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BPA and Alcoa Sign 10-year Contract by Staff BPA Journal, January 2013

In December, BPA and Alcoa signed a 10-year power sales agreement during a ceremony at the aluminum smelter's Intalco Works plant in Ferndale, Wash. The new contract provides long-term certainty to the plant and its 625 employees while providing BPA and the Northwest financial and operational benefits.

"This is fantastic news for Washington state and the Intalco community in Ferndale," said U.S. Senator Patty Murray, D-Wash., at the ceremony. "Today's signing of this long-term contract shows what can happen when government and industry come together to create jobs and help families across our state."

Beginning Jan. 1, 2013, the new agreement will provide 300 average megawatts yearly through September 2022. Intalco started operations in 1966 and has three potlines capable of producing 279,000 metric tons of aluminum per year.

BPA's current power sales contract with Alcoa was set to expire May 26, 2012, but was extended via a series of short-term agreements to allow time for the development and public review of the long-term agreement.

"With this agreement, Alcoa is electing to be part of the Northwest community seeking to solve some of our most difficult challenges," said Steve Wright, BPA administrator. "It provides benefits for BPA power customers in the form of lower rates in the near term and increased long-term rate stability. It also provides operating flexibility to help deal with intermittent resources like wind while moving a step closer to resolving longstanding litigation over benefits BPA provides to residential and small-farm customers of investor-owned utilities."

While preparing the power sales agreement, BPA conducted an analysis, called the equivalent benefits test, to determine whether net benefits would flow to BPA ratepayers through a contract with Alcoa. The results of that analysis show that service can be provided through September of 2022 while continuing to benefit all BPA ratepayers.

For fiscal years 2014 and 2015, BPA is forecast to receive a yearly net benefit of $15 million, lowering the proposed preference power rate for those two years by nearly a full percentage point (from 10.5 percent to the proposed 9.6 percent rate increase).

Related Pages:
New BPA Agreement to Provide Millions in Savings, Hundreds of Jobs by Rob Manning, Oregon Public Broadcasting, 12/10/12
BPA to Provide Power Supply for Alcoa's Intalco Works by Alcoa, Azom.com, 12/10/12
10-Year Power Deal Ensures Jobs for 625 Alcoa Workers by Associated Press, The Columbian, 12/9/12
Alcoa Signs Ten-Year Power Contract for Intalco Works by Business Wire, Daily Finance, 12/7/12
Alcoa, Bonneville Power Make History by Paul Niemi, KGMI, 12/7/12

Alcoa power purchase contract [Regionwide]
BPA and Alcoa signed a 10-year power sales agreement in December. The new contract, to begin Jan. 1, provides long-term certainty to Alcoa's Intalco plant in Ferndale, Wash., and its 625 employees while providing BPA and the Northwest financial and operational benefits. The new agreement will provide 300 average megawatts yearly through September 2022. For information, go to www.bpa.gov/goto/DSI.