Aleris says Big Rivers rate increase would impact aluminum rolling mill

Monday, May 20, 2013
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Aleris International, a US rolled products manufacturer, is warning that planned power rate increases by Big Rivers Electric will make it more difficult for Aleris' aluminum rolling mill in Hancock County, Kentucky, to compete in a challenging economy.


Big Rivers, a Henderson, Kentucky-based generation and transmission co-op, is proposing a series of rate hikes over the next year or so to offset the impending loss of almost 70% of its load represented by Century Aluminum and Rio Tinto Alcan, operators of 244,000 mt/year and 216,000 mt/year aluminum smelters in Hawesville and Sebree, respectively.


Century, which recently announced plans to purchase the Sebree smelter, is seeking to bypass Big Rivers and buy its electricity from the less expensive wholesale power market. Century is believed to want a similar, separate deal for Sebree as well.


The first Big Rivers rate increase could be implemented in August and cause electric rates to rise by 23% for most of the co-op's 112,000 customers in western Kentucky.


That, and subsequent rate hikes, will cause pain for the Aleris rolling mill, the company said Friday.


"We expect to see a 30% total increase in our electricity costs at our Lewisport plant as a result of this rate increase," company spokeswoman Shannon Bennett said. "The proposed rate increase, together with the potential for additional and substantial increases in the future, will make it more difficult to compete in a marketplace that now includes foreign competitors that benefit from lower cost structures and rich government incentives on power, tax adjustments and other subsidies."


Instead of seeking to raise rates to compensate for the loss of the Century and RTA smelters, Big Rivers "should be making structural changes to make its system more efficient," Bennett said. She did not indicate what those changes might be.


Big Rivers has said it might idle one or more of its coal-fired power plants, although the MidContinent Independent System Operator has told the co-op it wants the 443-MW Coleman plant in Hawesville to continue operating to provide grid support for the region.


Aleris is part of the newly formed Fair Rates Kentucky coalition that is fighting the Big Rivers rate increases.

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