House committee postpones vote on Ky. smelter bill

FRANKFORT, Ky. (AP) -- A legislative panel on Thursday postponed a vote on a bill that would allow two aluminum smelters in western Kentucky to purchase electricity on the open market.

That's because negotiations over rates are continuing between Century Aluminum and the local utility company, Big Rivers Electric Corporation.

Century Vice President John Horner told lawmakers that Big Rivers' rates have made it uncompetitive in the aluminum market and will force it to close its Hancock County plant, costing hundreds of jobs. The bill would allow the plant to bypass the local utility, and current law, to buy cheaper electricity elsewhere.

The two sides have been negotiating over rates for months and continue to talk. Century said the rising rates forced the company to cancel its contract with Big Rivers, which will end in August.

The House Natural Resources and Environment Committee put off the bill. But it still heard more than an hour of testimony from both sides.

Horner told the panel loss of his plant would cost Kentucky 700 jobs that provide wages and benefits of $90,000 each. He explained that current electric rates have made it difficult to compete in the aluminum market both in and outside the United States. And he said rates are only expected to increase.

Passing legislation to allow his company to buy electricity on the open market, he said, would "keep these plants alive."

"We like Kentucky," he said. "We want to stay here long term."

Democratic state Rep. Tommy Thompson of Owensboro, who sponsored the bill, explained that the legislation does not mean deregulation of Kentucky's electricity market. He said the bill is narrow enough to only apply to the two smelters in western Kentucky and save jobs. Dozens of people wearing yellow shirts supporting the bill filled much of the room where the committee met.

Mark Bailey, Big Rivers' president and CEO, said the loss of such a big industrial customer will spike rates for residential customers by about 19 percent, increasing an average bill of $84 to $100. But Bailey contended that rates will increase even more if Century is allowed to buy power on the open market because of transmission costs.

Century representatives, however, told the committee that buying electricity elsewhere will not affect residential rates. Company officials said it will pay for the millions of dollars in transmission costs.

___

The legislation is House Bill 211.