“It’s all about power prices,” said Alcoa spokesman Jim Hodson of Rockdale, agreeing in principle. “Whenever Luminant’s Unit 4 is running, that is dedicated power to us. When it is not running, we are subject to the wholesale market power price. It has been real high priced, as high as $4,000 per megawatt hour. Unit 4 has not been running very well so we have been submitted to that market price and we have lost money. We cannot continue to do that any longer. The only thing to do is reduce our consumption of power and we are going to shut off three of our potlines.”
Alcoa reported in a press release that three Rockdale operations potlines were immediately idled because of the supply interruptions and because energy costs increased to as much as $2,000 to $4,000 per megawatt hour during peak hours.
Luminant Power officials on Thursday said they are not responsible for Alcoa’s decision to idle production.
Alcoa’s accusations that “supply interruptions” from Luminant’s Sandow 4 power plant have resulted in uncompetitive power prices to Alcoa are incorrect, Luminant officials stated.
“Luminant has supplied power to Alcoa pursuant to the long-standing contractual arrangement mutually agreed to by the two companies, which includes a provision that mitigates the impacts of buying from other suppliers when Sandow 4 is not producing power.”
Luminant also has offered Alcoa several other options for buying power during those times, but Alcoa has declined to pursue those offers, Luminant stated.
The idled potlines - rows of electrolytic cells used in the production of aluminum - represent about 120,000 metric tons per year of production. Output at the remaining three potlines will continue using contracted long-term power.
“There have been ongoing supply issues at the dedicated power generating unit adjacent to our plant, which has forced us to go into the open market to secure power,” said John Thuestad, Alcoa’s U.S. Primary Metals division president. “Unfortunately local energy costs have escalated significantly over the past few weeks to an unsustainable level and we have no choice but to idle production that is reliant on uncompetitive power.
“This is in no way a reflection on our workforce who has been doing an outstanding job,” said Thuestad. “Luminant’s inability to consistently operate the Sandow Unit 4 for our Rockdale operations over the last few months has resulted in uncompetitive power and forced us to make this decision. We’ll look to work with Luminant to see if we can secure competitive power to ease the impact on our local community and try to get back to normal production.”
“It is a temporary curtailment,” said Hodson. “It’s our plan to start them back up once we get the power situation rectified.” Hodson had no estimate when the potlines would be restarted.
Layoffs, as outlined in the contract with United Steel Workers of America Local 4895, is based on seniority, Hodson said. “Probably no one would have been there more than a couple of years.”
David Edmonds, United Steel Workers of American Local 4895 president, said he and union vice president Troy Hirt were notified of the layoffs at 2 p.m. Thursday. The union is now concerned with keeping as many employees as possible drawing pay and benefits, and is planning negotiations with Alcoa on requests to replace contracted services for jobs that could be performed by USWA members. The union was advised that the layoffs could affect 250 to 300 Alcoa employees, Edmonds said.
“We won’t know until we get to the end of these negotiations with the company on what the final figure would be and how it would impact us,” Edmonds said.
Some employees are so new that they would not qualify for supplemental unemployment benefits if they are laid off, Edmonds said.
Meanwhile, the union will keep track of negotiations between Alcoa and Luminant Power “to stabilize a decent contract on power,” Edmonds said. “It would be a real shame to lose 300 to 600 jobs because you can’t bargain a decent power contract. Hopefully, there will be some common sense bargaining with Luminant and Alcoa, where they can reach some kind of deal where we can stay open. We don’t have a whole lot of control on that one.”
Alcoa notified Rockdale Mayor John Shoemake of the layoffs Thursday afternoon and it was “news we didn’t want to hear,” he said.
“We can expect some negatives out of this, but hopefully things will turn around and things will get back to where it needs to be,” Shoemake said. “I have a lot of confidence in Alcoa and the utility industry.”
Rockdale merchants “are familiar with this type of thing. It will hurt them but they will adjust,” Shoemake said.
