Smelters, Ratepayers in Power Tussle
Two mainstays of the Northwest’s economy --public power and aluminum--are waging a war of words over the Bonneville Power Administration’s attempts to set rates for the electricity it sells.
Both sides have hired public relations companies in their attempts to sway public opinion before the federal power marketing agency sets new electricity rates effective Oct. 1.
Bonneville is expected to announce its new rates this month.
Bonneville, which sells power produced at 29 federal hydroelectric dams and a nuclear plant, has signed contracts for about 11,000 megawatts but has generating capacity for only 8,000 megawatts. A megawatt is enough electricity to energize about 600 homes.
To help make up the 3,000-megawatt shortfall, BPA is pushing a plan to idle the region’s 10 aluminum smelters for two years, until additional generating capacity comes online. In exchange, the BPA proposes paying a portion of aluminum workers’ wages and benefits.
Fearing the potential loss of 7,500 aluminum jobs in the region --and the possibility that some of the plants will not reopen--aluminum companies launched a radio ad campaign accusing the BPA of demonizing their industry to cover its own missteps.
“What the BPA tried to do is demonize one sector of the Northwest economy and at the same time offer people what was at the surface a very easy solution,” said John Wilson, a Seattle public relations executive who is director of the Northwest Power Alliance, financed by the aluminum industry. “Anyone familiar with the Northwest power system recognizes it’s a much more complicated equation that that.
“This notion of shutting down the plants for two years ignores the economic dislocation it will cause,” he said. “It’s a failure of BPA to do its job.”
The aluminum alliance ads that began running on May 10 ask residents to write their congressmen in support of a tiered rate plan that would keep smelters operating.
Since then, two smelters--one in Ferndale, near Bellingham, and the Columbia Falls, Mont., Aluminum Co.--have come to terms with BPA and agreed to shutter their plants.
BPA spokesman Ed Mosey said negotiations are underway with at least two other smelters.
The aluminum industry’s proposal would make 75% of the power it needs from BPA available at less expensive prices. It would have to pay much higher rates to buy the other 25%.
Representatives of public power utilities, schools, other industries and environmental groups lashed back with their own ad campaign.
Public Power Council launched its own series of newspaper advertisements accusing the aluminum industry of seeking favorable rates that will drive up the monthly electricity bills of Northwest ratepayers and customers by as much as 200%.
“While your rates soar, the aluminum industry reaps record profits--reselling your power,” ads for the Portland, Ore.-based council say. “A special deal for the aluminums is a bad deal for us.”
The advertisements refer to Kaiser Aluminum Co.’s $119.6-million first-quarter profit, entirely from resale of its BPA power.
The public power alliance contends aluminum companies could simply curtail operations so they never would have to pay more than the cheaper rate, forcing BPA to pass along twofold rate increases to other users.
The aluminum industry ads are running in Portland, Seattle, Boise and other Northwest markets and claim BPA’s proposal would cost 30,000 jobs in the aluminum plants and dependent businesses.
By comparison, Bonneville’s public utility customers have said a 200% rate boost could force as many as 60,000 layoffs in the region.
The public power alliance released a letter asking the Northwest congressional delegation to oppose the tiered electricity rate.
So far, six of the eight Northwest U.S. senators have signed a letter to acting BPA Administrator Steve Wright in favor of temporarily shutting down the smelters.
The 1980 Northwest Power Act gives public and investor-owned utilities and rural electric cooperatives priority for BPA power over industrial users.
The Northwest Power Alliance ads contend BPA promised its customers more power than it could deliver, forcing it to buy electricity on the expensive wholesale market and pursue a record rate hike.
Mosey, the BPA spokesman, called the aluminum industry ads “historical revisionism.”
He said Bonneville is negotiating to pay wages and benefits of laid-off aluminum workers in an effort to keep the industry afloat while saving 1,500 megawatts that the agency won’t have to buy on the expensive wholesale market.
Wilson contends the aluminum industry will always need the Northwest’s cheap federal hydropower to remain competitive. The BPA, meanwhile, wants to wean the smelters from cheap federal hydropower in five years.
Aluminum industry proponents contend the smelters provide a kind of “circuit breaker” in the region, able to shut down quickly when electricity supplies are low, avoiding the rolling blackouts that have afflicted California.
The industry helped BPA avoid bankruptcy when it agreed to sign power contracts in 1995, rather than bolt for cheaper offerings from independent energy marketers, Wilson said.
“The reason BPA did not go into financial default was because of the aluminum industry. We agreed to pay above market rates for a slice of power that allowed the BPA to remain financially stable,” he said. “Without the aluminum industry, there is no big player to step up and help BPA.”
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On the Net:
NWPPC aluminum study: https://www.bpa.gov/power/pl/
aluminumstudy/aluminum
study.shtml
Bonneville Power Administration: https://www.bpa.gov/index
main.shtml
Aluminum industry: https://www.aluminum.org
Public Power Council: https://www.NoSpecialDeals.com
