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Columbia Falls Aluminum to Close at End of October by Michael Jamison The Missoulian, October 22, 2009

90 Workers Lose Jobs

COLUMBIA FALLS - Columbia Falls Aluminum Co. will shut down at the end of October, laying off nearly 90 workers as high energy prices make operations unprofitable.

"The prices (of electricity) have gone way up, way beyond what you can make aluminum at," said company spokesman Haley Beaudry.

Traditionally, big power users such as CFAC (at its height the plant consumed about 25 percent of all electricity used in Montana) received cut-rate prices from Bonneville Power Administration.

A quasi-governmental outfit, Bonneville markets power produced at the region's federal hydroelectric dams, and for decades sold at-cost electricity to big industrial customers. It was considered a sort of economic development, as the smelters provided hundreds of jobs in a region short on diversified employment.

But as population boomed and economies modernized, general demand for the cheap hydropower skyrocketed, pitting industry against other users. The amount of at-cost power available to industry was whittled away, and eventually was replaced entirely by a small subsidy that helped CFAC and others buy down the cost of electricity.

General consumer advocates, however, still cried foul, arguing that the subsidy was too large and came at the expense of other ratepayers. The court agreed, and in December 2008 ordered BPA to end its subsidy to CFAC.

Bonneville and the aluminum producer quickly cobbled together a "bridge agreement," Beaudry said, which carried the company through Sept. 30, 2009. CFAC has been operating at 10 percent capacity since that agreement.

The litigants again sued, however, successfully challenging the bridge agreement.

BPA - which had required CFAC to buy power from the agency in return for the subsidy - cut the company loose, and since October 1 the plant has struggled to buy electricity from private producers.

"Right now, we have no power contract," Beaudry said. "We've been in the open market, the commodity market, for the entire month of October."

During that time, he said, prices have soared from about $35 per megawatt hour to nearly $50. "That's just too high," Beaudry said. "Way, way too high."

Worldwide, he said, the aluminum industry is on the rise; but in the United States, high power prices have left producers out of the competitive loop. A weak American dollar doesn't help, he added, as the raw materials are imported, but much of the product is used domestically.

The company, with help from the workers' union and Montana's congressional delegation, continues to negotiate with both Bonneville and the U.S. Department of Energy, "and everybody is trying to find a solution," Beaudry said. "There has to be a solution. We haven't found it yet, but there has to be."

Any solution, however, will take time to implement, leaving the Oct. 31 closure all but assured. The company has been depleting its inventory of alumina and carbon and tar, "and won't have raw materials on site to keep the plant operating beyond October, even if a favorable agreement with Bonneville falls out of the sky today," Beaudry said.

Restocking the raw materials, he said, would likely take a month or more, regardless of power negotiations.

So while Beaudry expects the plant to eventually reopen, he's also helping CFAC's 88 or so employees to prepare for unemployment. The workers qualify for federal retraining funds, he said, and also for programs that extend health insurance and unemployment benefits.

And small number of workers will remain at the plant, Beaudry said, performing maintenance and "keeping the heat on." "Beyond that," he said, "the plant will be closed."