Politicians, Century See PSC Order as Start of Hostage Negotiation

In the last couple of days, we have seen stories in the Charleston Gazette and Daily Mail about Century Aluminum’s announcement on Tuesday that it is refusing to accept the recent PSC order on special electric rate treatment.  Century says it cannot reopen its Ravenswood smelting plant under the generous provisions of the PSC’s order in the case.  As I noted in my post last week, the PSC’s order approves significant new burdens on WV rate payers and tax payers and also included a plan to allow Century’s electric rates to fluctuate according to the price they receive for their products.  The only catch, as far as Century is concerned is that, at the end of ten years, the company will still be responsible to make up any underpayment for electricity if aluminum prices, and therefore the rates they paid under the plan, remain below a specific threshold.

It’s funny that Century wouldn’t like getting everything they wanted in their earlier filings.  In prior representations to the PSC, the company’s lawyers stated that their fluctuating rate scheme (which the PSC essentially followed) would result, at the end of ten years, in a net gain for other APCo customers, even if those customers had to cover Century’s electricity in some years when the price of aluminum was low.  Century puffed about how rosy the outlook for aluminum was and that there was almost no possibility of a shortfall in their payments for electricity, and that APCo and its rate payers had no risk under Century’s plan.

So now, it is surprising to see Century reject the one part of the PSC plan that they had said earlier was no problem.  All the PSC wants Century to do is settle up with APCo and its other rate payers at the end of the ten year period.  The PSC plan still gives Century a loan from APCo’s other customers in years when Century’s electric bill falls below the special rate threshold.  Apparently, Century no longer believes its earlier rosy predictions about aluminum prices, because now it is afraid to have to pay up at the end of its ten year electric rate loan period.  This, of course, points to the fact that all Century cares about is eliminating its market risk by transferring it to APCo and West Virginians.

On Tuesday, the Gazette ran a story about the situation that included quotes from politicians.  The link to this story may die in a week, but you can read it here.  Here are quotes from WV politicians about the Century decision to walk away from the PSC’s plan:

Century said the company is “in the process of discussing modifications that would permit a restart at this time, and we plan to file a motion for reconsideration with the PSC.”

During a gubernatorial debate Tuesday night, Gov. Earl Ray Tomblin said he would do everything he can “to get those jobs back in Ravenswood.” Tomblin said he would work with Century and Appalachian Power to re-open the plant.

Sen. Joe Manchin, D-W.Va., said in a phone interview Tuesday that Century and the PSC are still talking and “want to revisit the issue.”

“I respect the Public Service Commission for doing its due diligence. I do not believe the general public should be put at risk. That was [the PSC’s] decision,” Manchin said.

“I am hoping they can sit down and reach an agreement to create the jobs we need. I think the PSC worked hard and came to a good decision. And it is always good if they are still talking.”

Sen. Jay Rockefeller, D-W. Va., said in a news release that Century’s decision to not move forward in reopening its smelter is “deeply disappointing news.”

“I urge Century to do everything that it can to achieve what we have all been working toward – reopening the plant, putting people back to work, and restoring health-care benefits that workers and retirees have earned.”

These responses are very interesting, particularly in light of former Gov. Manchin’s direct interference in the PSC process in order to get approval for Allegheny Energy’s TrAIL line in 2008.  Gov. Tomblin’s main goal appears to be re-opening Century’s plant, not protecting APCo rate payers from an out of state corporation’s bid for welfare.  Sen. Manchin sees the final order of the WV PSC only as some kind of “due diligence” stop along the way to a similar deal to reopen the Ravenswood plant.  To his credit, Sen. Rockefeller places the responsibility for failure on Century’s unwillingness to compromise.

Had this been a PSC decision that favored the interests of out of state corporations like Century over the interests of West Virginians, it appears that Sen. Manchin and Gov. Tomblin would have no trouble proclaiming the sanctity and finality of the WV PSC’s decisions.  But when a PSC decision goes against one of those corporations, a WV PSC final order is just one more part of the hostage negotiation.

One thought on “Politicians, Century See PSC Order as Start of Hostage Negotiation

  1. And this is why expired commissioners who owe their job to the politicians continue to retain their seat. Who owns the PSC? The one who appoints them. Impartial my rear end.

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