Kaiser to consider restart in face of BPA rates
NEW YORK, June 29 (Reuters) - Kaiser Aluminum & Chemical Corp. (NYSE:KLU - news) said on Friday that it would consider the rates increases announced by Bonneville Power Administration (BPA) to see whether it would be feasible to restart its primary aluminum smelter operations in the Pacific Northwest in October.
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On Friday, BPA told a press conference that it would set wholesale rates 46 percent above rates previously signed by fixed-rate contract customers. The five-year contracts would begin in October, although rates will be re-set every six months as BPA measures its demand against high electricity costs in the U.S. Northwest.
``We are pleased that the rate is below the exorbitant level that BPA had talked about a couple of months ago. It's still well above where we were before with the old contract. So, we are going to take a very close look at it, and we will make a decision in due course about when and if we restart,'' said Kaiser spokesman Scott Lamb.
He added that he does not have a timeline to qualify ``in due course.''
Kaiser has idled all of its 273,000 tonnes of smelting capacity in the region because of sky-high power rates there.
The power that BPA has allotted to Kaiser would allow it to run 110,000 tonnes of capacity in the area.
Most of the other aluminum producers in the region have signed agreements to stop operations for at least six months beginning in October in order to reduce demand load on BPA and therefore lower power rates.
Kaiser is the only producer which was unable to reach agreement with BPA. It said its preference is to operate and that it would consider doing so even at higher power rates.
``I will reiterate what we said before, that we have a very strong preference to operate,'' he added.
Both BPA and Kaiser have said they would be willing to continue negotiating an agreement in which Kaiser would temporarily remain shut to reduce the load on BPA.
``We are always willing to talk to BPA about any of these matters. But, right now our focus would be on taking this rate information and doing a very close analysis about a potential restart,'' said Kaiser's Lamb.