Sebree aluminum smelter gives notice to end electricity supply with KY companies

The Rio Tinto-owned Alcan Aluminum Smelter has given a 12 month notice to terminate its current power supply with Big Rivers and Kenergy.

A Rio Tinto spokesperson says after a similar notice given by Century Aluminum back in August prompting Big Rivers's rate increase proposals, producing aluminum could cost too much to make a profit.

Rio Rinto Alcan spokesperson Kenny Barkley at the Sebree Smelter says if the Big Rivers rate increase proposal is passed by the PSC, operation will be difficult.

"We already had a very high cost for power and now another 16 percent on top of that just makes us unprofitable and unsustainable," Barkley said.

Barkley says the Sebree facility employs about 500 people, and he says although ceasing operations is a possibility, the plant is doing everything it can to stay in production.

President and CEO of Kenergy, Greg Starheim says about 70 percent of Kenergy's energy supply goes to Rio Tinto Alcan and the Century Aluminum Smelter in Hawesville.

"It would obviously be a huge loss of load if they terminate operations," Starheim told 14 News.

Starheim says if the termination causes Big Rivers the need to increase rates, rates to Kenergy customers could go up, too.

He tells 14 News that even though in a year, power for the Sebree plant won't be coming through Big Rivers, Kenergy is looking at other ways to serve the Smelters.

"Kenergy wants to do everything we can to keep them in operation. Obviously, they have a huge impact on our local economy," Starheim said.

"We've got a lot of work to do between now and the next 12 months to keep the plant sustainable," Barkley said.

Starheim says one of the ways Kenergy could possibly still serve both Century Aluminum and the Sebree Smelter is through providing power on the open market. He says, right now, Kenergy is in communication with both of those Smelters.

Copyright 2013 WFIE. All rights reserved.