Mar. 14--Progress is being made on the "unwind" transaction that would continue to provide cost-based electricity for Century Aluminum of Kentucky in Hawesville and Alcan Inc. in Sebree.

E.ON-U.S. announced Friday that it and Big Rivers Electric Corp. would accept the conditions of a March 6 ruling from the Kentucky Public Services Commission that will allow for the unwind, which would terminate a previous lease between the two companies.

"We feel it is important to restore some economic stability to that region, as well as ensuring that we can help retain the 5,000 jobs by supplying power at this price to the smelters," said Chris Whelan, director of communications for E.ON.

When operating at full capacity, the smelters employ 1,400 people and provide $115 million in payroll and benefits, according to a March 6 PSC press release. Another 3,500 jobs are estimated to depend on the smelters.

Without the unwind, the smelters would be subject to market-based costs, "which would be energy costs that might not lend itself to the long-term viability of the plants," Matt Powell, Hawesville vice president and plant manager of Century Aluminum, previously told the Messenger-Inquirer.

The unwind agreement would end the lease under which E.ON has operated electric generating plants owned or controlled by Big Rivers, according to the PSC press release.

"We think the stipulations were not unreasonable for Big Rivers to accept," said David Spainhowardcq, Big Rivers' senior vice president of external relations and interim chief production officer.

If the unwind is completed, Big Rivers will take full responsibility for operating and selling power from three plants it owns and one plant owned by Henderson Municipal Power & Light, or HMPL, the press release said.

Henderson Municipal also has to agree to the unwind for it to take effect.

Gary Quick, general manager of HMPL, said the utility was willing to accept the unwind if the parties will go forward under the existing contracts, which were created in 1998.

Big Rivers has proposed to play HMPL $2.50 per kilowatt hour instead of $1.50 for excess energy, which is in the 1998 contract.

The company also wants HMPL to make changes to certain provisions in existing contracts, Quick said. "That's what we can't agree to," he said.

Both Spainhoward and Whelan said they were surprised by HMPL's announcement. Spainhoward said Big Rivers hasn't had any discussions with HMPL in a while. "That is why this is so surprising to us," Spainhoward said.

Whelan said there were several points E.ON was still negotiating with HMPL. But if a deal is worked out by March 23, the unwind could close as early as April 9, she said.

Beth Wilberding, 691-7307, bwilberding@messenger-inquirer.com

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