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Larsen Optimistic on Intalco by John Stark The Bellingham Herald, July 5, 2008

Smelter's future hinges on power deal

U.S. Rep. Rick Larsen is hopeful that Alcoa Intalco Works will get the long-term power supply it needs to keep its 650 employees busy producing aluminum at the Cherry Point smelter west of Ferndale.

But in a Wednesday meeting with close to 200 Intalco workers, the Everett Democrat also acknowledged that there are no guarantees.

"I don't know what the end of that chapter is going to look like yet," Larsen said. "The odds increase the harder you work."

The smelter now operates at about two-thirds of full capacity, thanks to a cash power subsidy from the Bonneville Power Administration that is guaranteed through October 2011.

BPA is now negotiating a new power supply deal with Intalco and other power users for the 20 years following that, and Plant Manager Mike Rousseau said his company hopes to acquire a big enough share of low-cost BPA hydroelectric power to keep the local smelter viable. A long-term deal would also make it feasible for parent company Alcoa to upgrade the plant.

"We want to get this done now, because we want to invest," Rousseau said.

Intalco faces stiff competition from public utilities and other power users as BPA decides how to allocate its low-cost power supply.

In response to questions after his talk with workers who packed Intalco's Totem Terrace meeting hall, Larsen said he didn't want to speculate about the chances that Intalco will get what it needs after 2011. But he said the situation is far from hopeless.

In past power-supply agreements with public utility districts, BPA has agreed to supply all the needs of those districts, buying more costly power in the electricity marketplace when the supply of hydropower from Columbia River dams fell short of demand.

In the new 20-year deals now being negotiated for post-2011, BPA may be able to switch to a system that gives the utility districts the responsibility for acquiring their own additional power when their BPA allocation falls short. That may provide BPA with more flexibility to shift some power to Intalco and other regional aluminum smelters, which need hundreds of megawatts of electricity to turn aluminum ore into ingots.

Rousseau said BPA often has enough surplus power to enable the federal agency to sell its power outside the region. He argues that his company should be able to get a share.

"Before that power goes outside the region, we should take care of customers that have historically had access to it," Rousseau said.

Meanwhile, the lives of employees like Lindsay Jackson hang on the outcome.

Two years ago, Jackson was arranging merchandise displays at Macy's in Bellis Fair mall. Now Jackson, 25, is driving a forklift and doing other jobs at the smelter's relining department, and making a lot more money.

"It's given a little more stability with money," Jackson said. "It's a lot more physical, a lot more hours, but I like it."

SHRINKING INDUSTRY

At the aluminum industry's peak in the 20th century, 10 Northwest smelters consumed 3,000 megawatts of power - more than twice the amount now consumed by the city of Seattle.

Today, Intalco is one of four Northwest smelters still in operation, and the aluminum industry's share of Northwest power consumption is perhaps one-fifth of its peak.