Alcoa and an investor in its Berkeley County smelter have notified Santee Cooper they will not renew their electricity contract at the end of 2015, throwing into jeopardy 600 local jobs unless a deal can be reached over the next 17 months.
The two parties have been in discussions for nearly three years to come to an agreement on a long-term power contract to no avail.
Without an agreement that would reduce its power bill, Alcoa could snuff out its smelters and lay off its work force at its sprawling Mount Holly factory on 4,500 acres near Goose Creek.
Both Alcoa and Santee Cooper called the notice "procedural" and said they are continuing to negotiate.
Under the terms of the current contract, which dates to Sept. 1, 2010, Pittsburgh-based Alcoa and Century Aluminum Co., which jointly own the plant, had to notify the utility by June 30 whether they planned to extend the power agreement.
"Mount Holly notified Santee Cooper, as required by its power contract, that the facility will not renew its current power agreement when it expires on Dec. 31, 2015," Alcoa spokeswoman Samantha Cheek said Monday.
"Mount Holly will continue working with Santee Cooper toward a new contract and remains committed to securing a competitive, long-term power agreement that protects the 600 jobs and $900 million annual economic value the plant brings to the state of South Carolina," she added.
Santee Cooper spokeswoman Mollie Gore said the termination notice does not affect continuing negotiations.
"We are very optimistic we will be successful with the negotiations and will keep working toward that," Gore said.
What the notification means is that no deal has been reached and a deadline has been set. In just over 16 months, Alcoa, which churns out 235,000 tons of primary aluminum annually and is one of Santee Cooper's largest customers, will not have a power provider if the two sides can't reconcile differences.
In its most latest earnings statement, Chicago-based Century Aluminum, which owns nearly half the plant, referred to the contract problems.
"In South Carolina, we regrettably deemed it necessary to provide the post-2015 termination notice of Mt. Holly's power contract," CEO Michael Bless said in a statement last week. "That said, we are committed to finding a long-term solution and are in active discussions with the power company."
Santee Cooper said it must to take into consideration several factors when setting electric rates.
Rising fuel costs, increased transportation charges and uncertainty over the effect of current and future federal environmental regulations are affecting costs that inevitably are passed along to Santee Cooper's 168,000 customers and 30 large industries, including Alcoa, Gore said.
Alcoa insists that without a long-term power contract with lower rates, it cannot remain competitive and could close the 34-year-old factory, one of the Lowcountry's largest industries.
Reach Warren L. Wise at 937-5524 or twitter.com/warrenlancewise.
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