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Energy Crunch Forces Aluminum Companies to Revise Game Plan by Margot Higgins Environmental News Network - January 31, 2001

Energy prices have ballooned so much in recent months that several aluminum companies in the Pacific Northwest are revising their operations.

The companies have determined that it is more lucrative to shut down their production and re-sell the energy they would normally consume to make aluminum.

Electricity accounts for about one-third of the production price of aluminum. Aluminum companies receive a large share of that power at inexpensive rates from the Bonneville Power Administration, the federal agency responsible for marketing power from dams in the Pacific Northwest.

BPA rates are among the cheapest in the United States, and about a third of the power it generates goes to aluminum companies.

The Pacific Northwest aluminum industry currently receives about 2000 average megawatts from the BPA, at a cost of 2.26 cents a kilowatt-hour.

By comparison, it takes about 1200 average megawatts to power the city of Seattle and the energy crisis has driven up the price of electricity to about 70 cents a kilowatt-hour on the open market.

Now, in the face of its own power crunch, BPA is repurchasing that power from the aluminum companies. Hydropower only contributes to a portion of the power that BPA is obligated to provide to public utilities and Northwest industrial plants. BPA must purchase the rest of its power at expensive rates on the open market.

Conservation groups generally support the shut-downs. "It is essential to free up more power in the Pacific Northwest," said Mark Glyde, a spokesperson for the Northwest Energy Coalition. "This puts less pressure on BPA to rely on water that is supposed to aid salmon migrations."

On a number of recent occasions BPA has used water meant to aid migrating juvenile salmon to meet its energy needs. BPA is required by the Endangered Species Act to provide minimum flow and spill levels to help the salmon survive the dams. In power "emergencies," however, those fish passage measures can be suspended to allow for additional hydropower generation.