Wenatchee re-energized by smelter’s reopening

Christmas in Wenatchee came wrapped in shiny aluminum foil this year.

On Dec. 13, 9:15 a.m. to be exact, the first of hundreds of “pots” where alumina is brewed into aluminum was fired up inside the Alcoa smelter. Day-by-day since then, crews have gradually added to the count, with the expectation that 300 pots arrayed in two of the Wenatchee plant’s four potlines will be operational by mid-February.

The other two lines will remain dark. In fact, the plant once had five lines, but the fifth was scrapped during the 3 1/2-year period when the Wenatchee works sat idle.

With the restart, the number of operating smelters in the region grew to three. None are at full capacity. The seven others that once helped make the Northwest the source of 40 percent of the nation’s primary aluminum are either mothballed, scrapped, or on the verge of being scrapped. Kaiser Aluminum Corp.’s Tacoma and Mead plants are history. Half the potlines at the Kaiser plant on Hawthorne Road have been demolished.

The cause of the industry’s demise is old news now. The plants consume huge amounts of electricity. That was fine when the Bonneville Power Administration had inexpensive megawatts to spare, but as residential and commercial demand increased, the share taken by the smelters was increasingly coveted by other consumers. Squabbling among the contending power users escalated through the 1990s. When a supply crisis struck in 2000, all 10 plants shut down, displacing thousands of highly paid workers in the process.

Only plants at Wenatchee, Columbia Falls, Mont., and Ferndale in Western Washington, have resumed production. A 15 percent to 20 percent increase in aluminum prices this year has helped.

But even with that, it took a good deal from the Chelan County Public Utility District and concessions from plant workers to fire up Wenatchee again.

The PUD has been selling the power once consumed by the smelter into the wholesale market. Some of the proceeds paid the wages of 400 idled smelter workers. Chief Financial Officer Joe Jarvis says the arrangement was good for the utility because market prices were so much higher than the costs of generation at its Rocky Reach dam.

The smelter will get that power at cost, a remarkably cheap 1.2 cents per kilowatt-hour, about one-quarter what that power is worth wholesale. “It actually generated more money for us when they were not operating,” Jarvis says.

The smelter contract runs into 2011. Although the deal robs the PUD of some revenues, Jarvis notes the positive effect the restart is already having in the community. Wearing his hat as president of the Chamber of Commerce, he says retailers have already noticed an upturn in sales because plant workers will again draw the overtime and shift pay that used to fatten paychecks. They also have the certainty they will have a job for the next six years.

At the Alcoa plant, spokesman Jim Baxter says the company might not have hung on in Wenatchee as long as it did if officials had known how long the shutdown would last. The constant expectation after the closure in July 2001 was that production would restart within three months. In the meantime, revenues from the sale of power fell about $1 million a month short of covering payroll, he says.

“If we had seen 3 1/2 years ago it was going to be 3 1/2 years, there might have been a different decision made,” Baxter says.

Bonneville, for its part, continues to look for ways it might make at least some power available to its remaining industrial customers when existing contracts expire Sept. 30, 2006.

Spokesman Ed Mosey says 500 megawatts or an equivalent amount of cash may be on the table, but the price may not be low enough to make smelter operations viable. Even at three cents per kilowatt-hour, about the going price today, electricity is too expensive to keep the region’s smelters competitive with newer plants in remote locations like Iceland and Bahrain.

“I think the aluminum industry in the Northwest is in its death throes,” says Mosey, a long-time member of the region’s extensive energy community.

Sad, but true. The aluminum industry hung on for many years because member companies hung together. Almost nobody is left.

Lucky for the Wenatchee community and its aluminum workers Alcoa, the world’s largest maker of aluminum, had the financial resources to stick the shutdown out when weaker players like Kaiser folded their aluminum shelters.

The restart, Baxter says, “truly has made their Christmas a little bit brighter.”

It’s all in the wrapping.