Tom Owens, an Alcoa employee for more than 17 years who worked as a potliner before the plant closed, drags a hose while a Hoe Ram operated by Ron Skelton digs out pots on Potline 5. Crews have been working to prepare the plant for a potential restart.
World photo/Tom WilliamsBy Laurie Smith, World staff writer
MALAGA -- After three months, a plan for bankrolling the development of a long-term power supply to run Alcoa's Wenatchee Works smelter is looking like a bust.
Because of a continuing decline in power prices, Alcoa has been losing money on what was hailed in June as a landmark agreement struck with the Chelan County PUD.
"So far, we're very disappointed in what's happened, of course," Plant Manager Phil Rasmussen said.
"It's a bummer," said Charlie Hosken, interim general manager of the PUD.
At less than $30 per megawatt-hour during high-load hours, wholesale electricity prices have dropped from triple-digit peaks last winter to their lowest point in 17 months. They're now running about what they were in September 1999.
On July 1, the Wenatchee Works stopped making aluminum for the first time in its 49-year history. PUD power freed up by the shutdown has been sold on the open market at prices far below what officials were counting on.
Proceeds haven't covered Alcoa's costs, including wages and benefits for 470 employees, let alone generated any capital for resource development.
Under the contract, Alcoa was supposed to get $4.3 million a month from the power sales for payroll and other costs. According to Hosken, the sales have yielded more like $3 million a month after expenses.
Hosken said the PUD will continue seeking a new power source for the plant, which has contract rights to scarcely enough Chelan County power to run two of five potlines. But "we don't think we're going to have a pot of money ... to help buy this resource," he said.
Rasmussen said: "The way our contract is structured, we are not going to achieve our goals. That seems to be clear at this point. The question becomes: What are the alternatives?"
When asked in June what would happen if the return on power sales fell short, Alcoa's U.S. smelting president, Lloyd Jones, said the plant would resume production and "go back to things as they were" before the shutdown.
For now, Rasmussen said, "we're simply in a holding mode. We're going to see what happens with prices in the next few months."
"I believe that they're going to stick it out a little while longer to see if something doesn't change," said Wayne Pretts, president of the Wenatchee Aluminum Trades Council, the workers' bargaining unit.
Morale has begun flagging as employees run out of things to do and miss out on the overtime pay and shift premiums they used to get, he said.
"We have some issues of folks losing money," Pretts said. "It's pretty emotional. It's getting to where we wish we would fire back up and start making aluminum."
Despite a cloudy future, the plant itself is looking cleaner and brighter than it has in decades thanks to their hard work, plant spokesman Jim Baxter said.
Workers have been painting potrooms, passageways and equipment, as well as replacing brick potroom floors with a poured refractory material.
They've also been preparing Line 5 -- digging out pots, repairing cathodes and resetting anodes -- for a potential restart, Rasmussen said.
Alcoa is going to "have to make some tough decisions," Hosken said. "I think they're going to be challenged (to decide) what the heck to do."
The company has been building gas-fired power plants to operate its overseas smelters, Hosken said, adding, "Maybe they need to think about building power plants in this part of the country."
