of any attempt the Kentucky General Assembly makes to intervene in the contract between a utility and its customers.

"The Chamber feels that these two measures compromise the stability that ratepayers statewide have enjoyed," Adkisson said. "These rates have long been an economic development recruiting tool for new and expanding business in the state."