October 22, 2010 in Business

Alcoa site could open for silicon plant

Company says restart hinges on power costs
By The Spokesman-Review
 

A potential restart of the shuttered Alcoa plant at Addy may founder because of high electricity costs, executives working on the project say.

Northwest Silicon LLC President Dave Tuten said the company would produce metallurgical silicon using two furnaces consuming 55 megawatts of electricity, enough to supply more than 38,000 homes.

Refurbishing the plant, where Alcoa smelted magnesium until 2001, would cost about $60 million, he said, about half the investment required to build a new silicon plant.

Also, the Addy plant could be restarted in less than one year, compared with two to three years for a new plant, he said.

But the Avista Utilities rate for industrial customers is $46 per megawatt-hour, as much as 60 percent higher than rates charged by utilities in the Southeast, Tuten said.

He said Northwest Silicon could be profitable today using Avista power, but investors are concerned profits could become losses during a downturn in silicon prices.

Northwest Silicon is not the first company to consider making silicon at Addy, which is northwest of Spokane along U.S. Highway 395. A German company abandoned its effort in 2008, also because of high power costs.

New emissions equipment would be installed by Filter Technology. Company President Bob Hood said more than 100 would be employed at the site during remodeling, and more than 50 long-term by Northwest Silicon.

“We’re eager to see something come of it,” he said.

Tuten said silicon, which eventually ends up in solar cells, is produced by combining high-purity quartz from an existing mine in Canada with wood chips and coal. Potential buyers include REC Silicon in Moses Lake, and a South Korean company, both of which would benefit from lower freight costs.

But he said Avista has been unwilling to consider implementing a lower electricity rate that would allow the utility to shut off power during a supply emergency.

Northwest aluminum smelters – huge consumers of electricity before most were closed – had such an arrangement with the Bonneville Power Administration.

Bonneville has a substation at the Addy plant but cannot, by law, sell power directly to any new industrial customers.

Avista spokeswoman Jessie Wuerst said utility representatives have held only preliminary talks with Northwest Silicon officials. The utility supports efforts to bring family-wage jobs to depressed areas like Stevens County, she said, but the company is bound to sell Northwest Silicon electricity at the same rate paid by its 32 industrial customers.

Creating a new rate for customers willing to have their power cut off for short periods would be complicated and would have to be approved by Washington utility regulators.

Mike Parvinen, assistant director for energy at the Utility and Transportation Commission, said the process of reviewing a new rate would probably take 11 months because of the effect it might have on power costs for all Avista customers.

“There’s a whole gamut of issues,” he said.

Water availability could be another problem.

Keith Stoffel, section supervisor for water resources for the Department of Ecology in Spokane, said two big water rights owned by Alcoa would be more than enough to meet Northwest Silicon needs. But water rights may lapse if unused for five years, he said, although there are numerous exceptions to that rule.


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