A state Senate bill that would have let Century Aluminum buy all of its electricity on the open market failed to get past a subcommittee hearing Thursday, dimming the possibility of a last-minute deal to save the company’s Mount Holly smelter and its 300 jobs.
“I never want to definitively say something is dead, because as long as we’re in session there’s always a possibility,” said state Sen. Larry Grooms, R-Charleston, one of the bill’s sponsors. “But I don’t see a reasonable possibility at this point.”
Grooms said the legislative lifeline, introduced earlier this month, got a late start in the session and was gaining support but ran out of time.
Thursday’s hearing was held just days before the May 1 deadline to send a bill between the General Assembly’s two chambers.
Mike Bless, president and CEO of Century Aluminum, told analysts during a conference call Thursday that Mount Holly will shut down on Aug. 31 if a solution to the power issue cannot be reached.
“We’re obviously running out of time,” said Bless, who also testified during Thursday’s hearing.
A similar legislative measure to save Mount Holly died in a House subcommittee last week, putting the onus on the Senate to find a solution.
“The House was pretty clear in what their intention was to do with the bill,” said state Sen. Sean Bennett, R-Summerville, a member of the judiciary subcommittee that held Thursday’s hearing. “I question even if we were to pass it out today and pass it out in full committee, it doesn’t look like they have much appetite to do anything with it. And we can’t do anything unilaterally. I think we’re in a difficult spot.”
Bless told the subcommittee that Mount Holly can’t compete on a global market because its current power deal with state-owned utility Santee Cooper is too expensive. Under an agreement first reached in 2012, Mount Holly gets 75 percent of its power on the open market — from utilities generating electricity with cheap natural gas — and 25 percent from Santee Cooper, which uses more expensive coal to produce power.
An official with Mocks Corner-based Santee Cooper said the bill would force the utility to raise rates for other customers to subsidize Century Aluminum’s operations.
Valerie Taylor, a 12-year Mount Holly employee, told the subcommittee the jobs at the smelter are important to workers and the community.
“My family solely depends on me,” said Taylor, adding that she has five children and a husband who is disabled. “Without these jobs, a lot of us would not be able to afford the bare necessities of life.”
Marvin Dickerson, Mount Holly’s human resources manager, said the legislation would not cost any jobs at Santee Cooper or other utilities if it were approved. “But if the bill does not pass, we’re going to lose 300 high-paying jobs,” he said.
Michael Baxley, Santee Cooper’s general counsel, said he sympathizes with Mount Holly’s employees, but “we’ve given everything we can give.”
Baxley said the 2012 deal, which was renewed in December, has saved Mount Holly $120 million in electricity costs and the smelter pays the lowest rate of any of its industrial customers. He said allowing the smelter to become its own utility, which the bill would do, could hurt Santee Cooper’s bond ratings, creating “a substantial risk to all of our customers.”
Under the proposed legislation, Century Aluminum would pay Santee Cooper for transmission of the power that the company buys on the open market and a separate fee for any revenue Santee Cooper loses as a result of tying up its transmission capacity. “We will pay to make Santee Cooper exactly whole as they are today,” Bless told the subcommittee.
Baxley said the issue isn’t only about money. He compared the power transmission plan to giving Century Aluminum its own lane on a two-lane highway and then putting all other Santee Cooper customers in the other lane.
“Somebody’s going to go dark if there’s not enough transmission” capacity, he said.
Bless faced skepticism from some lawmakers who questioned whether Century Aluminum’s problems are a result of historically low aluminum prices worldwide instead of electricity prices. State Sen. Luke Rankin, R-Conway, the subcommittee’s chairman, said Century Aluminum has cut production at plants in other states where the company has the kind of power deal it is seeking in South Carolina.
Ultimately, Rankin said, the subcommittee lacks the expertise to make a decision this late in the legislative session.
“This is not the room for those negotiations,” Rankin said. “We are not skilled at negotiations between a utility and a customer ... this is not our business.”
Rankin said he would have liked to reach a resolution, but “this is just a lot in too little time.”
Mount Holly currently operates at 50 percent capacity and employs about 300 people. At full capacity, the smelter employs twice the people and has a roughly $1 billion economic impact on the Charleston region, according to a University of South Carolina study.
Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_