Century Aluminum of South Carolina, a global producer of primary aluminum , filed an antitrust lawsuit January 30 in federal court in Charleston against the South Carolina Public Service Authority (Santee Cooper), accusing the utility of violating state and federal antitrust laws governing monopolies and unfair trade practices because it has refused to let the company buy electricity for its Mount Holly smelter on the open market, according to a report by The Post and Courier.
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 percent 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 aluminum producer alleged.
The 23-page complaint details how the utility, without any meaningful state oversight, used its monopoly power over transmission of electric power in its service area to force the Mt. Holly smelter to accept the highest electricity prices paid by any aluminum smelter in the country even though cheaper power was readily available from third-party providers.
“We have filed this antitrust lawsuit against Santee Cooper as a last resort to save 600 jobs and the nearly $1 billion in economic contributions to the state of South Carolina made by the Mt. Holly plant,” stated Century Aluminum CEO Michael Bless, adding, “We reluctantly made the choice to proceed with the lawsuit only after all else failed, including a recent final face-to-face attempt to reach resolution with Santee Cooper.”
“We are not challenging the idea of public utility monopolies” said Bless. “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.”
Bless further stated, “A competitive power contract is the life blood of an aluminum smelter. About 40 percent of the Mt. Holly smelter’s operating costs are for electricity, far more than any other type of manufacturing. When forced to purchase 25 percent of its power requirement at Santee Cooper’s rates, Mt. Holly is uncompetitive on the world market and consistently loses money. If able to purchase all its power from the free market, the plant, aided by a world class work force, relatively modern technology and a loyal customer base, would have a bright long-term future.”
The lawsuit rejects Santee Cooper’s frequently repeated claim that it simply doesn’t have capacity to transmit third-party electricity through its facilities and that doing so might force Santee Cooper to forego future market purchases.
“This claim is contradicted by Santee Cooper’s own admission that there is sufficient existing, unreserved import capacity to serve Mt. Holly’s entire load,” according to the complaint. “This claim is further contradicted by Santee Cooper’s own rate study for 2016-2018, and in longer-term forecasts presented by Santee Cooper management to its Board, acknowledging that Santee Cooper does not intend to increase its market purchases.”
In a statement provided to The Associated Press, a spokesperson for Santee Cooper called the suit “frivolous” and promised a “vigorous defense.”