Kaiser faces uncertain future as rate hike looms
Chamber officials concerned about impact on local economy
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John Stucke - Staff writer
Kaiser Aluminum Corp. continues to seek cheap federal electricity, even as the Bonneville Power Administration prepares to announce this week what are expected to be searing rate hikes for this fall and winter.
At stake are thousands of local jobs, company managers said during a Spokane Valley Chamber of Commerce committee meeting Monday.
During the past two months, BPA has warned its broad customer base that rates are poised to at least triple unless the aluminum industry decides to curtail energy-intensive smelters and other customers pledge conservation.
The troubling request bubbled over during the chamber meeting, where Kaiser managers and a BPA official from Spokane talked about the issue.
Some Spokane businesses and government leaders have lobbied BPA on Kaiser's behalf.
County Commissioner Kate McCaslin said the loss of smelter jobs and ancillary businesses would devastate the local economy.
The commission has adopted a resolution urging BPA to supply Kaiser with cheap electricity to keep local plants operating.
Such a move, however, would shift huge costs onto others, including 8,100 Spokane Valley customers of Vera Water and Power.
Mike De Vleming, Vera's customer service director, said without aluminum shutdowns and conservation deals, its Valley residential and commercial customers would be stung by higher rates.
Homeowners and landlords would face higher rates, and businesses, from grocery stores and restaurants to offices and retail stores, would be saddled with higher costs that are difficult to pass along.
After a testy exchange with De Vleming, McCaslin said Kaiser must be allowed to operate its smelters.
Anything less "would be devastating," she said.
A deal between BPA and Kaiser, however, remains elusive.
The two sides remain at odds over Kaiser's handling of about $460 million it netted by shutting down last winter to sell its allotment of BPA electricity.
BPA demanded Kaiser pay full wages to its laid-off work force and invest the money in Northwest operations. Without such a commitment, the federal agency considers Kaiser a rogue company in violation of its power contract.
The company resisted BPA's demands, and claims it has done nothing wrong.
The disagreement has led to allegations of contract violations that appear headed for a legal showdown.
After the meeting, McCaslin said the County Commission neither urged Kaiser to pay its workers in full nor spend its windfall profits on regional projects such as new electricity generation or factory improvements.
"We considered that a private business issue," she said.
But the threat of the smelter closing down during the next two years is a public matter, she said.
If the only path to a Kaiser-BPA compromise is the sharing of resale profits, McCaslin added, something should be worked out "if that's what it takes to find middle ground."
Kaiser and BPA have not publicly budged from their positions regarding power sales.