PSC denies rate reconsideration hearing in Century case - Business, Government Legal News from throughout WV

PSC denies rate reconsideration hearing in Century case

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The West Virginia Public Service Commission issued an order Dec. 14 denying any rate reconsideration hearing in the Century Aluminum case.

Both Century and Appalachian Power Co. requested a rate reconsideration after the PSC's Oct. 4 order. The PSC has ordered that ruling "in full force and effect," and considers the case final.

Because of a bill passed by the 2012 Legislature, the PSC was authorized to consider a special rate for energy intensive industrial consumers under certain circumstances.

The PSC's Oct. 4 order established a special rate mechanism that tried to strike a balance among the interests of Century, Appalachian Power, the PSC Consumer Advocate, the Legislature and the economy of West Virginia.

"The Commission points out that if Century determines that it cannot reopen the plant with the special rate mechanism established in the October 4th order, it has the option to pursue discussions with the other parties in an attempt to reach an agreement for a more acceptable rate mechanism," the PSC stated in a news release.

"If those discussions fail, Century has the option to file another complaint case with the Commission and present its new proposal."

Several parties to the case asked for clarification to the issue of refunds to ratepayers to be sure ratepayers are paid first before any electricity rates for Century are lowered because of a favorable uptick in the aluminum market.

According to the motion, the CAD and WVEUG think the PSC order "implies that there could be some form of sharing ... which would not necessarily maintain repayment of ratepayers as the first priority."

The joint motion from the CAD and WVEUG described their request for clarification as under "an abundance of caution."

Century Aluminum and Appalachian Power also filed motions Oct. 26 for reconsideration of the rate.  Click here to read Century Aluminum's petition for reconsideration.  Click here to read Appalachian Power's petition for reconsideration.

Century Aluminum contended in its petition the PSC's special rate does not increase any risk or burden on all other Appalachian Power Company ratepayers, but it keeps the prospect of a reward for those customers if the aluminum market draws in higher prices.

Century's petition proposed two different modifications to the special rate: one dubbed the "Future Restart" and one called the "Immediate Restart," which the company states will allow the Ravenswood plant to reopen in mid-2013.

Century's petition claims the special rate does not provide predictability to electric costs, and Century's parent corporation will not guarantee any deficits at the end of Century's contract, which the special rate demands.

Century's petition also requests a clarification to how the state tax credits permitted by the West Virginia Legislature this year will be administered.

As for Appalachian Power Company's petition, a "further evidentiary hearing" was proposed if it is needed to clarify any issues that were not fully explored during the July 30-Aug. 1, 2012 evidentiary hearings.

Appalachian Power asked in its petition for clarity regarding the corporate guarantee for any shortfalls.

"There is no question that the Commission intends that Century and Century Aluminum Company be responsible for any accumulated shortfalls in the Special Rate Mechanism Tracking Account over the life of the special rate contract," the petition reads. 

Appalachian Power states in its petition that it has funded all special rate shortfalls from Century's past 10 years, and continuing to saddle Appalachian Power with an uncollected shortfall "would not be a balanced and equitable outcome."

Appalachian Power points out that such shortfalls would be unpredictable, and the PSC should increase its review of Century's standing.

Century Aluminum announced Oct. 9 that it would not be able to reopen its Jackson County smelter under the rate the PSC approved, because that rate did not allow some of the adjustments Century had requested.

To view our previous coverage of this story, click here.

The Ravenswood plant closed in 2009, and 650 jobs were lost because of it. Plant retirees also lost their health benefits, but part of the latest agreement for a new rate was for retirees to regain their benefits.

The PSC issued a 70-page decision that stated that it had tried to balance the interests of all parties to the case.

The special rate sets a minimum monthly payment for electricity, but it also allows an electricity rate tied to the market price of aluminum.

Any deviation from the minimum price would be kept in a "tracking account."  The rate also requires Century to guarantee any deficits at the end of the power contract. The rate allows a continuance of $20 million that other ratepayers took on when the plant closed in 2009 because of fixed costs, but if there is an excess in Century's "tracking account," the first $20 million would be returned to ratepayers, and if there is excess money beyond $20 million, it will be divided at a rate of 75 percent to Century and 25 percent to other ratepayers.

PSC Consumer Advocate Byron Harris said shortly after the PSC's rate decision the $22.7 million deficit Century accumulated through its prior rate agreement will still fall to other ratepayers.

"It's like a mortgage, you can make the payments cheap on it, but at the end of the day, you'll still have to pay $22.7 million," Harris said. "It's certainly better than anything Century proposed, ... but it's not a complete protection for other customers, which is what we were after."

Harris also said at the time that a corporate guarantee would still be only as good as the corporation.

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