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Economic and dam related articles

Intalco Smelter Near Ferndale Gets
Short-term Power Contract Extension

by John Stark
The News Tribune, May 24, 2012

Working aluminum ingots at Alcoa Intalco Works. The Bonneville Power Administration has given the Alcoa Intalco Works aluminum smelter west of Ferndale a 35-day extension on its electricity supply contract, just three days before its existing contract was scheduled to expire.

BPA spokesman Mike Hansen said the extension, announced Wednesday, May 23, means business as usual through the end of June while Alcoa and BPA negotiators continue their efforts to put together a longer-term agreement.

Hansen said the longer-term deal is expected to provide 300 average megawatts of BPA power - a slight reduction from the 320 average megawatts in the current deal that had been scheduled to expire May 26, 2012.

The new deal could have a term of as long as 10 years, Hansen said. He noted that any new long-term deal would have to be presented to other BPA customers for comment before it could get final federal approval.

If a deal of that duration could be struck, it would provide more economic security than the smelter's 620 employees have been accustomed to in recent years. The smelter is one of the county's largest employers.

Three years ago, when the current power deal was being negotiated, Alcoa executives were warning that they might be forced to shut the smelter down if they could not get power at a suitable price. This time, no such crisis atmosphere is evident.

Intalco spokesman Josh Wilund said the talks appear to be going well.

"We remain optimistic, and talks with BPA will continue to focus on a long-term contract," Wilund said.

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 hydropower from federal dams. But many smelters 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 lower-cost hydropower 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 operating makes good economic sense, since the direct employment at the smelter is believed to create another 1,500 indirect jobs.

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.

John Stark
Intalco Smelter Near Ferndale Gets Short-term Power Contract Extension
The News Tribune, May 24, 2012

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