Senators renew call for Kaiser audit
Cantwell, Murray want to know where electricity profits went
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Jim Camden - Staff writer
Washington's two senators have repeated their call for a formal federal review of the way Kaiser Aluminum Corp. spent money earned by shutting down its Mead smelter and reselling federal power during last year's energy crisis.
Sens. Maria Cantwell and Patty Murray also asked the Department of Energy how it decided Kaiser could spend some of those profits on rebuilding a Louisiana facility.
"We would appreciate an explanation of the legal analysis underlying this conclusion," Cantwell and Murray wrote Tuesday in a letter to Deputy Energy Secretary Francis Blake.
The two senators asked Blake in December for an audit of the money Kaiser made reselling the power.
Blake recently replied that the Bonneville Power Administration plans to review the way Kaiser used the money to make sure it was "consistent with the contract."
A spokesman for the BPA said Tuesday, however, contract terms are fairly vague about how Kaiser could use its windfall from power sales.
"We do intend to review their use of funds," said Ed Mosey, BPA spokesman. The money could be used to "shore up, secure and improve their domestic operations" and would not be restricted to being spent in the Northwest, he said.
At issue is some $465 million Kaiser received by reselling BPA power in the months leading up to last Oct. 1, when the company's long-term energy contract expired. Five years earlier, Kaiser had signed a contract that allowed it to curtail operations at its power-hungry smelters in Mead and Tacoma and resell the electricity to other users.
In 1996, when power prices were low and supplies were plentiful, Kaiser was taking a risk by agreeing to that contract provision, Mosey said. In 2000 and 2001, however, power supplies were scarce and prices skyrocketed, and Kaiser could make more money reselling electricity than making aluminum at its Northwest smelters.
The company closed the smelters, paying workers 70 percent of standard wages, for periods tied to their years of service with the company.
The BPA initially wanted Kaiser to agree to spend its energy resale revenues in the Northwest. Kaiser argued that keeping the company viable overall kept the Northwest smelters open.
Some of the money was used to rebuild an alumina refinery in Gramercy, La., that was heavily damaged by an explosion in 1999. Rebuilding the refinery cost Kaiser some $278 million.
The BPA asked Kaiser "a couple of weeks ago" for documentation on how the resale profits were spent, Mosey said. The review may be delayed by Kaiser's filing for Chapter 11 bankruptcy, and there is no deadline for it to be finished.
Having it complete in 60 days -- as Cantwell and Murray ask in their latest letter -- is "doable," he said.
The senators want full details to be made public on how Kaiser spent its windfall profits.
"What we are asking for is a full accounting of whether Kaiser delivered on their obligations," Cantwell said Tuesday.