Alcoa and Santee Cooper extend deadline for power contract

Aluminum-maker Alcoa and power provider Santee Cooper will continue talking through year’s end about how to bring lower-cost electricity to one of the utility’s largest customers and keep one of the Lowcountry’s largest employers from shutting down.

The Berkeley County factory and the state-owned utility have been in negotiations for about two years to come to an arrangement on a new power agreement.

The current contract expires at the end of 2015, and the extension allows Alcoa to notify Santee Cooper by Dec. 31 of this year if it does not intend to renew the contract. The most recent deadline was June 30. The original deadline was one year ago.

If Pittsburgh-based Alcoa opts out of a renewal agreement, the plant’s future could be in jeopardy. It could snuff out its smelters and lay off nearly 600 workers at its sprawling plant on 4,500 acres north of Goose Creek.

“The future of our long-term operation is dependent on the outcome of these negotiations,” Alcoa Mount Holly spokeswoman Erin Pabst said. “We’ve been here for more than 30 years, and we want to be here another 30 years.”

Alcoa maintains electricity is one of its top costs to make aluminum and wants a more competitive power rate.

Santee Cooper says it’s not as simple as just lowering the cost of electricity.

Rising fuel costs, increased transportation charges and uncertainty over the effect of current and future federal environmental regulations are affecting power rates, costs that inevitably must be passed along to Santee Cooper’s 164,000 customers and 30 large industries, including Alcoa, utility spokeswoman Mollie Gore said.

“We are doing all we can to control costs,” she said, pointing to the 45-year contract signed last week with Central Electric Power Cooperative, its largest customer, as a sign of stability to credit agencies that will translate into savings on long-term borrowing costs. “We are committed to working together to find a long-term solution,” Gore said.

The plant has been a part of the Lowcountry since 1977, when construction started on what was once Alumax. Production began in 1980, when Santee Cooper started providing electricity to the site. The local factory can churn out 235,000 tons of primary aluminum annually, according to its website.

Alcoa’s corporate office announced earlier this month that it will review 460,000 metric tons of smelting capacity worldwide over the next 15 months for possible curtailment to remain competitive. It pointed out aluminum prices have fallen more than 33 percent since their peak in 2011.

The review will include facilities across the Alcoa system and will focus on higher-cost plants and plants that have long-term risk due to factors such as energy costs or regulatory uncertainty. The possible curtailments could affect 11 percent of Alcoa’s global smelting capacity.