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Gregoire, BPA Boss to Visit Intalco Monday by John Stark The News Tribune, December 19, 2009

Gov. Chris Gregoire and Bonneville Power Administration Administrator Steve Wright will visit the Alcoa Intalco Works smelter Monday, Dec. 21, for a possible announcement on the future of the facility and its 530 employees.

Spokeswomen for the governor, BPA and Alcoa said they could not give specifics in advance.

But it seems clear the visit will be more than a meet-and-greet. Gregoire's office issued a release calling it "an event to set the course for the future of Alcoa Intalco Works aluminum smelter."

Besides its big payroll, the company pays more than $1 million a year in property taxes to local governments.

Intalco workers have been living with job insecurity for years as Alcoa, BPA and other BPA power users wrangled over how much cheap hydroelectric power should be allotted to Intalco, and under what terms.

Aluminum smelters need huge amounts of low-cost power to be profitable. When the industry established itself in the Northwest during and after World War II, the region enjoyed a surplus of hydropower from the Columbia River dams. But as the region grew, the surplus turned into a deficit. Power prices rose, and most Northwest smelters closed.

Intalco was the last smelter built in the region, opening in 1966 and employing about 1,200 workers at its peak. The smelter was forced to close during the 2001 West Coast power crisis, but managed to keep paying workers under the terms of a complex financial arrangement with BPA.

The smelter reopened two of its three potlines in May 2002, and efforts to work out a long-term power supply contract with BPA have been ongoing. Seemingly promising proposals have come and gone, amid ominous statements from Pittsburgh-based Alcoa about the risk of a permanent shutdown if a deal wasn't struck soon.

In October, BPA proposed a deal that would guarantee 285 megawatts to Intalco for the next 19 months. The smelter now uses 320 megawatts to run two of its three potlines. The deal also contains provisions providing Intalco up to 320 megawatts if calculations show the deal wouldn't be too costly to BPA.

During those 19 months, BPA could have the courts clarify federal law that governs the agency's regional power sales. After that, the proposed deal would enable Alcoa to buy power for another five years, if economic conditions warranted.

But the ultimate fate of Intalco may be determined in the courts. Some public utility districts and other power users have gone to court to challenge BPA's authority to provide power to Alcoa. They argue the utilities have first claim on hydroelectric power that BPA markets.

Last August, a federal appeals court partially upheld the challengers' legal theory, ruling that any power deal between BPA and Alcoa must provide a "net economic benefit" to the region.

Alcoa's opponents claim that over the roughly seven-year life of the proposed BPA-Alcoa deal, other power users would pay an additional $400 million on their electric bills.