November 12, 2008 in Business

Ponderay Newsprint drops suit

Usk, Wash., plant opposes high-cost repairs to dam
By The Spokesman-Review
 

Ponderay Newsprint Co., which buys 90 percent of the power generated by the Box Canyon Dam, has withdrawn a lawsuit against the dam’s owner, the Pend Oreille County Public Utility District.

“We dropped the suit so that we could open up dialogue with the utility district,” Tom Garrett, human resources manager for the newsprint plant, said this week.

The Usk, Wash., plant makes paper for more than 100 newspapers, including publications of McClatchy Co. and Gannett Co. Inc., which are part owners. Cheap power helped lure the plant to northeast Washington two decades ago. Box Canyon Dam generates more electricity than Pend Oreille County’s 13,000 residents can use, and Ponderay Newsprint became the utility’s largest customer.

But cordial relations between the company and the utility broke down over $122 million worth of planned upgrades to Box Canyon Dam.

The utility plans to spend $76 million on fish-friendly turbines, plus $46 million to replace 1950s-era equipment at the dam. The improvements are part of a mediated agreement with the federal government, said Bob Geddes, the PUD’s general manager. The utility is on the cusp of signing the agreement, which is a key provision in renewing the dam’s federal operating license for 50 years, he said.

Newsprint officials hope to convince the PUD to hold off on signing.

“We feel that there are viable options to replacing the turbines,” Garrett said.

According to Ponderay Newsprint’s estimates, paying for the dam’s upgrades will result in an $8 million annual increase to the plant’s electric bill. That threatens the viability of the plant, which employs 180 people, Garrett said.

Geddes said the $8 million figure sounds high, though he hasn’t calculated the increase in the newsprint plant’s electric bill.

The first of the four new turbines has been ordered from Austria, and scheduled for installation next year.

“We’re moving ahead,” Geddes said.

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