Cutbacks at Usk newsprint operation would hurt rural utility, officials say

The owner of the Box Canyon Dam in northeast Washington could be scrambling for new buyers for its electricity if a large newsprint plant closes or cuts back operations.

Ponderay Newsprint Co. is the largest customer of the Pend Oreille Public Utility District, purchasing about 70 percent of the utility’s electric load.

But the newsprint company’s officials alerted the utility its projected demand for power will drop sharply in 2017, said Colin Willenbrock, the Pend Oreille PUD’s general manager. Based on the magnitude of the decline, utility officials have concluded the plant is likely to close.

Ponderay Newsprint employs 140 people in Usk, Washington.

Myron Johnson, the general manager of the newsprint mill, issued a statement saying the plant has solid orders for newsprint through 2016 as a result of recent paper mill closures on the West Coast, but future demand for the plant’s product is unclear.

Ponderay Newsprint is 40 percent owned by Resolute Forest Products of Quebec. Several large publishing companies own the remaining 60 percent of the company, including McClatchy, Media News and Gannett.

The plant has a 20-year contract to purchase power from the PUD through June 2027, according to Willenbrock. If Ponderay Newsprint defaults on the contract, he said the company could be liable for damages of more than $200 million, which is two times the PUD’s annual cost of producing and delivering the electricity under contract.

Officials from Ponderay Newsprint and the PUD are meeting later this month to discuss the situation. Invoking breach-of-contract provisions are not in either party’s best interest, Johnson said in the statement.

If Ponderay Newsprint is slated for closure, finding a replacement purchaser for the electricity could take some time, Willenbrock said. Most of the utility’s 8,500 customers are residential or small commercial operations.

In addition to the electricity generated at the Box Canyon Dam, the PUD buys power from the nearby Boundary Dam, which is owned by Seattle City Light, and some wholesale electricity from the Bonneville Power Administration.

If Ponderay Newsprint closes, the loss of the industry will be hard on the small, rural community as well as the PUD, Willenbrock said.

“We’re working as hard as we can to keep Ponderay Newsprint in the county,” he said.