Only bright spot for Kaiser: power sales
By Nicholas K. Geranios
The Associated Press
SPOKANE - Even as it racks up huge profits selling electricity, Kaiser Aluminum is not optimistic about the future of aluminum production in the Northwest.
The company would have lost money in the first quarter if not for windfall profits from electricity sales. And Kaiser is negotiating to sell some of its Northwest plants, including the Trentwood rolling mill that employs more than 1,000 workers here.
"We're in very active negotiations ... on five separate transactions, any one of which would help the company address debt," Chief Executive Officer Raymond Milchovich told industry financial analysts Tuesday.
Kaiser reported profits of $119.6 million in the first quarter, entirely from resale of its low-cost allotment of federally-produced electricity from the Bonneville Power Administration (BPA). Electricity sales totaled $223 million in the quarter that ended March 31.
The profits increased tenfold from the $11.7 million reported for the same period last year.
But without the power sales, Kaiser would have had a first-quarter loss of $9.1 million, compared with net income of $4.1 million for the year-ago quarter.
Kaiser reported first-quarter sales of $480.3 million, down from $575.7 million a year ago, due mostly to idled production.
The company has shut down its aluminum smelters in Spokane and Tacoma, but it continues to pay the workers because it is making more money selling electricity than aluminum.
Kaiser pays the BPA about $23.50 a megawatt hour - a price expected to increase many times under new contracts, which would ban resale. Power on the current market is selling for about $250 a megawatt hour, and prices may reach $480 by the end of the summer.
The power-sale profits are funding hefty bonuses for Kaiser executives.
According to documents filed this week, Milchovich received a bonus of $978,000 above his $630,000 salary. Other top executives received bonuses ranging from $250,000 to $435,000.