Alcoa, BPA Reach Deal
Alcoa announced Monday that it has purchased enough power on the open market to operate one-third of the capacity of its Intalco Works aluminum smelter in Ferndale, Wash., for the next five years.
The Bonneville Power Administration, the Portland, Ore.-based federal agency that markets electricity from hydroelectric dams, is subsidizing Alcoa's purchase at $12 per megawatt hour up to $38.4 million annually.
In June, BPA signed an agreement with Alcoa (NYSE: AA) and several other Pacific Northwest aluminum companies to reduce the cost of open-market power purchases.
In past years, BPA sold reduced-rate power to big industrial customers such as aluminum companies, but the rapid growth of the region, and growing demand for electricity, left BPA with less cheap power.
Aluminum companies, which consume large amounts of electricity, have suffered. Alcoa spokesman Kevin Lowery described the agreement signed in June as a "bridge" that will allow Alcoa to keep running the Ferndale plant for the next five years. In 2011, Alcoa hopes to be able to buy cost-based power from BPA, he said.
The Alcoa Intalco plant provides 450 jobs and had a total economic impact of $210 million in Washington in 2005, according to the company.
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