BPA: Now it's up to Alcoa:
Deal with BPA done; talks with PUD under way over Wenatchee Works future
By Laurie Smith
World staff writer
WENATCHEE -- A deal struck two weeks ago by Alcoa and the Bonneville Power Administration to curtail smelter operations may play a significant role in deciding the future of the Wenatchee Works.
But Alcoa still hasn't let on what the local impact of the deal, if any, will be. The agreement calls for Bonneville to provide full pay and benefits to as many as 1,200 aluminum workers who would be furloughed during a two-year shutdown.
Acting BPA Administrator Steve Wright, in Wenatchee on Wednesday, said he didn't know how the deal would play out and was "sort of curious" about that himself.
A BPA news release announcing the deal on May 16 said the agreement applied to Alcoa's now idled Ferndale plant, which employs about 900 people. The release did not mention the Wenatchee Works and no one has said where the other 300 workers to be compensated are employed. Alcoa's only other aluminum plant in the Northwest is the Wenatchee Works.
BPA is continuing to provide power for Alcoa's magnesium plant at Addy, about 40 miles north of Spokane, which employs 325 workers.
Wright offered his views of the agreement while meeting with the Wenatchee World editorial staff.
The agreement is "not plant specific," he said, which means it could affect either of Alcoa's two Northwest aluminum smelters. How it's implemented is up to Alcoa, which has shut down the Ferndale plant for up to two years.
Alcoa officials referred questions to Wenatchee plant spokesman Jim Baxter, couldn't be reached for comment Wednesday or today.
Earlier this week, Baxter said there is a chance that the smelter, which took two of four potlines out of production in January, will further curtail operations to a single line after its purchasing contract for BPA power expires on July 1.
Shutdowns because of the energy crisis at nine other Northwest plants leaves Wenatchee with the last full potline still making aluminum in the region. It remains in production only because of low-cost power supplied by the Chelan County PUD, said Jack Speer, Alcoa's Northwest power manager.
What will happen after July 1 is likely to depend on negotiations now taking place between Alcoa and the PUD.
Shutting down the 49-year-old Wenatchee Works so Alcoa could continue to resell electricity "is one of the ideas that's on the table," PUD General Manager Roger Braden said. But the PUD wouldn't go along with that unless the company's profits from power sales were used to support local employment, he said.
"If they wanted to do a shutdown -- and that is being discussed -- it'd have to be not just to make money," Braden said. "Our goal is to have them in operation and to have jobs. If they come up with a proposal that'll do that, we're open to it."
Since October, Alcoa has been reselling Chelan County power on the open market. For the seven months ending April 30, the company netted $134 million on the power sales. The PUD consented to the sales under a short-term agreement that expires June 30.
Because Alcoa was able to divert BPA power to Wenatchee from a former Reynolds Metals Co. plant that it acquired last year in Troutdale, Alcoa hasn't needed Chelan County power to run the one-and-a-half to two potlines still in production. After July 1, when the BPA power is no longer available, it would need the PUD power to continue running the lines.
Under its long-term purchasing contract with the PUD, Alcoa is obligated to pay the generating cost for 23 percent of the output from Rocky Reach Dam through 2011.
Because of near-record low water conditions this spring, Alcoa's share of PUD power isn't always enough to run two potlines, Speer said.
In early March, the company said it planned to cut 150 to 160 of the plant's 641 jobs by the end of June. Baxter said Tuesday that 58 senior employees have opted to take an early-retirement package. About 40 junior employees were sent home with pay three months ago, and Baxter said he didn't know whether those workers will be laid off.
Leaders of the Wenatchee Aluminum Trades Council are in Nashville this week for union contract discussions and were unavailable for comment.
Alcoa and PUD officials, meanwhile, were scheduled to meet today and Friday.