Alcoa’s aluminum smelter shutdown is expected to reduce the taxable value of its Rockdale Operations by 85 percent, the Milam County Appraisal District reported Wednesday. But with added revenue from Luminant’s Sandow Steam Electric Station Unit 5 to be completed next summer, Milam County and the Rockdale school district may escape a major loss of dollars on their respective 2009 tax rolls.

Alcoa announced Tuesday it would immediately begin the shutdown of the three remaining potlines at its Rockdale smelter, and would lay off about 660 employees during the next three months. The curtailment affects employees in every department, spokesman Jim Hodson said. The company cited an noncompetitive power supply and overall market conditions as the reasons for the curtailment. Alcoa is suing Luminant over power supply issues. Alcoa’s Rockdale Operations will continue manufacturing aluminum powder and its carbon plant will remain open, with about 140 employees remaining on the job.

Dr. Frank Summers, Milam County judge, said he is investigating the impact the smelter shutdown would have on the county’s finances, which not only is related to the loss of tax revenue, but also of sales tax and properties owned by laid-off Alcoa employees who may move away. Summers said he is gathering information from Alcoa on the exact number of employees who will lose their jobs, and the impact on taxable values resulting from the shutdown.

Chief Appraiser Patricia J. Moraw said the 2008 tax roll has been certified and Alcoa’s taxable value of $120 million will be applied for taxes collected by Milam County and the Rockdale school district in 2009.

“For the 2009 appraised value, it appears that we will probably lose the majority of value at Alcoa,” Mrs. Moraw said. “There could be some additional losses because of contractors moving out.”

Possibly, the two taxing entities that depend heavily on tax revenue from Alcoa will be able to avoid a loss in tax revenue because as Alcoa’s values ebb, Luminant’s Sandow 5 power plant is nearing completion and is to be operational by August 2009.

“I hope it’s a wash,” Mrs. Moraw said. “That’s the best I can see happening, that the value coming on the roll for Sandow 5 would offset the loss of Alcoa value.”

Sandow 4 was valued on the 2008 tax roll at $250.4 million. The Sandow 5 power plant at the completion phase it had reached Jan. 1 totaled $130.3 million, the appraisal district reported. The Perryman Group reported in April 2006 the potential impact of Luminant’s capital investments in Milam County for Sandow 5 is $1.5 billion in expenditures and $239 million in retail sales during construction. Luminant declined to provide an estimated value of the Sandow 5 plant upon completion, although the company has reported it would spend $1 billion upgrading the Sandow 4 power plant, and building Sandow 5.

Rockdale Superintendent Walter Pond said school officials are collecting information on Alcoa’s values and the impact the smelter shutdown would have on the district. “Even though we are going to lose some value with Alcoa going out, we think we will still be OK with our interest and sinking fund because Luminant is coming in with Sandow 5 and it will be worth hundreds of millions of dollars.”

School administrators can only guess how the curtailment of Milam County’s largest industry will affect enrollment, but Pond does not expect “a mass exit of students” because Alcoa employees with two years’ tenure qualify for unemployment benefits and might decide to stay in Rockdale. “It will be early spring before we are going to know,” Pond said.

The $30 million bond-funded school construction project will continue because they still need new facilities even if there are fewer students, he said. “We were not building because we were gaining new students; it was because our facilities were old and we needed new schools.”

Alcoa built its smelter southwest of Rockdale in 1952, marking the first aluminum smelting plant to use lignite coal as a fuel for generating electrical power, a company report stated. At six potlines, the plant was capable of producing 1.67 million pounds of aluminum per day, making it the largest primary aluminum smelting operation in the U.S.

Rockdale Operations encompasses 35,000 acres for the integrated occupations of mining, power generating and aluminum smelting. The plant produces sheet ingots, weighing 40,000 pounds each, which are shipped to fabricating plants to be formed into plate sheet and foil; it makes primary ingots or “pig” sold for remelting; and makes aluminum powder used for a variety of chemical and commercial applications, including cosmetics, paint and as a component in solid rocket propellants for NASA. The atomizer was built in 1966 and is the sole supplier of aluminum powder to the Space Shuttle program. The atomizer produces more than 200 grades of high quality atomized aluminum powder.

At six potlines, the company employed about 1,000 people, with an annual payroll of $100 million. During this time, the plant paid more than $3 million in local property taxes.

jwilliams@temple-telegram.com