Bpa Strikes Deals With 7 Customers But Federal Power Supplier Rejects Contract With Kaiser

The Bonneville Power Administration and seven of its 15 industrial customers have agreed on new contracts after a day of confused negotiations on both ends of the country.

Kaiser Aluminum & Chemical Corp., which operates smelters in Spokane and Tacoma, was not among the companies whose contracts were acceptable to federal officials.

Bonneville Administrator Randy Hardy said the companies that came to terms committed 95 percent of their load to the agency.

In return, they will receive a 12.7 percent rate cut and guarantees against responsibility for escalating fish-restoration costs.

Hardy said Bonneville rejected deals with companies that would not place at least 80 percent of their load with the agency.

The contracts accepted late Thursday, which take effect Oct. 1, 1996, will assure Bonneville $250 million in annual revenues over its five-year term, he said.

“These revenues will help us meet our fish and wildlife responsibilities as well as other obligations,” he said. “Without this income, more costs would be borne by remaining customers, which would eventually lead to higher rates or to Bonneville’s inability to meet its Treasury payments.”

But a spokesman for the Northwest Conservation Act Coalition said Friday Bonneville was putting itself in just that position by shielding the industrial customers not only from fish costs, but also those created by expensive resources like Washington Public Power Supply System Nuclear Plant No. 2.

“We feel the Clinton administration has done a great disservice to millions of Northwest residents,” said Jim DiPeso.

Oregon Rep. Peter DeFazio, a leading critic of the contracts, accused Bonneville and U.S. Department of Energy officials of caving in to pressure from Sens. Slade Gorton, R-Wash.; Mark Hatfield, R-Ore., and Patty Murray, D-Wash.

All three senators were unhappy that contracts submitted by all the industrial customers last week had been rejected earlier in the day.

The department said it decided loss of the industrial customers “would imperil the Bonneville system,” which markets power produced by hydroelectric dams on the Columbia and Snake rivers.

The department and Bonneville also issued a statement calling for a comprehensive regional review of the BPA’s role and structure in the Northwest in light of the “dramatic and rapid changes in the wholesale electricity market.”

“We will work with the Northwest governors and members of the region’s congressional delegation to determine the shape and substance of this forum,” Deputy Energy Secretary Charles Curtis said. “We do not have preconceived ideas and are open to their suggestions.”

Pete Forsyth, regional manager for Kaiser, said Thursday’s convoluted decision-making was in sharp contrast to the way business could be done in the private sector.

The 80 percent load threshold, for example, had never been discussed prior to Thursday, he said.

Forsyth said Bonneville figured Kaiser would have to sign up for 360 megawatts of energy using that yardstick, a level the company was unwilling to accept.

He would not disclose the commitment Kaiser was willing to make.

“We will keep talking,” he said. But he added that Kaiser could obtain the electricity it needs from other suppliers if the company cannot reach agreement with Bonneville.

“The market’s very active and people want to do business,” he said.

Kaiser and other smelter operators have already contracted with other suppliers for some of their energy needs.

The BPA extended the deadline for the remaining companies to reach agreements to Oct. 31.

The 15 direct-service industries yield about $418 million in annual revenues to Bonneville at current operating levels, about one-third of the agency’s total.

, DataTimes