Bonneville sets signing date for new power contracts

NEW YORK, Oct 16 (Reuters) - Wholesale energy supplier Bonneville Power Administration (BPA) said Monday it will sign new five-year power contracts with all its customers by October 30.

The contracts, between Portland, Oregon-based BPA and the customers it serves in the Western United States, including primary aluminum smelters in Washington and Oregon, will be in effect from October 2001 through September 2006.

``We are bound and determined to complete this process by the end of the month,'' BPA spokesman Ed Mosey told Reuters. ``All contracts will be signed by then.''

Customers could potentially sign contracts for as long as ten years ``if they desire to accept whatever rate consequences should follow after 2006,'' he added.

Mosey said BPA will supply about 1,500 megawatts out of an estimated 10,000 megawatts to aluminum producers at a rate of roughly $25 to $26 a megawatt hour -- roughly half the national average rate.

Aluminum operations in the area require about 3,000 megawatts of power to meet their needs, said Mosey.

``Producers are very unhappy about the fact they are only getting half their smelter load, but we've had to allocate (supply) and when it is gone, it's gone,'' he said.

Since June, aluminum smelters run by Golden Northwest Aluminum, Vanalco Inc., Kaiser Aluminum Corp. (NYSE:KLU - news), Alcoa Inc. (NYSE:AA - news) and Ormet Corp. have curtailed output due to escalating electricity costs.

A cost recovery adjustment clause in the new contracts provides for a surcharge if the price of electricity BPA must purchase on the market exceeds its projections.

Monday, spot electricity in the Pacific Northwest was trading between $106 to $110 per megawatt hour.

BPA has had to allocate specific megawatt blocks to each customer class: Public agencies including municipalities, cooperatives and public utilities, getting roughly 6,000 megawatts, residential customers, including some utilities, that are allotted 1,900 megawatts and direct service industries getting 1,500 megawatts.

BPA aims to purchase ``several thousand'' megawatts of its total supply from the electricity market to meet customers' needs, Mosey said.