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NW Senators Back BPA Plan by John Stucke and Bert Caldwell, The Spokesman Review, May 4, 2001

Half-dozen sign letter favoring residential users over smelters

U.S. senators from the Northwest have sided with residential and commercial electricity users fighting for dwindling supplies of cheap regional hydro power.

The loser may be the aluminum industry.

In a letter signed April 26, six of the region's eight senators endorsed a Bonneville Power Administration effort to hold down rate increases by keeping the region's aluminum smelters idled.

"Clearly, we're disappointed," said Sharon Kanareff, manager of Alcoa Inc.'s Northwest government affairs office.

The setback comes as aluminum companies are waging a battle for public support.

So far, their efforts have been marginally successful.

"We're seeing a huge groundswell in communities in which we operate," Kanareff said.

But that's where it ends.

The senators may have realized that when they wrote to Steve Wright, BPA's acting administrator.

"What you outlined ... is certainly strong medicine for the region," their letter stated. "While we wish you didn't have to take such drastic steps, we understand that the strategy you have outlined -- if successful -- will reduce next year's rate increase to below 100 percent."

It was signed by Republican Sens. Larry Craig and Mike Crapo of Idaho, Gordon Smith of Oregon and Conrad Burns of Montana, along with Democratic Sens. Patty Murray of Washington and Max Baucus of Montana.

The BPA strategy, however, has been characterized as a death sentence for the Northwest industry, which supplies 40 percent of the nation's aluminum.

Companies such as Alcoa, Kaiser Aluminum Corp., and Columbia Falls (Mont.) Aluminum Co., claim keeping smelters unplugged will cost more than 7,500 jobs and billions of spin-off dollars.

But the alternative is grim, too.

BPA estimates that unless aluminum smelters stay shut, all other BPA customers better brace for at least an across-the-board tripling of electricity rates.

That could devastate broader segments of the regional economy by erasing 60,000 jobs while punishing the poorest residents unable to pay climbing power bills.

Such a scenario is unthinkable for utilities serving homes and businesses stretching across the four Northwest states.

So the Washington Public Utilities District Association and Seattle City Light hired political lobbying muscle. Former Sen. Slade Gorton, a longtime powerful aluminum ally, and Denny Miller, chief of staff for former Sen. Henry "Scoop" Jackson, will represent the organizations, which support BPA's plan for aluminum companies.

Craig signed the letter, according to spokeswoman Sarah Berk, to defend BPA against criticism from Californians who say the agency has not done enough to help that state solve its energy shortage.

It's the same concern for Smith, who fears California's political will may turn its attention to the Northwest's coveted federal asset, said spokesman Joe Sheffo.

Meanwhile, Democratic Sens. Maria Cantwell of Washington, and Ron Wyden of Oregon, did not sign the letter.

Cantwell is drafting her own letter to BPA's Wright, suggesting a broader approach, said spokeswoman Jennifer Crider.

It will include the possibility of acquiring more power generation for the region.

She spent Thursday afternoon hearing testimony from members of the Federal Energy Regulatory Commission. Last week, FERC set electricity price caps for California, but Cantwell said that may not help Washington.

Murray has strongly criticized FERC for its reluctance to intercede in Western electricity markets. Spokesman Todd Webster said Murray considers the BPA plan for aluminum the best of a bad lot.

"There are no good alternatives," Webster said.

Aluminum companies disagree. They are pushing a two-tiered pricing plan that would provide all BPA customers -- including aluminum smelters -- with power. The first 75 percent would be priced at BPA's cost of production and delivery. The remaining 25 percent would cost whatever the soaring power market fetches.

BPA and utilities say the two-tiered rates would shift massive costs onto residential and commercial customers that can't quickly lop off 25 percent of power consumption.

Today, hundreds of Steelworkers and other aluminum industry workers are rallying at BPA headquarters in Portland. They are pushing for some sort of plan that allows aluminum companies to operate and remain part of the Northwest economy.

"I look at this letter and I think it says (the senators) support Wright's efforts to bring Bonneville back on a business-type footing," said Jim Woodward, a Steelworkers subdistrict official from Auburn, Wash. "I didn't take it as a complete blanket endorsement. There's plenty of room here for negotiation."