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BPA Finalizes Plan to Help Aluminum Companies by Nicholas K. Geranios, Associated Press The World LInk, June 2, 2006

SPOKANE, Wash. -- Aluminum mills in Washington, Oregon and Montana will get millions of dollars from the Bonneville Power Administration to buy cheap electricity over the next five years, the federal power marketing agency says.

The deal also provides electricity for Port Townsend Paper Co. in Washington state, the BPA said.

Mike Hansen, a BPA spokesman, said Thursday the deal will improve chances that the aluminum smelters, battered by high electricity prices, will operate in the future.

Beginning this fall, BPA will provide $59 million per year to the aluminum companies that will allow them to buy up to a daily average of 560 megawatts of electricity for a year on the open market. The BPA for decades provided electricity directly to the aluminum companies, but now wants to save its power for other customers, such as public utility districts.

The BPA will sell 17 average megawatts of electricity directly to Port Townsend Paper Co.

"This decision gives the aluminum companies and their employees a fighting chance to continue operations, while not unduly burdening other regional consumers," said Steve Wright, BPA administrator in Portland.

The money will go to Alcoa Inc., which operates aluminum mills in Wenatchee and Ferndale, Wash.; Columbia Falls Aluminum Co. in Montana; and Golden Northwest Aluminum Co., which operates mills in The Dalles, and Goldendale, Wash.

Alcoa will receive the value of up to 320 average megawatts; Columbia Falls will receive up to 140 average megawatts; and Golden Northwest will receive up to 100 average megawatts.

Sen. Conrad Burns, R-Mont., a member of the committee which oversees the BPA, said the deal has been in the works for months.

"I am pleased that BPA has offered an acceptable contract to (Columbia Falls), a plant which has purchased power from BPA for over 50 years," Burns said. "This is welcome news for the more than 150 employees..."

Haley Beaudry, a spokesman for the Columbia Falls plant, said the deal gives the smelter a chance to continue operating.

Companies must use the BPA money to make aluminum, not to buy and resell power, Hansen said.

The BPA is a quasi-governmental agency that markets power generated at the region's many federal hydroelectric dams.

Wright said the aluminum companies may not use the $59 million to drive their cost of electricity below the price paid by BPA's customers.

The BPA was not required to help the aluminum companies, but the decision recognized that the companies have been steady customers of BPA for decades, Hansen said.

The companies can begin receiving the money on Oct. 1.

If the aluminum companies take their full allocation of 560 average megawatts of benefits, BPA's public utility customers will see about a $1 per megawatt-hour increase over what their costs would have been absent the benefit, the BPA said. The wholesale rate for utilities is approximately $30 per megawatt-hour.

Related Sites:
BPA Web site: www.bpa.gov/power/regionaldialogue