Bonneville Power Administration negotiated a deal with Columbia Falls Aluminum Co. that will save BPA about 167 Mw of power, shut down the aluminum plant, and keep aluminum workers salaries and benefits paid.
If the aluminum plant had tried to remain operating, its power bill would have been “astronomical,” forcing it to shut down anyway, said Mike Hansen, spokesman for BP.
With BPA saving power, even buying it back at $15 to $20/Mw-hr, an expected rate increase will be less and the effect on the local economy of an aluminum plant shutdown is minimized
BPA only has 8,000 Mw of available resources to serve a demand estimated at 11,000 Mw for this summer and fall. If BPA has to go out on the market to procure the entire deficit, rates will have to increase threefold, said Hansen. This means that retail rates could double for many Northwest area consumers.
“The high cost of wholesale power in the market would most likely have forced the [aluminum] companies to shut down anyway, so helping them to maintain a paid work force until prices come down is the best possible outcome for all concerned,” said Steve Wright, acting administrator of BPA.
Details of this latest deal were released late Monday.
The agreement calls for reductions in power deliveries to Columbia Falls Aluminum of 167 Mw through Sept. 30, 2002 and 100 Mw from Oct. 1, 2002 through Sept. 30, 2003. Affected workers will receive pay and benefits while the potlines of the aluminum plant are idle.
This agreement is in addition to a similar deal struck with Alcoa’s Ferndale plant also located in the Northwest in March. That deal saved BPA 400 Mw of power.
BPA is trying to reduce a rate increase this fall that could be as much as 250% if it has to buy 3,000 Mw of power on the wholesale market to meet demand.
BPA’s goal is to hold the rate increase to 100% by reducing the amount of power it has to buy. Wholesale power prices are expected in the $200/Mw-hr to $300/Mw-hr range.