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BPA Boss Tells Intalco Workers No Guarantee of Future Cheap Power by Philip Dwyer Bellingham Herald, October 1, 2008

Although he made no promises, Bonneville Power Administration boss Steve Wright has told local aluminum workers there is still hope that Alcoa Intalco Works can get a new deal from his agency to ensure their jobs for many years ahead.

Wright, BPA's administrator since 2000, visited the big aluminum smelter west of Ferndale Tuesday, Sept. 30.

Alcoa is now trying to work out a power sales agreement with BPA that will be cheap enough to keep its 660 workers employed for the 20-year period beginning in 2011. Wright told an audience of about 200 workers that getting there won't be easy.

"No matter what agreement we come to with Alcoa, it won't be a guarantee that this plant will continue to operate," Wright said. "We want this plant to have a reasonable chance to survive, but candidly, it can't be too good a deal, it can't be too sweet a deal. ... I'm still optimistic we're going to find a way to get there. ... I need to say to you in all candor, I can't promise you that this will work out."

That's because the Northwest's public utility districts and municipal power systems would prefer that all of BPA's low-cost hydropower be reserved for them. Aluminum plants blossomed across the Northwest in the early years of the Columbia River hydroelectric system, when power was plentiful. But today, BPA no longer has enough hydropower to meet demand, and the public utility systems argue that federal law entitles them to get first shot at what is available.

Wright's visit was a reunion of sorts with workers who protested outside his office in 2001 when power market disruption forced a shutdown at Intalco for about a year. If there were any hard feelings left over from that episode, they were not in evidence.

"It isn't every day you have 400 people standing outside your window shouting your name," Wright said, holding up a souvenir protest T-shirt reading "Wright is wrong."

Tuesday's mood was different. Workers expressed gratitude to Wright for coming to the smelter to meet them and hear their concerns.

At one stop on Wright's plant tour, a group of workers in orange hardhats stood beside a stack of shiny aluminum cylinders and ingots as company planning and logistics supervisor Michelle Lehnert explained where Intalco's production goes: A plant in Portland, Ore,. manufactures window frames and other construction components, and another company in Spokane manufactures airplane components.

Wright told the workers that this kind of information will help him make a case for the region-wide benefits from aluminum production, beyond the payroll in Whatcom County.

Elsewhere in the region, many business leaders and public officials contend that they need all the cheap BPA power they can get to create more jobs in their own communities. As they see it, a cheap power supply to Intalco would come at their expense.

Under the terms of Alcoa's current deal with BPA, the company gets a cash subsidy instead of BPA power. Beginning in 2011, Alcoa hopes to get back on the BPA system. But the smelter's demand on that system would be substantial. Intalco now uses somewhere around 300 megawatts of power to operate at two-thirds capacity. By way of comparison, the entire city of Seattle uses about 1,200 megawatts.

Wright said BPA can guarantee a supply of about 7,500 megawatts of hydropower for the region, but that's not enough to meet demand. BPA meets that demand by buying far more costly power from other sources, and those purchases get factored into the price that BPA customers must pay.

"My job is to serve the 10 million people in the Northwest," Wright told workers. "It's important to understand that we do hear from other communities."

Wright makes the decisions on new power supply contracts for Intalco and other BPA customers, in consultation with his superiors at the U.S. Department of Energy. He said he expects to issue a draft contract proposal for Intalco some time in the weeks or month ahead, and then get public input before making that proposal final.

In an interview after his tour, Wright said he must divide up the BPA power supply in a way that is fair to all the competing interests in the region. "We have to be able to make a credible case that the Northwest economy as a whole will be better off," Wright said.

Smelter workers tried to make that case to Wright, while also reminding him of the struggles their own families would face if the smelter is forced to shut down.

Barry Hullett, a plant operations manager, said Intalco gives back good value for the power it uses. Aluminum is a lightweight metal that saves fuel in cars and other vehicles, he noted.

"We do need a lot of power to make aluminum," Hullett said. "If we don't make it here, it's going to be made somewhere else."

T.J. Faulk told Wright he has been working at Intalco for six months, since his construction work dried up in the Seattle area amid the economic downturn.

"This is by far the best job I've ever had," Faulk said. "This is an important job to me and I want to hold onto it."

Another worker told Wright it was important for the U.S. to hold on to what's left of its manufacturing jobs.

"Everything's going to China," he said. "We can't all be longshoremen."