BPA, Kaiser getting closer to power deal
Agency's spokesman says talks have been productive
John Stucke - Staff writer
Kaiser Aluminum Corp. and the Bonneville Power Administration are engaged in serious negotiations that may settle a nine-month dispute surrounding electricity contracts and the idled Mead smelter.
"I can tell you that we are closer to an agreement now than we have been through this entire process," said Bonneville spokesman Mike Hansen. "There are some serious discussions that could develop later this week."
An agreement could provide some certainty regarding the future of Kaiser's Mead smelter, which is closed at least through October. The last time it produced metal was last December.
The federal agency has been at odds with Kaiser since last year, when the company shut down aluminum smelters to sell its massive federal load of electricity into a starved market.
As Kaiser netted more than $460 million from the sales, Bonneville demanded a role in how the money would be spent. Other aluminum companies that sold Bonneville electricity agreed to several Bonneville wishes, including paying laid off workers full wages; investing some of the money for future power supplies; keeping smelters idled up to two years, and returning some of the windfall to Bonneville to ease regional rate increases.
Kaiser declined, and has steadfastly maintained that it has complied with the contract language surrounding the resale of federal power and use of proceeds.
The company is paying laid-off Steelworkers about 70 percent of their wages -- the amount called for under its labor contract.
On Sunday, the United Steelworkers of America ran a full-page advertisement in The Spokesman-Review calling on Kaiser CEO Ray Milchovich to share the resale proceeds much like other aluminum companies.
It claimed Kaiser has used the money to pay down long-term debt, rebuild a refinery in Louisiana and reward executives with excessive bonuses.
The right to resell federal power supplies ended on Monday as new contracts between Bonneville and aluminum companies began.
Under the new terms, Kaiser can either pay Bonneville and accept electricity, or decline it and force the agency to sell the power into the market. Here's the catch: If Bonneville has to sell the power for less than Kaiser was scheduled to pay, the company has to make up the difference.
During the past month, electricity is fetching far less than what Kaiser would be paying Bonneville.
With progress on negotiations, Hansen said, the agency won't hit Kaiser with charges to make up a sales shortfall.
"We feel we're getting closer," he said. "And while we're still talking about how it all might work out, Kaiser isn't out there racking up charges."
If Kaiser wants to void its five-year contract with Bonneville, it must make that decision within 30 days.