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Economic and dam related articles

For CFAC, Power Cost
Still the Critical Question

by Bill Spence
The Daily Inter Lake, July 2, 2005

Despite an offer of 140 megawatts of federal power, Columbia Falls Aluminum Co. officials say it's too early to tell when or if the plant will increase production.

The Bonneville Power Administration announced Monday that it would supply up to 577 megawatts to a handful of industrial customers beginning late next year, including 140 megawatts for CFAC.

However, that supply isn't guaranteed and the price is still nebulous, according to Haley Beaudry, CFAC's external affairs manager.

"We wish Bonneville could have come to an actual decision," Beaudry said. "They put a lot of effort into working out this agreement, but it doesn't offer any guarantees to the aluminum companies."

The "record of decision" issued by Bonneville also doesn't specify what price would be charged for the electricity, he said. That will be a critical factor in determining whether the 50-year-old plant can increase production.

"We need to see something below $30 per megawatt hour," Beaudry said. "Everyone in the Pacific Northwest needs to see that," including public utilities. (bluefish adds: Future BPA rates are projected to be around $32 to $33 per megawatt hour. This deal for the aluminum companies is representing about $0.7 of this price increasing from the current $30 to $31 level.).

CFAC hasn't operated at full capacity since September 2000, largely because of high power prices.

At the time, the company employed about 540 people, with a $30 million annual payroll.

In January 2001, the plant shut down completely for the first time since coming online in 1955. Partial production resumed in March of 2002.

CFAC has been operating at 20 percent of capacity since March of '03. It currently employs about 150 people.

At full capacity, the plant uses 345 megawatts of electricity. Consequently, a $1 increase in power prices costs the company about $3 million per year.

Beaudry said the long-term implications of Bonneville's offer won't be known until a firm power supply contract can be negotiated. That probably won't be until sometime next spring.

Raw material costs and aluminum prices also will affect production levels.

"For the last several months, aluminum prices have been pretty good," Beaudry said. "But between the raw material costs and power prices, it's still a tough industry."

Bill Spence
For CFAC, Power Cost Still the Critical Question
The Daily Inter Lake July 2, 2005

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