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Peculiarities Come with Energy Crisis

by Editorial Board
Seattle Post-Intelligencer, December 12, 2000

The week has already brought omens of the looming energy crisis.

First, warnings of an impending cold snap brought urgent requests for cuts in energy consumption to avoid rolling brownouts.

Second, the Kaiser Aluminum plant in Spokane shut down operations because the company found something more profitable than making aluminum: reselling federally subsidized power at a nearly 200-fold markup.

The plant had a contract with the Bonneville Power Administration to buy electric power at a set price per megawatt, but the market price has risen to many times that contract price. Instead of using that electricity to make aluminum, Kaiser closed the plant and sold its December power back to BPA at a profit of about $52 million.

A closed plant doesn't need workers. So Kaiser has left its 400 workers idled for the next 10 months. At best, some of the workers will get about 70 percent of normal wages.

BPA says the Kaiser maneuver is actually a good deal for the rest of us. BPA says it could be worse: Kaiser could have gotten an even higher price by reselling the power on the open market; and so the power BPA bought back from Kaiser is at least available for other customers.

Sell wholesale and buy retail? Why would the BPA agree to such an arrangement? Promising to buy its own power back at whatever the open market dictates smacks of mismanagement of the public resources.

Related Pages:
Energy Chief Slams Resales
Kaiser Closing Mead Smelter
Kaiser Makes a Bundle by Reselling Power

Editorial Board
Peculiarities Come with Energy Crisis
Seattle Post-Intelligencer, December 12, 2000

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