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BPA Releases DSI Policy by Staff BPA Journal, July 2005

BPA announced in late June that it will offer power benefits to three Northwest aluminum companies and one paper mill for five additional years. Beginning in the fall of 2006, BPA expects to provide the equivalent of up to 577 average megawatts to the industries that it has traditionally served directly.

"This was a very difficult decision," said Steve Wright, BPA administrator. "There is not enough low-cost federal system power to satisfy all interests, and we have worked hard to appropriately balance regional interests. On the one hand, low-cost federal power keeps important jobs in the region and helps support the economy of many Northwest communities. On the other hand, we have a responsibility to the rest of the region's ratepayers not to inappropriately shift costs to them."

Under the agreement, Alcoa Aluminum Company would receive the value of up to 320 average megawatts; Columbia Falls Aluminum up to 140 average megawatts; Golden Northwest up to 100 average megawatts, and Port Townsend Paper will receive the remaining 17 average megawatts.

BPA made three stipulations. First, the agency committed to provide up to $59 million annually for the five years to bring aluminum company rates down to be more in line with the rates BPA's public agency customers pay. Due to the uncertainty of world aluminum markets and electric power market prices, this full value may not be completely utilized, and therefore could have less impact on BPA rates.

Second, under no conditions will the aluminum companies pay less than BPA's preference rate, and, third, to be eligible, a company must prove that it is creditworthy.

Ten years ago, the DSI load was 3,000 average megawatts. Under current contracts, it is 1,500. Today's DSI loads average about 300 average megawatts.

BPA will negotiate contractual agreements to implement this proposal by this fall and submit proposed contracts for regional review and comment. BPA would then incorporate comments and proceed to offer contracts in early 2006.