Century Aluminum President and CEO Michael Bless says he’s “optimistic” that the company’s Ravenswood plant will reopen.
“We’re very committed, from the Board of Directors on down, to getting this done,” Bless said on Metronews Talkline Monday. “It’s important to us for so many reasons and we’re going to work like heck to get it done.”
I admire Bless’ assured approach, and I hope he’s right. But the deal that will lead to the restarting of the aluminum plant in Jackson County is a long way from being done.
Here’s the problem: Century says it must have a “special rate” from Appalachian Power Company (APCo) for the massive amounts of electricity needed to run the plant. Under Century’s proposal, APCo’s other customers would have to pay higher electric rates to subsidize Century when the price of aluminum drops below a certain level.
Aluminum prices have slumped over the last couple of years. Today, at about $1,900 a ton, prices are hovering near a two-year low.
APCo attorney William Porth said candidly that the proposal “protects Century from virtually all business risk, shifting that risk to non-investors, notably electric ratepayers, who would be required to bear it involuntarily.”
Bless sees the deal differently. He said on Talkline that his company expects aluminum prices to rise over the next ten years, meaning ratepayers won’t be saddled with the subsidy.
“Over time, we’re confident that this thing should be net neutral to the rate payers in the region,” Bless said.
Maybe aluminum prices, which are subject to dramatic swings, will rise in the years ahead, but economies here and around the world are going to have to improve for that to happen.
The problem here is that APCo customers, the vast majority of whom have no vested interest in whether the Ravenswood plant reopens, are being asked to assume the risk. That’s a tough sell, especially on the heels of this storm, which already has thousands of customers steamed at the power company.
The state Public Service Commission is considering Century’s special rate proposal for Ravenswood, and will hold an evidentiary hearing July 30-Aug.1 in Charleston. Given APCo’s opposition, and concerns expressed by some rate payers, it’s unlikely the PSC will approve the deal.
It would be in the best interest of West Virginia and especially Jackson County, if Ravenswood reopened and put many of those 650 people laid off in 2009 back to work. In addition, reopening the plant would bring back health care benefits for hundreds of retirees.
But the deal has to be fair for tens of thousands of APCo customers, and the deal now proposed by Century is not.
If Mr. Bless is as committed as he says he is to getting Century back on line and taking advantage of expected higher aluminum prices in the future, then the company and its investors need to take more of the risk.
I