Aluminum companies continue to blast BPA
The Northwest Power Alliance says a BPA plan to idle smelters for two years is designed to cover up the agency's own mistakes
Friday, May 11, 2001
By TOM DETZEL of The Oregonian staff
WASHINGTON -- Northwest aluminum companies launched a new attack Thursday on the Bonneville Power Administration, saying the agency's promises are at the root of huge rate increases coming this fall.
The charge from the industry-financed Northwest Power Alliance comes in a new series of radio ads that accuse the BPA of trying to "cover up for its mistakes" by putting 7,000 aluminum workers out of jobs for two years.
The ads target BPA's controversial strategy for limiting rate increases, which it says would be more than 100 percent otherwise. BPA has asked all its utility customers to cut demand, is paying farmers not to irrigate fields and wants the aluminum companies to stay off-line for two years until wholesale prices decline.
In particular, the ads charge that the federal power marketing agency goofed by promising more power than it could deliver to its customers, forcing it to buy electricity in the high-priced wholesale market and pursue a record rate hike.
"Now they're looking for a way out of this mess, and want to sacrifice the jobs of men and women who work in the aluminum industry," one ad says. "BPA wants to eliminate our jobs to cover up for its mistakes."
A Bonneville spokesman dismissed the claim as "historical revisionism," and noted that the agency is in negotiations with four of the companies about how much they should be paid to temporarily give up rights to BPA power.
The payments, likely to be in the "hundreds of millions" of dollars, would be used to pay worker wages and benefits, Ed Mosey, a BPA spokesman, said.
As the companies' broadened their public relations campaign in the Northwest, a congressional subcommittee on Thursday passed a bill that would allow them to continue making huge profits by reselling BPA power they don't use.
Some of the companies have rights to resell BPA power under their current contracts and are doing so in transactions expected to bring them $1.5 billion this year even though they aren't producing aluminum. But the resale rights expire in October, when new five-year contracts begin.
What to do about those contracts, covering 1,500 megawatts of power, is at the heart of BPA's rate increase as well as its dispute with the companies.
Bonneville signed contracts last year for 11,000 megawatts of power but can only provide 8,000 from federal dams and one nuclear plant in the region. Buying the 3,000 megawatts difference on the open market could force it to raise rates for the power it sells Northwest utilities by 250 to 300 percent next year.
That's unfair to the region's aluminum workers, said Richard Milne, a spokesman for the alliance with Pacific Public Affairs in Seattle. The group includes labor and business backers of the industry but is primarily financed by three aluminum companies: Alcoa, Kaiser and Golden Northwest, Milne said.
BPA's contracts were finalized last fall as the big run-up in wholesale prices caused by California's power crisis began to take hold, making Bonneville's low-cost hydropower a bargain.
But Milne said the agency should have made sure it could cover the demand even as customers flocked to BPA.
"As soon as they got beyond 8,000 megawatts, they should have been sure they had the power to meet those loads," he said. "Now they're turning around and saying to the (aluminum companies) . . . 'You're the problem -- get out.' "
But Mosey countered that Bonneville, which provides about half the region's electricity, was obligated under the law to first serve public utilities and the residential customers of private utilities.
The agency isn't required by law to serve the aluminum companies, he said, but ended up allocating more power to them under political pressure from the companies and unions representing their workers.
"The reason we oversold is because we sold them power," Mosey said, adding that BPA's request for a two-year curtailment is based on industry claims that plants couldn't make a profit if Bonneville doubles or triples its rates.
The industry ads are running in Portland, Seattle, Boise and other Northwest markets and claim BPA's proposal would cost 30,000 jobs in the aluminum plants and dependent businesses.
By comparison, Bonneville's public utility customers have said a 200 percent rate boost could force 55,000 layoffs among employers they serve.
Mosey said BPA's negotiations with the aluminum companies are "making progress. I think we're getting close to agreement with a few of them."
As to the charge that Bonneville is trying to sacrifice jobs, he said: "Why would we be offering to pay full pay and benefits if we wanted to do that?"