May 11, 1995 in Nation/World

Kaiser Seeks Ways To Cut Power Bill Aluminum Producer Weighs Whether To Stick With Bpa

By The Spokesman-Review
 

Kaiser Aluminum Corp. could chop $100 million off its electricity bill in the next five years if the company shut off the Bonneville Power Administration, regional Power Manager Pete Forsyth said Wednesday.

But a variety of factors, including the possibility power may become cheaper still, have so far stayed Kaiser’s hand, he told the Northwest Power Planning Council.

Wednesday was the second day of the council’s monthly meeting, which will conclude today in Post Falls.

Forsyth and Jack Spear, Alcoa’s regional power manager, said the Northwest has been overrun by new suppliers of electricity since federal legislation in 1992 opened the nation’s transmission system to all comers.

At the same time, lack of resources has loosened Bonneville’s grip on smelters and other large electricity users that the federal power marketing agency once supplied exclusively.

“Every day the door is being knocked down by people wanting to do things,” Forsyth said. “We’re extremely active at looking at all the options.”

Electricity expenditures represent about 30 percent of the cost of producing aluminum. Kaiser, when its Tacoma and Mead smelters are at full capacity, consumes about as much power as all Spokane-area businesses and residences combined.

Spear said he recently signed a deal with Enron, which is rapidly becoming a major force in newly deregulated energy markets, that will provide Alcoa’s Wenatchee smelter with as much as 50 megawatts of electricity at a cost of 1.9 cents per kilowatt-hour.

The deal takes effect next April 1. Now, by comparison, Bonneville charges the smelters 2.8 cents per kilowatt-hour.

Another smelter in The Dalles, Ore., made a similar, five-year deal with Washington Water Power Co. three weeks ago.

Forsyth said Kaiser has delayed a decision while it awaits a response to the new business environment from Bonneville.

Also, he said, legal challenges to a recent agreement that loosened smelter bonds to the agency are unresolved, and there are unanswered questions about who and how will the new energy market be regulated.

“This is not the end of the process,” Spear added.

The power council spent much of Wednesday hearing testimony and evaluating the impacts of deregulation on the Northwest.

The 1970s misadventure with the Washington Public Power Supply System, and now the costs of saving dwindling salmon stocks, have driven regional power bills higher.

Bonneville Administrator Randy Hardy is expected to meet with the power council today to discuss the agency’s situation, and its response.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email