Century Aluminum

The Big Rivers Electric Corp. will be forced to raise rates again for its 113,000 customers, as a second western Kentucky aluminum smelter has reached an agreement to purchase its electricity on the free market.

The Kentucky Public Service Commission has approved a rate increase for customers of Big Rivers Electric Corporation.

The utility sought the increase to absorb the loss of its biggest customer, an aluminum smelter.

The PSC authorized Big Rivers to seek an additional $54.2 million from customers. That is about $20 million less than requested.

The Public Service Commission approved agreements today that allow the Century Aluminum smelter in Hawesville to purchase electric power on the open market through Kenergy Coporation instead of power generated by Big Rivers Electric.

PSC Spokesman Andrew Melnykovych says Century’s electricity will still run through Big Rivers’ system, the corporation just won’t be providing electricity it generates.

“In essence what will happen is Big Rivers is going to go as Century’s agent, purchase the electricity on the open market, transmit it through its transmission system to Kenergy, which will then supply it to Century," he says. "Century in essence then pays market rates for that power.”

The Kentucky Public Service Commission will conduct public hearings in Paducah, Henderson and Owensboro over a proposed rate hike for electric customers who could see their bills increase by nearly 20 percent.

The proposed hike comes as Big Rivers Electric attempts to raise a $74.5 million to fill a budget hole left by its biggest customer, Century Aluminum and pay debt obligations.

The possible 20 percent increase would account for an extra $24 per month for the average customer. Industrial customers would see nearly 17 percent rate increases.

Big Rivers Electric’s decision to let Century Aluminum out of its contract in August, may mean significant electric rate increases throughout the region.

Big Rivers spokesperson Marty Littrel said the aluminum smelter will be able to buy electricity elsewhere on the open market. But since the smelter is Big Rivers’ biggest customer, Littrel said the power supplier has to raise rates about 20 percent.

“All we’re trying to do is cover our expenses here,” he said. “We’ll likely have to idle a plant because this is a huge revenue loss for us.”

The Century Aluminum smelter in Hawesville has notified employees that it plans to shut down operations Aug. 20 unless it can get lower electric rates.

The aluminum smelter has been in negotiations with its power supplier, Big Rivers Electric Corporation, for more than a year. Both parties say they are still trying to negotiate a deal before time runs out.

With the Kentucky General Assembly adjourned for the year, a look into lobbying spending during the session shows major dollars are still used to influence issues.

During the first two months of this year's session, a total of $4.2 million was spent lobbying. That's a 10 percent increase over the last 30-day session in 2011, according to Legislative Ethics Commission.

A legislative panel has postponed its vote on a bill that would allow two aluminum smelters in western Kentucky to purchase electricity on the open market.

Big Rivers Electric customers in western Kentucky can expect a marginal increase in their rates soon but a much larger increase could be coming their way in July. The Kentucky Public Service Commission reaffirmed a 2011 decision that decreased subsidies for two aluminum smelters, fixed a $450,000 mathematical error and added legal costs, which adds 45 cents to the average customer’s bill.