Alcoa to suspend Wenatchee operations
John Stucke - Staff writer
Alcoa Inc. has agreed to idle its Wenatchee aluminum smelter for 15 months as part of a long-term power supply contract with the Chelan Public Utility District.
The 500-person work force will be trimmed to 400 using 80 layoffs and an early retirement package, said Sharon Kanareff, Alcoa's Northwest government affairs manager.
During the shutdown, Alcoa will return electricity to Chelan, which plans to sell it on the open market. Chelan wants to use the profits to invest in a new power plant or lock in a long-term outside supply of affordable power, Kanareff said.
Also, the power sales will be used to pay Alcoa for not operating the plant.
The deal was heralded by both Alcoa and Chelan as a stability measure. Alcoa receives a reliable power source for the next 35 years and the financial flexibility to sell its Chelan power allocation into the market as long as it maintains job levels.
Chelan general manager Roger Braden said the deal preserves regional jobs and gives Chelan an ability to find more energy resources.
"The arrangement with Alcoa allows us to acquire additional power supplies to serve Chelan County loads in the future and maintain Chelan County employment at no cost to the Chelan PUD or its other ratepayers," Braden said.
Chelan can generate about 1,900 megawatts of electricity when its three hydropower projects -- the Rock Island, Rocky Reach and Lake Chelan dams -- are running at full capacity.
Its biggest customer is Puget Sound Energy. It also sells to PacifiCorp, Avista Corp. and Portland General Electric.
Alcoa is a large customer, too, and holds a 23 percent ownership stake in the Rocky Reach Dam.
It receives enough power from Chelan to operate about one and one-half potlines in Wenatchee. The aluminum maker also uses electricity from the Bonneville Power Administration and other private sources.
The smelter has five potlines, but hasn't run them all since the early 1990s, Kanareff said. Instead, the smelter has been running at less than half strength.
Separately, Alcoa reached a deal with BPA in mid-May to idle its Intalco smelter in Ferndale, Wash., for up to two years. The agreement allowed Alcoa to resell most of its allocation of federal megawatts through September and keep most of the profits.