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Alcoa, BPA Reach Power Supply Accord for Intalco Smelter Helping Secure 528 Jobs by Business Wire Earth Times, December 21, 2009

FERNDALE, Wash. - Alcoa and the Bonneville Power Administration (BPA) have reached an agreement to provide power for the Intalco aluminum smelter in Ferndale, Washington. The agreement will help secure 528 jobs at the facility, along with the associated economic benefits to the local and regional economy. The new contract provides Alcoa with up to 320 megawatts (MW) of power at the Industrial Power (IP) rate and will allow the plant to produce a total of 184,000 metric tons per year.

Washington Governor Chris Gregoire joined Alcoa employees and local leaders at an event earlier today to welcome the new Alcoa - Bonneville Power Administration (BPA) contract. "I congratulate the Bonneville Power Administration and Alcoa for reaching this important agreement to keep the Intalco aluminum smelter operating. This agreement supports more than 500 living-wage jobs in the Ferndale area, jobs that are essential to our ability to make it through and recover from this recession," Governor Gregoire said.

"Today's signing is clear evidence of what can be achieved when federal, state and local partners work together in pursuit of a common goal," said Bob Wilt, Alcoa's President for US Primary Products.

"We are very grateful for the support we have received from everyone involved, including Governor Gregoire, Congressman Rick Larsen and Senators Maria Cantwell and Patty Murray. We are also grateful to our employees - union and management -- who have worked hand-in-hand on this issue, and to local community leaders," Wilt added

Alcoa is a 70-year customer of BPA and this contract marks a return to direct power sales under the Northwest Power Act. Direct power sales were halted in 2006. The new contract has two phases - an immediate 17-month power supply for up to 320 MW and a second phase for at least an additional five years of power. The second phase would be implemented following clarification of a recent US 9th Circuit Court of Appeals ruling and will depend on the state of future power markets.

Under terms of the agreement, the facility will maintain an average of 528 full-time equivalent jobs.

An independent study by Washington economist Dick Conway shows that each Alcoa job sustains around three additional jobs in Washington State. The results of the study indicate that over 2,000 jobs will be preserved as a result of this agreement.

"In addition, this decision has helped maintain the local tax base, expenditures with local businesses and the community contributions made by our organization and our employees," Wilt concluded.

In the past three years, Alcoa and the Alcoa Foundation have contributed more than $500,000 to local organizations, including $10,000 to the Whatcom County Toys for Tots campaign as part of a plant safety campaign this month. And in October, Intalco employees contributed more than 1,000 hours of volunteer service to local non-profits as part of Alcoa's Global Month of Service.

About Alcoa

Alcoa is the world leader in the production and management of primary aluminum, fabricated aluminum and alumina combined, through its active and growing participation in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components including flat-rolled products, hard alloy extrusions, and forgings, Alcoa also markets Alcoa® wheels, fastening systems, precision and investment castings, and building systems. The Company has been named one of the top most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland and has been a member of the Dow Jones Sustainability Index for eight consecutive years. Alcoa employs approximately 63,000 people in 31 countries across the world.

A timeline of major events for the Alcoa Intalco Works aluminum smelter:

1966: The Ferndale-area facility begins operations as Intalco Aluminum Corp., owned by Alumax, Pechiney and Howmet.

June 1998: Alcoa Inc. and Alumax merge, creating Alcoa Intalco Works.

May 2000: Alcoa executives consider building their own power plant to fuel Intalco out of concern over rising energy rates.

May 2001: Not able to cope with high energy prices, Intalco decides to close the plant for two years, keep its employees and sell its power back to Bonneville Power Administration to aid in the energy crisis. BPA pays for the wages and benefits of nearly all the workers plus $1.75 million to cover Intalco's tax burden.

May 2002: After being shut down for six months, the facility reopens two potlines.

October 2003: Alcoa shuts down a potline because of high energy costs, cutting 200 jobs and leaving only one of the three potlines in operation.

February 2004: Mike Rousseau takes over operations as plant manager of the facility, replacing Mike Tanchuk.

June 2006: Alcoa becomes full owner of the facility, buying out remaining partners.

August 2006: Alcoa signs a five-year contract with BPA ensuring continued work for its 450 employees.

February 2007: The Ferndale facility restarts its second potline, increasing employment to 575 employees.

October 2008: BPA proposes a long-term contract deal to supply power to Intalco.

October/November 2008: In response to the economic recession and less demand for aluminum, the Ferndale facility institutes a series of budget cuts, including cutting about 100 jobs.

January 2009: Alcoa and BPA are unable to reach a long-term agreement proposed by BPA in October.

March 2009: Intalco officials say facility is at an "extreme risk" of closing unless BPA approves company proposal for new power contract.

July 2009: BPA and Intalco reach tentative power agreement for enough low-cost power to operate the plant at or near two-thirds capacity for seven years, guaranteeing at least 528 full-time jobs.

September 2009: After an August court ruling restricting BPA's authority to share power with Intalco, the July proposal appears to be in jeopardy.

December 2009: BPA approves a two-phase power contract that guarantees enough power to keep 528 workers employed for 17 months. After that, BPA could offer five more years of power if courts approve and economic conditions permit.