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Energy Deal Sparks Strong Objections

by Erik Olson
The Daily News, November 7, 2008

A proposed power deal to help keep two Northwest aluminum smelters operating would undercut Cowlitz County employers and couldn't come at a worse time, local economic leaders said Thursday.

The Bonneville Power Administration is proposing deeply discounted rates for Alcoa's smelter in Ferndale, Wash., which employs 480 workers, and the Columbia Falls Aluminum Co. in Montana. Discounts could be as high as 40 percent and span a 17-year period.

BPA, which has fixed costs, would raise its rates for other power customers, such as the Cowlitz PUD. The PUD buys about 90 percent of its power from the BPA, and the utility would have to pass the rate hikes on to customers, which include industrials such as Weyerhaeuser Co., Longview Fibre Paper & Packaging and Steelscape.

Weyerhaeuser estimates the deal with both smelters could cost it up to $60 million over 17 years.

The proposal doesn't sound fair to Cowlitz County at a time of high unemployment and struggles in the pulp and paper industries, said Ted Sprague, president of the Cowlitz Economic Development Council.

"Subsidizing energy rates for certain industries could have a very negative effect on the others," Sprague said.

The BPA, the wholesale marketer of power from the region's hydroelectric dams, did not take similar steps to protect the 900 jobs lost at the Reynolds Metals Co. aluminum plant in Longview, Sprague said. The plant shut down in 2001 after owner Michael Lynch made millions selling power back to BPA, then backed off on a promise to reopen the smelter.

"Where was this when our plant was being shut down? I don't understand the thinking behind it," Sprague said.

The smelters' current power contracts expire in 2011, and the new agreement would take effect the next year.

Cowlitz PUD estimates it would see a 3 percent increase in its BPA power costs under the proposed Alcoa and Columbia Falls agreements, PUD spokesman Dave Andrew said Thursday. It's too early to say exactly what the increase will be and how it would affect PUD customers, he said.

The utility plans to write a letter in opposition to the agreements, he said.

"We're troubled by the prospect. We think that the cost to our customers is more of a detriment than a benefit with the jobs in the (Ferndale) area," Andrew said.

Unlike most other industrial customers, aluminum smelters buy power directly from the BPA. So much power goes into smelting aluminum that these contracts have far-reaching effects across the region.

The BPA is aiming for an agreement that has "no significant impact" on other Northwest industrial customers, said Katie Pruder, spokeswoman for the Portland-based agency.

"We're trying to balance all the needs," she said.

Monday is the deadline for public comment to the BPA on the proposal. If the agency chooses to go forward, the public still would have a chance to comment on a draft power agreement with Alcoa, Pruder said.

The two aluminum smelters are among the BPA's oldest customers. The Alcoa plant opened in 1966, and the Montana smelter opened 1955.

Pittsburgh-based Alcoa hopes to have a new agreement by the January, the company stated in an Oct. 10 news release.

The Ferndale facility would operate at 50 percent capacity under the new agreement, and Alcoa would be required to maintain the 480 jobs and invest $160 million in capital improvements to the plant, company spokesman Kevin Lowery said.

"It lays the groundwork for helping us try to secure the future of this facility," Lowery said.

" Wow! What a kick in the ****. As a former Reynolds employee I Don't recall BPA coming to our rescue, But being the reson for our demise, Now I have to possibly pay for them to finally do something for our reigon.BPA you can KMA. "

" Gee rob from the poor to benefit the rich. "

" Protecting jobs may be a good thing, but doing it at the expense of relatively few is not. If this is a company bailout then call it that and spread the cost beyond the power customers. The alternative for the aluminum companies is either raise the price of their product or decrease their profit margin. I'd be interested in knowing who is buying the aluminum because they may be the real beneficiaries of this power deal. "

" Do we, as a nation, want all of our heavy industry moved overseas? When we need basic constuction materials (copper, aluminum, steel), do we want to buy them from Russia? This BPA agrrement sounds reasonable to me (of course, without knowing much about it). The big picture is more important than always reacting to 'personal impact' (higher utility rates). "

" I wonder how much the aluminum companies paid into the Messiahs coffers??? Its gonna be a hoot!!!! "

" Sorry, Thought. You should have 'thought' about it. Corporation contribute overwhelmingly to Repubs. "

Erik Olson
Energy Deal Sparks Strong Objections
The Daily News, November 7, 2008

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