The New York State Public Service Commission on Sept. 19 issued an order approving the power transmission line aspects of a planned split of aluminum maker Alcoa Inc. into two separate companies.
In a petition filed on July 12, Alcoa Inc., Alcoa Power Generating Inc. (APGI), and Alcoa Corp. requested issuance of a declaratory ruling that a proposed intra-corporate transfer and reorganization that would include the conveyance of ownership interests in APGI will not be reviewed further under Public Service Law (PSL) §70. APGI is subject to lightened regulation by the commission with respect to its ownership and operation of electric transmission facilities located in New York.
Said the Sept. 19 approval: “As discussed below, the Commission grants the relief sought in the Petition.”
Alcoa Inc. is an international company that deals in metals technology, engineering, and manufacturing. It directly or indirectly, through APGI, owns generating assets that supply power for Alcoa operations throughout the United States. APGI’s electric generation assets produce electricity for consumption by Alcoa, and its electric transmission facilities were constructed to connect Alcoa’s industrial plants to generation owned by APGI or other electric utilities.
The Long Sault Division is the only one of five APGI power supply divisions that is located within New York. The Long Sault Division owns electric transmission facilities needed to connect the Alcoa smelting and fabricating facility near Massena, New York, with transmission systems owned by the New York Power Authority (NYPA), National Grid US and Cedar Rapids Transmission Co. (CRT).
The Long Sault Division owns two 115-kV transmission circuits (the Cedars Lines) that connect at the Canadian border with transmission facilities owned by CRT, which is a former Alcoa subsidiary. The Cedars Lines connect CRT to National Grid and the capacity is committed to CRT through a long-term contract that expires in 2035. The Long Sault Division also owns 85% of three 115-kV transmission lines (the MAL Lines) that connect NYPA’s St. Lawrence-FDR hydroelectric project to the Massena Facility.
Alcoa Corp. is a new entity that was created for purposes of a global Alcoa reorganization pursuant to which the company will split into two entities. Following the corporate reorganization, Alcoa Corp. will be a publicly-traded company with assets that generated more than $11 billion in revenue in 2015. This corporate reorganization includes the transfer of APGI ownership interests from Alcoa Inc. to Alcoa Corp.
Following the proposed transaction, Alcoa Inc. will retain its present “Value-Add business” and will be renamed “Arconic.” Alcoa Corp. will hold assets that include APGI as well as five business units that currently comprise Alcoa’s Global Primary Products – Bauxite, Alumina, Aluminum, Casting, and Energy.
The electric service that APGI currently provides to the Massena Facility will continue uninterrupted after the proposed transaction, subject to a FERC-regulated Open Access Transmission Tariff (OATT). APGI will additionally continue providing the Massena Electric Department (located in the Town of Massena, New York) with transmission delivery service over the MAL Lines. The rate for this service is specified in a long-term contract that is regulated by FERC and will not change after the transaction is completed.
Incidentally, FERC on Aug. 24 approved this corporate split based on all of the APGI divisions, including the one in New York. The reorganization and eventual separation of these companies is expected to be completed in the second half of 2016.