Power-Price Surge Affecting Kaiser

Prices in West Coast electricity markets are so high even the Bonneville Power Administration is losing money, spokesman Ed Mosey said Monday.

The agency, which sells about half of the power consumed in the Northwest, has been a net buyer for the past three weeks, he said.

Mosey said the Army Corps of Engineers and Bureau of Reclamation are refilling reservoirs, which reduces the availability of cheap hydropower.

Also, weather forecasters are predicting above-normal temperatures, so other suppliers are staying on the sidelines, he said.

“You’ve got a recipe for high prices,” Mosey said. “They know we’re without alternatives.”

Kaiser Aluminum Corp. Vice President Pete Forsyth said electricity prices have spiked as high as 75 cents per kilowatt-hour, almost 20 times rates typical for the spring, when runoff swells the region’s rivers.

Two weeks ago, he said, Kaiser briefly eased back output at its Tacoma and Mead smelters to exploit the extraordinary market conditions by reselling power purchased for aluminum production.

“These are phenomenally high prices for power,” he said. “You can’t make aluminum at these numbers.”

Vanalco Inc. announced Monday it would shut down most of its plant in Vancouver because it could no longer afford to buy electricity on the open market.

Forsyth said Kaiser buys two-thirds of its power from Bonneville under contracts good for another year. Other long-term contracts fulfill some of the remaining requirement, but the company is continually in the market, he said.

Forsyth said price spikes are less troubling than prices quoted for the months of June and July that are more than double the levels Northwest smelters can pay and still remain competitive with aluminum elsewhere in the world.

Kaiser is reassessing its operations to determine how best to respond to the unprecedented power market, which he blamed on sales to California by Bonneville and other suppliers taking advantage of high prices there, he said.