Northwest Aluminum Industry Slumbers
10 Northwest Aluminum Smelters Shut Down, Leaving 7,500 Workers to Wait for Power-Price Drop
SPOKANE, Wash. June 15 (Associated Press) -- The Northwest's 10 aluminum smelters are all shutting down for economic reasons, even as wholesale electrical prices are dropping.
But prices have to drop much before it becomes practical to fire up power-gobbling potlines and return nearly 7,500 workers to their jobs, experts said Thursday.
"They are all basically closed," said Ed Mosey, a spokesman for the federal Bonneville Power Administration, which markets much of the region's electricity. The final smelter still in operation was Alcoa's Wenatchee Works, but it plans to shut down for about 15 months, beginning July 1.
Some of the smelters closed because they were inefficient, while others
could not make a profit while paying skyrocketing prices for electricity.
Some voluntarily decided to close after making deals that allowed them to
sell their subsidized power from BPA for more money than they could make
selling aluminum.
John Wilson of the Northwest Power Alliance, an industry group, said BPA wants to sacrifice the aluminum industry to deal with the power shortage.
"They said, 'We're going to target you because you are an easy fix to our problem,'" Wilson said.
But Mosey said it is wrong to think that BPA coerced the smelters into closing to free up scarce electricity for other customers.
"They shut down because they could make more money selling power on the open market," Mosey said. Even though electricity prices have recently sunk to between $70 and $80 per megawatt hour, that's still too much to profitably make aluminum, Mosey said.
"They need nothing higher than $30 per megawatt hour," Mosey said. One reason prices have been falling is that the closed aluminum smelters have freed up huge volumes of electricity, Mosey said.
At the Wenatchee Works, the Chelan County Public Utility District reached a deal with Alcoa to resell the smelter's 23 percent share of electricity from the 1,347-megawatt Rocky Reach Dam on the Columbia River.
Profits would be used to compensate laid off aluminum workers and develop new power sources for the 49-year-old smelter and other PUD customers.
Other smelters have made similar deals to keep paying idled workers.
But it's not clear that closed smelters will ever reopen, Wilson said.
"It's hard to keep a work force together if they are down for two or three years," Wilson said.
Workers are losing money because they are paid only their base wages, without the lucrative overtime that regularly augments their pay by 20 to 40 percent, Wilson said.
The Northwest is about 4,000 megawatts short of meeting its power needs, Mosey said. About 2,000 megawatts of new production is scheduled to come on line in a year, with more coming after. He expects many of the smelters to reopen.
"It's a transitional problem," he said.
The other Northwest smelters are in Goldendale, Ferndale, Longview and Vancouver, Wash.; The Dalles and Troutdale, Ore.; and Columbia Falls, Mont.