Reporter's Notebook: BPA-aluminum industry fight will affect all ratepayers
May 05, 01
Al Gibbs; News Tribune Columnist
Like a gang of kids arguing over whose father is tougher, the Bonneville Power Administration and some Northwest aluminum producers are fighting over how much electricity the companies will get and at what price.
The stakes, however, are a lot higher than neighborhood honor.
The aluminum companies, claiming economic hardship, want as much cheap power as they can buy.
Bonneville, which contends it is trying to be fair to all of its customers, argues that the aluminum industry is endangering those customers, mostly local utilities.
By not telling the federal power marketing agency how much electricity they will use beginning in October, aluminum companies could force Bonneville to buy expensive power it may not end up needing, BPA claims.
"There's a game of chicken going on," Bonneville spokesman Ed Mosey said.
"We're a pain in the neck to them," Kaiser Aluminum spokesman Pete Forsyth said.
Bonneville has published an issue paper, obtained by The News Tribune, that claims the aluminum industry could cost Northwest ratepayers as much as $1.5 billion if plants that are now mostly shut down are restarted
after Oct. 1, when new BPA rates go into effect.
That would cause Bonneville to impose as much as a 250 percent surcharge, sending BPA's current rates of about $25 a megawatt hour to nearly $70.
The issue paper also contends such a move by the industry would increase the danger of winter blackouts.
Aluminum companies are easy targets for public relations campaigns these days. They consume large amounts of electricity - as much as 3,000 megawatts an hour under full operation - but employ relatively few people, fewer than 10,000 in the entire four-state region.
They're especially vulnerable now because many have shut down their plants and have made huge profits selling the electricity Bonneville provides at $22.50 a megawatt into the spot market, where prices lately have averaged $200 to $300.
Kaiser reported earning $228 million that way in the first three months of this year.
From a public relations standpoint, "now is the best time to get rid of the aluminum industry," Forsyth said, implicitly accusing BPA of wanting to do just that.
But Bonneville itself is hardly blameless.
It agreed to provide some 3,000 megawatts of power more than it actually had in a so-called subscription process designed to allocate its resources among utilities and industries last year. The power was cheap then. It's very expensive now.
And Bonneville, Kaiser officials point out, didn't tell the truth in its issue paper when it claimed that Kaiser alone among aluminum companies in the region hasn't provided any financial help to laid-off workers.
Not so, said Kaiser corporate spokesman Scott Lamb.
"Absolutely untrue," he said. "That's absolutely, utterly false."
Kaiser is supplementing laid-off workers' unemployment compensation checks to bring them to 70 percent of their normal pay. Not all Kaiser workers are eligible, however.
The aluminum companies, for their part, have come up with a plan for Bonneville to split up its power pie.
Allocate the cheap power from the region's hydroelectric dams according to each customer's draw from Bonneville over the most recent years, the companies propose. Sell it at something close to today's inexpensive Bonneville price.
If a customer wanted more than that, it would pay the far higher market price.
The plan, of course, benefits the aluminum industry but would be a disaster for utilities like Tacoma Power and Seattle City Light, which will dramatically increase their Bonneville purchases after Oct. 1.
"The voters of the region would take it in the shorts while the aluminum companies would laugh all the way to the bank," said Jerry Leone, the outspoken director of the Public Power Council in Portland.
It should be noted that the region's various energy factions - public utilities such as Tacoma and Seattle, investor-owned providers such as Puget Sound Energy, the direct-service industries such as aluminum companies and Bonneville - have been fighting among themselves for decades.
The high energy prices that became the norm just about a year ago have only made the battles more intense because the financial stakes are so much greater.
The Bonneville-Kaiser set-to is just the latest tiff, and it isn't making many friends for either side.
"We're both in a bad position," Bonneville's Mosey conceded.