Power rates may force area smelters to close, but BPA leader says he'll aid workers
Seattle Times
By William McCall
The Associated Press
PORTLAND - Northwest aluminum workers rallied yesterday to ask the Bonneville Power Administration to help save jobs threatened by its recommendation that smelters be shut down for up to two years to save electricity.
But the BPA's acting chief, Steve Wright, told workers he was doing his best to make sure they'll still get full wages and benefits if the aluminum industry decides it's cheaper to close its plants in Oregon and Washington than pay skyrocketing electricity prices.
"We have been with you all the way through this fight," Wright told about 500 workers who had gathered at lunchtime in the plaza at Bonneville headquarters.
Many of the workers were wearing T-shirts that said "Wright is wrong!" for recommending that smelters be shut down.
But Wright told them closure was inevitable if wholesale electricity rates keep increasing. In little more than a year, they have risen tenfold from about $25 to $50 per megawatt-hour to open market rates of nearly $250 to $500 per megawatt-hour.
Bonneville supplies about half the power to the region, most of it generated at 29 hydroelectric dams along the Columbia and Snake rivers and one nuclear plant in Washington state.
But the BPA does not generate enough electricity to meet expected demand of more than 11,000 megawatts this October, when new five-year contracts with aluminum companies take effect. The system can produce up to 8,000 megawatts, which will force Bonneville to buy the remainder on the open market.
If that happens, Wright says, wholesale electricity rates could shoot up 300 percent, damaging the Northwest economy and forcing the 10 remaining smelters in the region to close.
"It is not my goal, it is not the goal of this agency, to put the aluminum industry out of business," Wright told workers.
"But we do have a very difficult problem - we are looking at a wholesale power market that has gone through the roof in terms of prices."
Some workers warned that shutting down the industry for up to two years could kill it in the Northwest.
"They'll just move it someplace where they pay the workers 50 cents an hour," said Charlie Hudson, a 30-year veteran of smelter work from the Bellingham area.
The rally had been organized to give union workers a chance to hear from their representatives, including David Foster, District 11 director of the United Steelworkers of America, which represents many aluminum workers.
But Wright came down from his office to talk to reporters and workers and was invited to address the crowd.
Foster praised Wright for trying to prevent some aluminum companies from reaping windfall profits by selling off electricity they saved by closing smelters before the end of the current five-year contract with Bonneville.
"He deserves the credit for putting over $100 million of windfall profits back into the pockets of steelworkers and machinists," Foster said.
Foster also praised Alcoa Aluminum and Golden Northwest Aluminum for trying to keep smelters operating. But he called Kaiser Aluminum a "villain" for shutting down plants in Spokane and Tacoma to make about $480 million in profits by remarketing its BPA power.
Scott Lamb, Kaiser spokesman at company headquarters in Houston, said the company has set aside more than $57 million to pay laid-off workers and has invested more than $1 billion in the Northwest in the past 25 years.
"We value those assets, we value our employees, we are taking a long-term view of the situation and we want to produce aluminum," Lamb said.
"So I guess I would say it depends on what your definition of a villain is."
Lamb said Bonneville has made the aluminum industry a scapegoat for federal energy policy that has failed to keep up with demand.
"Northwest power prices are the highest in the world for any aluminum smelter, bar none," he said, "so clearly there is an aberration in the market."
Foster said workers would accept closures under five conditions: full pay and benefits; no windfall profits; reinvestment in new plants and renewable energy; closures limited to six months for re-evaluation; and power restoration to smelters once prices drop to affordable levels.