Kaiser Strikes Deal With Wwp Aluminum Manufacturer To Purchase Power From Spokane Utility

Kaiser Aluminum & Chemical Corp. has agreed to purchase up to 50 megawatts of electricity from The Washington Water Power Co.

The deal for the first time directly links two of Spokane’s largest employers, and ends the aluminum maker’s 50-year dependence on the Bonneville Power Administration for all its energy.

WWP, under the terms of a separate ground-breaking agreement, also will represent Kaiser in discussions with other potential suppliers of electricity.

Pete Forsyth, Kaiser’s regional power manager, said the company does not intend to restart idled smelting capacity with the power.

But cooperation between the companies will help secure existing jobs, he said, adding, “That’s a big plus in this.”

In the Spokane area, Kaiser operates the Mead smelter and Trentwood rolling mill. The plants employ 2,500. The company also has a smaller smelter in Tacoma.

The agreement covers only a fraction of the total 610-megawatt load Kaiser imposes on Bonneville when its facilities are at full production. Only six of Mead’s eight potlines are operating.

But Forsyth said that by signing the deal with WWP, Kaiser officials have signaled the company will never again rely on a single energy supplier.

Kaiser and WWP will hunt new resources available for short or long periods to reduce the risk of over-reliance on Bonneville, he said.

“It would not be prudent in our future to have a sole-source supply,” he said.

Forsyth said the services agreement will enable WWP, already an active power broker, to negotiate better deals by packaging its own needs with Kaiser’s.

He said the company’s satisfaction with natural gas service provided by WWP influenced the decision to purchase electricity from the utility.

“We have a long-standing and good relationship with WWP,” he said. “We know them and believe they have the the skills and capabilities to help us in our analysis of the energy market’s potential.”

Neither Forsyth nor WWP marketing representatives Tom Johns and Dana Zentz would disclose terms of the deal.

Forsyth said it could save Kaiser up to $7 million.

Johns said revenues to WWP could exceed $50 million. The price per kilowatt-hour is comparable to that negotiated in April with another smelter, Northwest Aluminum Co., he said.

That five-year deal, for 70 megawatts at 2.55 cents per kilowatt-hour, was the first shifting load away from Bonneville to a private utility. Deliveries begin in February 1997.

Aloca announced a one-year transaction with Enron and the Chelan County Public Utility District last month at 1.9 cents per kilowatt-hour.

The Bonneville rate to smelters is 2.8 cents.

Aluminum smelting consumes immense quantities of electricity. Domestic producers built 10 plants in the Northwest during and following World War II to take advantage of the cheap kilowatts generated by dams in the Columbia River Basin.

But drought and mounting expenditures to sustain salmon runs have driven Bonneville costs higher just as new technology has reduced the cost of building and operating generating plants fueled by natural gas.

In response, Bonneville is negotiating with the smelters to determine what rate will keep the bulk of their load on line for at least the next five years, according to Direct Service Industries Deputy Director Steve Waddington.

The trade group represents the smelters and other industrial facilities that buy their power from Bonneville.

“They are trying to put together a package that is competitive,” Waddington said. But he added that the power purchases announced to date by the smelters are probably just a trace of the behindthe-scenes activity.

Bonneville’s utility customers also have begun shopping elsewhere for power as deregulation opens the market for new resources.

, DataTimes