Longview smelter inks deal to sell power back to BPA
Similar agreement is what power agency hopes to work out with Kaiser Aluminum
John Stucke - Staff writer
An aluminum smelter in Longview, Wash., will shut down for 13 months as part of a power-saving agreement with the Bonneville Power Administration.
The deal requires BPA to pay $225 million to McCook Metals Group for the 420 megawatts it needs to make aluminum in Longview, said acting BPA Administrator Steve Wright.
Hailed by government, business and labor, the deal will further the quest to ensure the Northwest has enough power this summer to beat back threats of electricity interruptions, said BPA spokesman Ed Mosey.
"We're going to get through this summer," Mosey said. "We're not going to have brownouts and blackouts, thanks in part to these type of entrepreneurial companies."
McCook bought the Longview smelter from Alcoa for an undisclosed sum, getting the keys on Tuesday.
McCook will use part of its $225 million to pay its 700 employees -- members of the United Steelworkers of America -- full wages during the duration of the plant closure.
Also, the company will invest in two gas-fired combustion turbines to generate its own power and leave the federal system by 2006.
"We consider ourselves in a partnership," said Paul Frank, a McCook spokesman.
The deal works like this:
BPA will pay $225 million for McCook's 420 megawatts from March through September, Mosey said. That's the equivalent of $102 per megawatt hour, which is enough to meet the power needs of about 600 homes for one hour.
He said BPA is delighted with the deal, citing Thursday's spot market price for electricity that ranged between $275-$300 per megawatt hour.
Then, from October through March, when a new BPA contract with McCook begins, BPA won't have to deliver electricity to the Longview smelter.
Starting in April 2002, BPA will again ship power to the smelter. At first it will be 100 megawatts. By June 2002, it will deliver the 280 megawatts called for in McCook's new contract with BPA.
The deal is the sort of arrangement BPA wants to strike with Kaiser Aluminum Corp., which has shut down smelters in Mead and Tacoma. The company has been reselling its federal electricity supply and stands to earn about $500 million.
How to use those proceeds, however, has been at the heart of a disagreement between the federal agency and Kaiser.
The two sides have not reached a deal and negotiations are at a standstill.
The Mead closure has put more than 500 Steelworkers out of a job. They are being paid the equivalent of 28 hours per week, the money coming from a previously negotiated clause in its labor contract with Kaiser.