Intalco Needs New BPA Power Deal Soonby Staff
Bellingham Herald, April 27, 2012
The Alcoa Intalco Works aluminum smelter west of Ferndale has less than a month remaining on a Bonneville Power Administration contract that provides it with the cheap electric power it needs.
The 500-employee smelter is one of Whatcom County's largest employers.
BPA spokesman Mike Hansen said the federal power agency and negotiators for Alcoa have been hard at work on the terms of a new agreement, and an announcement could come as soon as next week.
If a long-term power supply contract cannot be put together before the current deal expires May 26, Hansen said BPA and Alcoa may come up with a short-term agreement to keep the smelter up and running until a longer-term deal is in place.
Intalco spokesman Josh Wilund said the company hopes to be able to make an announcement within about two weeks.
"At this point, BPA and Alcoa continue to have frequent discussions on how to proceed," Wilund said. "We are actively engaged in positive conversations with BPA."
Three years ago, BPA and Alcoa were negotiating a power deal in an atmosphere of crisis. Alcoa executives warned that the smelter could shut down if the company did not get the amount of power needed, at a low enough price.
This time around, there has been no indication of that kind of brinksmanship. Wilund declined to comment on whether there was any likelihood that the current round of negotiations on power supply might be unsuccessful.
Electricity is critical to aluminum smelters. The Intalco smelter, which began operating in 1966, is among the last in a region where the industry once flourished, thanks to abundant cheap hydropower from federal dams. But many smelters have shut down in the past 10 years as regional power demands increased and prices rose.
In past years, public power utility officials have argued that federal law requires BPA to reserve its limited supply of cheap power for them and their customers. But BPA executives, backed by Gov. Chris Gregoire and other elected officials, have argued that keeping Alcoa's Intalco smelter and its 500 jobs makes good economic sense, since the direct employment at the smelter is believed to create another 1,500 indirect jobs.
The Intalco smelter uses about 365 megawatts of power. To put that in perspective, Seattle City Light's Ross Dam produces about 450 megawatts.
Pittsburgh-based Alcoa is the world's largest aluminum producer, with 200 locations in 31 countries, according to the company website. The Intalco smelter represents about 6 percent of Alcoa's worldwide aluminum-producing capacity, the website indicates
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