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C. Falls Aluminum Firm, BPA Approve Contract by Staff The Daily Inter Lake, June 1, 2006

Columbia Falls Aluminum Co. will receive as much as 140 megawatts of electricity for the next five years, according to a decision released Thursday by the Bonneville Power Administration.

CFAC's current contract with BPA expires Sept. 30. Each contract lasts five years, and the company has been negotiating the new contract for at least two years, said Haley Beaudry, CFAC's manager of external affairs. Beaudry hopes the contract will be signed in a few days.

"This announcement comes about because it's a five-year discussion, and we have negotiated with an absolutely huge amount of help from our senators," he said.

Under the new contract, effective Oct. 1, BPA will provide its direct service industry customers financial payment in lieu of physical power, the equivalent of as much as 560 megawatts of electricity. Those monetary benefits will be capped at $59 million a year, and depending on world markets and power rates, the companies may not use the full $59 million.

"We have negotiated it so that there is some flexibility in the contract, so that if the price of power is a little bit lower one year, then we can take less than the full monetary benefit and then use that for a different year when the price is higher," Beaudry said.

Even with the flexibility, though, the contract stipulates that the monetary benefits never will enable aluminum companies to pay less than the rate public utilities and cooperatives pay.

In the past, BPA's direct service industry customers -- three aluminum companies and one paper company -- have received power directly from BPA. The paper company is not included in the 560 megawatts and will continue to buy direct power from BPA as a surplus power sales contract.

During the past few contracts, BPA has reduced the amount of power it has sold direct service industries.

"The amount of power from BPA has been reduced contract by contract until now we're reduced to one potline and a financial incentive instead of a certain amount of power," Beaudry said.

The company is operating on 70 megawatts, which, with current market rates, is enough to run one of its five potlines.