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BPA's Deep Discount to Industry Will Raise Public Rate by Associated Press Longview, WA, The Daily News, July 6, 2005

PORTLAND, Ore. -- Three aluminum companies and a paper mill will get a discounted rate on 577 megawatts from the Bonneville Power Administration over the next five years -- enough electricity to light more than half of Seattle.

Providing low-cost power to manufacturers translates into higher costs for other BPA customers. But the cost to consumers will depend on how much BPA power their utility takes.

If the companies use their full allocation of 577 average megawatts, Bonneville's public utility customers will see about a $1 per megawatt-hour increase.

"This was a very difficult decision," said Steve Wright, administrator of the Portland-based federal agency.

"On the one hand, low-cost federal power keeps important jobs in the region and helps support the economy of many Northwest communities," Wright said. "On the other hand, we have a responsibility to the rest of the region's ratepayers not to inappropriately shift costs to them."

The current BPA wholesale rate for utilities is approximately $30 per megawatt-hour. The new deal runs from 2006 through 2011, with the cost capped at $59 million a year, officials said.

The 31 federal dams and one nuclear power plant that supply Bonneville produce about half the electricity in the Northwest. The agency provides about 73 percent of the power needed by its customers, and buys the remainder of the electricity it needs on wholesale markets.

Alcoa Inc. will receive up to 320 megawatts; Columbia Falls Aluminum Company will receive up to 140 megawatts; Golden Northwest Aluminum Company will receive up to 100 megawatts; and Port Townsend Paper Company will receive the remaining 17 megawatts.

The decision announced last week continues a Bonneville trend of ramping down power supplies to industrial customers, called direct service industries or DSIs. Electricity provided to DSIs has been declining since before 1995, when contracts totaled over 3,000 average megawatts.

In 1995, contracts were reduced to 2,000 average megawatts, and in 2002 contracts were reduced to 1,500 average megawatts.