In grim energy triage aluminum must give
Northwest can't afford 1,500 megawatts for smelters
May 13, 01
The Pacific Northwest's power outlook for the next couple years is like one of those dilemmas in which three men are at sea with a raft that only carries two. Either one goes swimming - in this case, temporarily gives up his claim on the region's cheap hydropower - or everyone drowns.
The three "men" here are the Bonneville Power Administration three major customer groups: 135 public utilities, six private utilities and 10 aluminum smelters. Before the present energy crisis hit, Bonneville promised to deliver them a total of 11,000 megawatts through 2006. But the BPA has only 8,000 megawatts of inexpensive power from 19 dams and one nuclear plant.
Now that the cost of electricity has risen tenfold on the spot market, it would be ruinously expensive - for the entire region - to fold 3,000 megawatts of grotesquely overpriced power into that 11,000 megawatt base of cheap power. To do so, Bonneville officials estimate, could force a rate increase of 250 percent or more after Oct. 1. That is 250 percent on top of the increases Northwest utilities have already imposed to cover their own spot market purchases. Such an increase would cause immeasurable pain; it could easily plunge the regional economy into recession and leave tens of thousands jobless.
As part of a plan to avert this disaster, Bonneville has asked the aluminum companies to shut down their smelters for up to two yearsÊ- and has offered to pay their workers for the duration. In other words, the aluminum industry is being asked to give up its seat in the raft for the benefit of the region.
The industry has been fighting this proposal with a massive public relations campaign in the Northwest and a lobbying offensive in Washington, D.C. It argues that it has been unfairly singled out by Bonneville and that being forced to shut down would end aluminum production in the Northwest.
But the implacable reality here is the shortage of affordable electricity in the region. Demand cannot be reduced by 3,000 megawatts - enough power for three cities the size of Seattle -Êwithout drastic measures. The industry proposes to spread the cuts throughout the region, but there is no realistic scenario under which all Northwest power users - hospitals, homes, factories, stores, etc. -Êcould collectively cut consumption so quickly by 25 percent or so in addition to the conservation measures they have already adopted.
In any case, federal law gives the utilities first claim to Bonneville's power; it gives the aluminum smel-ters no claim at all. As for job losses, aluminum production probably employs fewer workers per mega-watt than any other major industry in the region. Suspending aluminum's 1,500 megawatts would cause far less economic pain than inflicting staggering rate increases upon the entire Northwest.
Bonneville's 3,000 megawatt shortfall will soon force a grim triage. Someone has to leave the raft - and the region's entire economy should not be jeopardized on behalf of 10 electricity-hungry smelters.