There was reason to celebrate last February when state leaders and Century Aluminum announced an agreement that they hoped would lead to the reopening of the company’s Ravenswood plant.
The plant closed in 2009, putting 650 people out of work and eliminating the health benefits for hundreds of retirees. Karen Gorrell, who advocated for the retirees, wept with joy at the prospect of the restoration of benefits and the reopening of an industry so vital to Jackson County.
However, it now appears the jubilation was premature, as we learn more about the substantial subsidy Century says it needs to reopen and operate the aging plant.
Appalachian Power, which supplies electricity to the plant, has delivered to the state Public Service Commission a stunning report on just how much the rest of the utility’s regular customers could have to pay to keep Ravenswood going.
The “special rate proposal” by Century allows its massive electricity bills to slide up or down, depending on the price for aluminum. When the price drops below a certain point, other rate payers have to make up the difference.
As an example, APCo says applying the current price of aluminum, “the average residential ratepayer would be facing a $12.65 increase in his monthly electric bill to support the special rate proposed by Century.”
Additionally, according to APCo, if aluminum prices dropped to a low reached three times in the past five years, ratepayers would subsidize Century to the tune of nearly $18 a month.
APCo attorney William Porth, who prepared the PSC filing, wrote that there are two inescapable facts about Century’s proposal: it would be beneficial on many economic levels if Ravenswood reopened and “the price tag accompanying Century’s special rate proposal is staggeringly high.”
Indeed, it appears, at least according to the APCo filing, that Century is trying to position itself to reap the benefits of what it must expect to be a rise in the demand and price for aluminum while protecting itself from a significant portion of the downside.
“It protects Century from virtually all business risk, shifting that risk to non-investors, notably electric ratepayers, who would be required to bear it involuntarily,” Porth wrote.
Of course West Virginians would want to see Ravenswood reopen and retirees have health benefits, but asking APCo’s 500,000 other West Virginia customers, most of whom are on their own during tough times, to help subsidize Century Aluminum is extraordinary.
Aluminum is a tough business; it’s expensive to prepare the product for buyers and the market is highly volatile. Century had a profit of $11 million last year and $60 million the year before. President and CEO Michael Bless is doing something right.
But if Bless is serious about reopening Ravenswood, his toughest sell will be to convince West Virginia and APCo customers that the proposed special rate for the purchase of electricity is a good deal.