Century Aluminum’s quest to rid itself of the agreement to buy power from only the South Carolina Public Service Company (Santee Cooper) was dealt a serious setback earlier this week when a state judge found that an agreement it had with the city of Goose Creek was illegal.
On Monday, Circuit Judge Roger Young handed down the ruling, which found that the city’s agreement with Century gave it too much power over the city as well.
Santee Cooper has been powering Century’s plant for three decades until recently, when Century began looking for a way out of the relationship on account of higher power prices and lower aluminium prices. That’s when it turned to the city and suggested that it create its own municipal utility.
In response, Santee Cooper took the city and the aluminium smelter to court citing the illegality of the agreement. Century and the city had made considerable progress on the agreement, including holding a citywide vote giving city officials the ability to create the new company. The two entities also agreed to annex the plant in order to be able to collect over $1 million in property taxes.
However, Santee Cooper asserts that none of this voids its right to be the sole power company for the aluminium smelter.
“Santee Cooper’s monopoly power in its exclusive service area therefore is the clearly articulated and affirmatively expressed policy of South Carolina,” explained Judge Young in the written opinion of the case.
He also agreed with Santee Cooper’s argument that the substantial infrastructure investment made to power Century would raise prices for the remaining customers if they broke the agreement.
“Providing electric services requires a tremendous investment in infrastructure, the cost of which is borne by all ratepayers,” Young agreed.
In addition, the judge struck down the agreement between Century and the city, saying that the agreement granted the company more power over the city than it should legally have.
“This agreement allows Century to veto future decisions over matters which only Goose Creek’s City Council […] may lawfully exercise.”
“Taken together, these provisions make it clear that Goose Creek would have little or no authority to operate its own electric utility system without Century’s approval first,” Young concluded.
The city may appeal the decision if it so chooses. Meanwhile, separate litigation continues between the two companies in a different suit.