Utility, smelter dispute getting more attention


Associated Press

Posted on February 21, 2013 at 4:01 PM

HENDERSON, Ky. (AP) — A dispute between a regional utility and two aluminum smelters in western Kentucky over electric rates is getting an increasing amount of attention from state officials in Frankfort.

The Gleaner (http://bit.ly/WcSL3x) reports that Gov. Steve Beshear sent a letter on Wednesday urging the presidents of Big Rivers Electric Corp. and its largest customer, Century Aluminum, to come to a compromise that preserves jobs and keeps electric rates from skyrocketing.

A day previous, Democratic Rep. Jim Gooch of Providence filed a bill proposing to force a merger between Big Rivers and East Kentucky Power Cooperative.

Earlier this month, a legislative panel postponed a vote on a bill that would allow the smelters to purchase electricity on the open market.

Big Rivers said the utility continues to negotiate with the smelters.

"I personally think we're close to an agreement," Big Rivers President and CEO Mark Bailey said.

The issue began with a rate disagreement between Big Rivers and its largest customer, Century Aluminum. When they couldn't reach a resolution after months of negotiations, Century gave notice that it would pull out of Big Rivers this August. That led the utility to request a rate increase that in turn led to another large smelter, Rio Tinto Alcan, to give notice that it would also leave the electric cooperative.

Together, the smelters employ about 1,200 people and support thousands of other jobs in the area. Meanwhile, the 112,000 customers served by Big Rivers are facing rate includes of 30 percent or more.

Bailey said he was pleased about the governor's letter, which indicated that it is up to the companies — not state lawmakers — to avoid a crisis.

The letter urges leaders at both companies "to craft a framework of compromise that will end the crisis of confidence in the security of affordable electricity and of continued employment that has been communicated to me from hundreds of phone calls, letters, emails and faxes from rate payers, employees and families."

Bailey said he hadn't yet reviewed Gooch's proposal, but added that he wasn't sure "if it's good public policy for a legislator to get involved in private entity affairs."

The bill didn't a get a good reception from East Kentucky Power either.

"East Kentucky Power Cooperative is opposed to this bill," its spokesman, Nick Comer, said in a statement.

"It came as a shock to us because the bill attempts to address an issue that is properly a business decision for our cooperatives to make, rather than the Legislature," Comer said.


Information from: The Gleaner, http://www.thegleaner.com/