When a bill's main goal isn't to become law

02/25/2013 11:12 AM

Most of the time, legislators file bills to set policy by changing the law.

In the case of a measure pushed this year by a bipartisan group of western Kentuckians, it’s mainly a back-up plan and a potential nudge to two companies and electric provider to solve their disagreement so that the state doesn’t have to step in.

Two Daviess County lawmakers — Rep. Tommy Thompson, D-Philpot, and Sen. Joe Bowen, R-Owensboro — proposed identical bills in both chambers that would allow companies that use huge amounts of power to be able to purchase it on the open market.

The way the bill’s drafted, it’s aimed at affecting only a pair of aluminum smelters that operate in Western Kentucky that use heavy amounts of electricity: the Hawesville-based Century Aluminum and Rio Tinto Alcan in Sebree. Together, they represent the biggest producers of aluminum in the country, as Thompson told Pure Politics.

Century Aluminum gave its one-year notice to the electric coop Big Rivers Electric last year that it wants to end its contract in August because executives believe they can buy power cheaper from another utility. But Big Rivers Electric isn’t eager to see the companies go because they make up about 70 percent of the power they sell, according to the Owensboro Messenger-Inquirer.

And the way Kentucky law is written, an electric customer can’t shop for power on the open market unless the current provider for that region gives its blessing.

John Talbert, director of external affairs for Big Rivers Electric in Henderson, said Big Rivers gave Century permission to go into free market but the main issue is that the legislation would allow the companies to avoid paying certain fees, such as transmission costs.

“This bill is being advertised as a way to keep people talking … but the bill was drafted, was actually intended to allow Century to avoid paying tens of millions of dollars in costs that Big Rivers would incur to allow them to go to market and rate payers would have to pick that up,” Talbert said, referring to the increased cost in transmitting that electricity through the power lines Big Rivers operates.

The smelters and the electric coop are currently in negotiations over that. But Thompson said the state can’t risk the loss of 3,000 jobs — which pay an average of $85,000 a year in salary and benefits — from the two smelters going away. So the bill, House Bill 211, would open up a loophole that Thompson said would allow just industrial customers that use the level of electricity that smelters do to shop for power on the open market.

Otherwise, he said, the plants will have to close anyway, and no matter what Big Rivers will lose their customers.

He said the hope is that the two sides will negotiate a more amicable divorce in which the smelters get to leave and the utility gets some compensation for the drop in demand for power from one of its plants. Here’s what Thompson said:

Thompson also noted that Big Rivers allowed Century Aluminum to get its power from another provider in 2006 before Century decided to return to buying it from the coop.

The bill is currently pending before the full state House and could be voted on as early as Monday afternoon.

(Clarification: The post was updated to reflect that Big Rivers’ gave permission for the companies to purchase power on the free market but is seeking payments from Century to cover the costs of transmitting the power to the smelter.)


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