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Port Townsend Contract Saves Jobs by Staff BPA Journal, May 2011

The largest private employer in Port Townsend, Wash., will stay that way, thanks to a new wholesale power contract with BPA. The new contract will provide more than two years of low-cost federal power to Port Townsend Paper Corporation, saving 300 family-wage jobs in a community of 8,300 residents.

"This is a really good outcome for everyone involved," says BPA Administrator Steve Wright. "While Port Townsend Paper, its employees and the local economy benefit from the purchase of BPA's low cost power, it also makes good business sense for our other ratepayers because the net benefits from serving Port Townsend Paper exceed the cost of service."

In the new contract, which runs through Aug. 31, 2013, BPA will continue to provide the paper plant with 20.5 average megawatts at BPA's Industrial Power rate. That amount of electricity is enough to power more than 17,000 homes for a year.

Just like the current contract between Port Townsend Paper and BPA, the service period of the new contract is limited by a 2009 U.S. Court of Appeals for the Ninth Circuit decision. The Court ruled that contracts with direct- service industries (certain electricity-intensive industries that are allowed to buy wholesale power directly from BPA) must be consistent with sound business principles. In other words, the benefits to BPA of serving the direct- service industry must equal or exceed BPA's cost of serving their energy needs during the period of service.

BPA's most recent analysis, called an equivalent-benefits test, indicated that service can be provided through at least August 2013 while continuing to benefit BPA and its ratepayers. Port Townsend Paper has a recurring option to request that BPA conduct another equivalent-benefits test to determine if the contract can be extended.