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Plan to Sell Energy to Smelters Draws Ire of Franklin PUD by Drew Foster, Herald staff writer Tri-City Herald, August 1, 2009

TRI-CITIES The Bonneville Power Administration's proposal to sell energy to two aluminum smelters and a paper company at a reduced industrial power rate has drawn the ire of some public utilities, including Franklin PUD.

The proposal calls for BPA to sell energy to the companies at a rate of $34.60 per megawatt hour.

Franklin PUD General Manager Ed Brost said that rate would be significantly lower than what the companies would pay if they bought power from the market or a local utility district, which buy power from BPA and resell it to consumers.

BPA spokeswoman Katie Pruder said BPA's customers usually pay an average wholesale rate of $28.77 per megawatt hour. Brost said that is typically less than half of the typical public utility retail rate.

If the two aluminum smelters and paper company had to buy power on the market, Brost said they'd likely pay $60 or $70 per megawatt hour.

"We are against it," Brost said. "Our customers shouldn't have to subsidize a multinational corporation when they are already struggling to make ends meet."

The two aluminum smelters are Columbia Falls Aluminum Co., which is based in Columbia Falls, Mont., and Alcoa Inc., which has a plant in Ferndale in Northwest Washington. The paper company is Port Townsend Paper Co.

A preliminary agreement with Alcoa calls for the company to employ at least 528 people.

"We understand the need for family-wage jobs," Pruder said.

She said BPA is providing the companies with industrial rate power, which costs less than the market rate BPA pays for energy, because BPA values its relationship with the companies.

She said BPA has been doing business with Alcoa, for example, since the 1940s. Pruder added that BPA is "trying to balance the needs of the region."

Since BPA will be selling the power to the three companies for less than it is worth on the open market, Brost said BPA will be taking a financial hit. He said that loss will have to be made up by public utilities like Franklin PUD.

"Basically, what Bonneville is trying to do is subsidize the aluminum industry with our customer dollars and at the expense of our local jobs," he said.

The public comment period on a draft term sheet between Alcoa and BPA runs through Monday. Comments can be made at www.bpa.gov/comment.

Pruder said BPA hopes to hear from as many utilities as possible, adding that their input is factored into BPA's decisions.

If the draft "term sheet" is approved, BPA will issue a draft contract for public review in September. Pruder said BPA hopes to have it in place by Oct. 1.

Pruder said courts have previously ruled that BPA can sell power to direct service industries at an industrial rate.

However, some legal challenges are still pending. The U.S. Court of Appeals for the Ninth Circuit is currently hearing that case. Depending on its ruling, any agreements between BPA, the aluminum smelters and the paper company could change, Pruder said.

Related Pages:
Aluminum Plant gets One-Month Reprieve by K.J. Hascall, Daily Inter Lake, 7/26/9
Columbia Falls Aluminum Operations Extended by Associated Press, KXMB, 7/26/9
Low-Price Power Deal May Be in Works for Intalco by Staff, KGMI, 7/20/9
BPA Proposal Looks Like it Will Keep Intalco Smelter Going by John Stark, Bellingham Herald, 7/17/9
Intalco Plant Continues to be Worth Supporting by Editorial Board, The Bellingham Herald, 6/28/9
CFAC Negotiates for Lower Rates with Hopes of Reopening by Allison Maier, The Missoulian, 6/8/9