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Alcoa's Intalco Works gets Power Contract by Christine Pratt Wenatchee World, December 23, 2009

WENATCHEE -- Alcoa's Intalco Works aluminum smelter in Ferndale Monday signed a contract to buy electricity for at least 17 months from the Bonneville Power Administration.

The contract, which took effect Tuesday, will supply Intalco with 285 to 320 average megawatts of electricity at the BPA's industrial rate of $34.60 per megawatt hour.

The contract could be extended another five years.

Intalco spokeswoman Jody Read said the contract will allow the smelter to increase production to two-thirds capacity, or two full pot lines. The plant was producing slightly less, she said.

Intalco and Wenatchee Works are Alcoa's only two smelters in the Pacific Northwest. Intalco employs 530 people and Wenatchee, 360.

"The contract keeps aluminum vital in the Northwest. We're obviously delighted for our counterpart, Intalco," Sharon Kanareff, spokeswoman for Wenatchee Works, said Tuesday.

The contract will be extended five years if the BPA can show the contract meets a legal test of providing the region with more economic benefit than job creation alone, BPA spokeswoman Katie Pruder-Scruggs said Tuesday.

The contract has already met the benefits test for its first 17 months, Pruder-Scruggs said.

Benefits include Intalco's ability to scale back production, if the BPA needs more electricity to meet regional demand, she said.

The benefits requirement stems from an Aug. 28 opinion by the U.S. Ninth Circuit Court of Appeals on a lawsuit brought against the BPA by 16 electricity cooperatives in seven states.

In their successful lawsuit, the cooperatives argued that the BPA has no legal obligation to sell to large power customers like Alcoa, and the low rates it gives those big customers hurts the federal agency's small customers by forcing them to pay more.

The appeals court upheld the BPA's discretion to sell power by contract to large purchasers like Alcoa, but required the BPA to show that such contracts provided a "legitimate business case" -- widespread economic benefit to the region.

Neither the Intalco contract nor the court's conditions affect the Wenatchee smelter, which buys its power under contract from the Chelan County PUD.

The BPA is a nonprofit federal utility that operates high-voltage transmission lines around the region and markets power from 31 federal dams.