Alcan has rounded out 2007 power supply contracts for its 180,000 mt/year aluminium smelter in Sebree, Kentucky, and is asking state regulators to approve the new arrangements.

At Alcan's request, Kenergy, an electric cooperative in western Kentucky, entered into a wholesale agreement with Big Rivers Electric, which procured about 120 megawatts of market-based power. Alcan is seeking Kentucky Public Service Commission approval so the smelter can begin receiving the power starting January 7, 2007.

Pam Schneider, Alcan's continuous improvement coordinator at the smelter, told Platts late Monday the Big Rivers-sourced power represents about one-third of the smelter's total electricity requirements. An E.ON US subsidiary currently is supplying the smelter's remaining power needs.

According to Kenergy's Monday filing with the PSC, most of the 120 MW will be supplied through Southern Illinois Power Cooperative (SIPC), Fortis Energy Marketing & Trading and Duke Energy Indiana, formerly PSI Energy. The cost for blocks of firm power ranges from 4.9 cents/kWh to 5.2 cents/kWh. Alcan is expected to pay about 4.4 cents/kWh for a 15-megawatt block of interruptible power.

Big Rivers will acquire, through Marion, Illinois-based SIPC, about 75 MW of power from "certain suppliers" within the Midwest Independent Transmission System Operator, a Carmel, Indiana-based regional transmission organization.

Schneider said Alcan hopes 2007 will be the final year the smelter will have to rely heavily on market-based power. Big Rivers, a Henderson, Kentucky-based generation and transmission co-op that supplies wholesale power to Kenergy, is in the process of "unwinding" a 25-year lease agreement signed in 1998 with LG&E Energy, now E.ON US. Under the deal, LG&E/E.ON US manages Big Rivers' 1,740-megawatt coal-fired generating system in western Kentucky.

Big Rivers hopes by late 2007 to regain operational control of the power plants. When that happens, Big Rivers is expected to resume supplying most, if not all, of the power needed by the Sebree smelter.