Century’s lawsuit says Santee Cooper has violated state and federal antitrust laws governing monopolies and engaging in unfair trade practices regarding the smelter’s power supply. Santee Cooper said it plans to “review Century’s litigation and mount a vigorous defense.”
The future of the aluminum smelter has been uncertain for years amid disputes over power contracts. Century Aluminum has said it wants to shop for electricity on the open market and have Santee Cooper deliver power from a third-party provider across its transmission lines. The lawsuit seeks to enable Century to accomplish that, and it asks for unspecified monetary damages from Santee Cooper, according to a news release.
The Santee Cooper board voted down that proposal in 2015, saying it would be unfair to its nearly 30 industrial customers across the state. The utility provider has said the problem stems from an industrywide decline in aluminum prices, not from electricity costs.
In late 2015, Century shut down one of its two lines and laid off half of its 600-employee workforce.
Century and Santee Cooper then reached an agreement that allowed the smelter to remain open at half capacity with one line and 300 workers. Century Aluminum received 75% of the plant’s power from an undisclosed third-party supplier, while Santee Cooper supplied the remaining 25%.
The lawsuit filed today centers on that contract. Century said it was forced to pay higher electricity rates because Santee Cooper “used its monopoly power over transmission of electric power in its service area.”
“The suit comes after more than a year of discussions between the companies regarding a new contract, during which time Santee Cooper unlawfully forced Mt. Holly to purchase 25% of the plant’s power from the utility at rates well above market prices, ultimately forcing the plant to lay off one-half of its employees in order to stay afloat,” the company said in a news release.
Santee Cooper spokeswoman Mollie Gore said the utility provider has been working for years to provide fair pricing to the smelter, saving the plant more than $120 million prior to the most recent three-year power agreement reached in 2015. The utility said its power costs are about 30% lower than the national average.
“It is disappointing that Century continues to avoid the real problem facing its Mt. Holly plant, which is that the 2007 recession and global competition have driven aluminum prices 40% lower than they were a decade ago,” Gore wrote in an email. “Rather than spending money on a frivolous lawsuit, Century should develop a fair, legal and realistic plan for Mt. Holly that addresses the global aluminum marketplace. Mt. Holly’s loyal employees deserve that approach.”
Century President and CEO Michael Bless said the lawsuit was filed as a last resort to save jobs. He has been pushing for a law that would enable the company to shop for power on the open market.
“We are not challenging the idea of public utility monopolies,” Bless said in the release. “But it is clear to us that, unlike other utilities in South Carolina and elsewhere, Santee has willfully violated the laws governing monopolies. That includes acting as an unregulated, unaccountable monopoly without meaningful oversight by the state.”
In response, Gore said: “The one thing Santee Cooper will not do is agree to terms with Century that require subsidy from our other customers, and yet that is what Century continues to demand. This litigation is simply Century’s attempt to obtain by frivolous lawsuit the same unreasonable financial concessions they have pushed before. Their charges are without legal merit, and their demands are still unfair to our other customers.”