Aluminum industry will ask task force for assistance
The Aluminum Association plans to meet with Vice President Dick Cheney to discuss BPA's plans
Thursday, April 19, 2001
By TOM DETZEL of The Oregonian staff
WASHINGTON -- The aluminum industry's biggest trade group is asking the Bush administration to protect plants in the Northwest, despite efforts by the Bonneville Power Administration to curtail the industry for up to two years.
Prompted by fears that 40 percent of the U.S. industry could be shut down if the region's aluminum plants close, industry officials say they've arranged a meeting with Vice President Dick Cheney's energy task force to make their plea.
Among their proposals is a request that the BPA enact a two-tier rate system that would guarantee the companies access to a low-cost block of power. Opponents of the proposal say it would shift billions of dollars in costs to other ratepayers.
The industry also wants the BPA to sell power to the plants at night and at other times when demand is low and surplus electricity might be available.
The decision to approach Cheney, who chairs a Cabinet group that is drafting a comprehensive national energy plan, is the latest in a revived effort by aluminum companies to raise public awareness and sympathy for their plight.
Last week, acting BPA Administrator Steve Wright said the only way he could avoid raising wholesale power rates by 250 percent or more next year was for the agency's customers to sharply cut demand for BPA power.
Wright called on utilities that buy from the BPA to cut power use by up to 10 percent and for the region's 10 aluminum companies to curtail operations for up to two years. Together, they have contracts for 1,500 megawatts of power.
"This affects over 10,300 jobs in the four-state region, and accounts for almost 40 percent of our national primary aluminum production, and that's 5 percent of world supply," said Robin King of the Aluminum Association.
King said the trade group, whose members operate 300 plants in 40 states, decided to get involved after Northwest member companies raised the issue.
Cheney spokeswoman Juleanna Glover-Weiss said she couldn't confirm the industry meeting. "Clearly the aluminum industry does have a great deal at stake here, and we would certainly welcome their views," she said.
The BPA is faced with the prospect of huge rate increases next year because it can't generate enough electricity with the federal hydropower system to meet all its contract obligations this fall.
Unless demand is reduced by about 2,500 megawatts, the agency will have to buy power on the open market, where prices are more than 10 to 20 times higher than Bonneville's cost of power from 29 dams and one nuclear plant.
That will force rate increases so large that aluminum companies won't be able to afford to operate at a profit, the agency claims.
The aluminum companies have won sympathy from some Northwest members of Congress, including Rep. George Nethercutt, R-Wash., who is helping arrange the meeting with Cheney's team.
"I believe it's beneficial for the administration to understand the benefits of the aluminum companies to the Northwest," Nethercutt said Wednesday.
But Rep. Peter DeFazio, D-Ore., who with Nethercutt co-chairs the Northwest Energy Caucus in the House, said he had been encouraging Wright to take a hard line.
He was especially critical of the industry's two-tiered rate plan. The proposal would allow BPA customers to buy 75 percent of the power they need at the agency's lowest cost. The other 25 percent would be sold at a far higher rate based on how much power BPA has to buy on the open market.
"Hospitals can't cut back production 25 percent; a school can't cut back production 25 percent," DeFazio said. "Nobody except an industry which can cut back on production can reduce their load by 25 percent."