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As Usual, Opinions Split
on BPA-Smelter Contracts

by Staff
San Diego Union Tribune, November 17, 2008

Mike Rousseau, manager of the Intalco plant. "We believe we have a right to this power."

PORTLAND, Ore. - Oregon's governor, public utilities and ratepayers advocates from around the Northwest are criticizing a Bonneville Power Administration proposal to provide electricity discounts of as much as $66 million annually to Alcoa Inc.'s smelter in Ferndale, Wash., until 2028.

The agency has also proposed $33 million in annual subsidies for the Columbia Falls Aluminum Co. in Montana, although it's unclear whether that proposal will go forward.

The BPA is looking to sign 20-year contracts with customers in January. A public comment period closed last week. BPA Chief Executive Stephen Wright told The Oregonian newspaper he will consider the comments in drafting final contracts with the smelters. When that contract is released in the next 60 days, the public will have another opportunity to comment.

The smelter subsidies, which could come in discounted power or monetary transfers, amount to about $140,000 a year for each guaranteed job at Alcoa, the Oregonian reported.

Public utilities contend they'll end up paying for them in higher rates, which would force job losses among their own struggling industrial customers.

"We're not sure why, but it appears the BPA values the aluminum industry jobs more than they do other industries," said Mark Howe, a spokesman for the Oregon Trail Electric Consumers Cooperative, based in Baker City.

Alcoa argues that the proposal provides only half the electricity needed to operate its Ferndale plant, while other industrial customers who have not been in the Northwest for nearly as long continue to have all their power needs met with BPA power as customers of public utilities.

Alcoa has committed to maintaining 480 jobs at its Intalco Works plant if it gets the power. It also argues that its $48 million payroll and operations directly and indirectly support more than 2,000 jobs in the Northwest.

"I really challenge people to stand back and look at this from a fairness and equity standpoint," said Mike Rousseau, manager of the Intalco plant. "We believe we have a right to this power."

Washington's governor and several members of its congressional delegation agree. They saying the agency's proposal would "maintain family wage jobs while not placing a significant economic burden on other customers in the region."

Wright said he has felt no political pressure within the region, or from Washington, D.C.

"When you sit in a job like mine, you do think about the impact on real people," Wright said. "Even if it's a small positive impact, it's probably worth pursuing."

Controversy has swirled for years around the BPA's electricity sales to its so-called direct service industries, a group of energy-intensive industrial customers - mostly aluminum companies - that traditionally purchased all their power directly from the BPA.

The direct service industries' heavy demands provided financial viability for the BPA in its early years and gave the agency flexibility to manage demand by allowing their service to be cut during peak electricity use.

Only three of the original 10 aluminum smelters that once dotted the Columbia basin remain today. Though Alcoa disagrees, most customers contend the BPA no longer has any statutory obligation to serve the smelters.

As Usual, Opinions Split on BPA-Smelter Contracts
San Diego Union Tribune, November 17, 2008

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