WA: BPA planning to idle smelters

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Federal power agency suggests Kaiser alone may
not be eligible for payroll compensation

. . .

the agency has a long-running dispute with Kaiser
regarding the company's use of proceeds netted from
the resale of federal electricity.

In its contract that expires Oct. 1, Kaiser had the
right to resell its allotment of BPA megawatts. The
deal created a $400 million windfall for the company.

. . .

"It is our expectation that the companies would
not be able to operate given a potential tripling
of our rates

. . .

"The future is an unknown, but it's reached what I
would call a crisis level," said Simpson. "And not
just for our particular company, but the whole

"We're just seeing the start."

The Spokesman Review

-- spider (spider0@usa.net), April 11, 2001


-- spider (spider0@usa.net), April 11, 2001.

Will power crunch kill aluminum industry? Wednesday, April 11, 2001


Dan Fowler was hoping to return to his post at Longview Aluminum by the end of the year. Now he doesn't know if he'll ever get back.

Fowler spent the last 27 years working aluminum, watching smelter owners come and go, rearing three kids and eventually pulling down $55,000 a year.

If the Bonneville Power Administration succeeds in implementing a proposal to shutter the Northwest's 10 aluminum smelters for up to two years, Fowler worries that there will be no jobs waiting for the 7,600 workers whose livelihood depends on the plants.

"The longer we are down, I feel that we are doomed as an industry out here," Fowler said. "We were hoping to get back in at the end of the year to get things started. ... I just don't see it now."

On Monday, the BPA called on aluminum concerns to close Northwest smelters to help hold down soaring energy prices. Many smelters had already closed their doors as high energy prices made aluminum production unprofitable.

The BPA plan would freeze a Northwest industry responsible for 38 percent of the nation's aluminum production in smelters throughout Washington, Oregon and Montana, according to industry data. The 10 smelters consume 1,500 megawatts of power, enough juice to light all of Seattle. Bonneville can only produce 8,000 megawatts.

Regulators and aluminum company officials will attempt to craft an agreement in meetings that could begin as early as this week, according a BPA official.

The two sides will likely discuss the length of any shutdown and BPA outlays to pay workers during down time, according to BPA spokesman Ed Mosey. But companies will likely negotiate payments directly with their workers or their unions.

"It is our strong intent that it not profit the companies, that (the payment) is being used to compensate their workers," Mosey said. "What we are trying to achieve here is to help these companies stay alive."

But the pending negotiations leave thousands of Northwest aluminum employees, and tens of thousands of workers tied to the industry, wondering when, if ever, the smelters will ever reopen.

Some laid-off smelter workers already receive support -- a mix of unemployment compensation and pay from the companies. Under that system, Fowler has seen his annual pay plummet from $55,000 to roughly $25,000. While BPA is promising continued assistance under new agreements -- current contracts expire Oct. 1 -- it will likely be less generous than current payments.

"You are going to see a lot of people losing their homes because there is just no way you are going to make it on that," Fowler said, referring to existing support.

A prolonged shutdown also threatens to rob aluminum companies of a skilled work force. If idled employees retrain for new careers, they may not be around when smelters reopen their doors, said Bill Hannah, a 27-year Longview aluminum worker. The payments are designed to help companies maintain a trained work force, Mosey said.

Alcoa Inc. fueled workers' concerns yesterday when an executive announced that its Alcoa Intalco Works aluminum smelter in Ferndale will close Oct. 1, probably for good, unless public pressure forces BPA to change its plan for huge increases in electricity prices.

Although BPA has offered to help compensate employees whose plants close, Lloyd Jones, president of Alcoa's U.S. smelting operations, said that plan wasn't acceptable. Restarting the smelter after a two- year shutdown would be costly, and there is no guarantee the region's energy woes would be over in two years, he said.

For an area that is still reeling from last month's closure of a Georgia-Pacific pulp mill and chemical facility, with its loss of 420 jobs, the potential loss of the Ferndale Intalco plant and its 1,100 jobs could be devastating, said Michael Brennan, president of the Bellingham/Whatcom Chamber of Commerce and Industry.

The Bellingham area has diversified its economy since the crash of the Canadian dollar sparked its last crisis -- a dramatic slide in retail sales -- in 1992, Brennan said.

But the pulp mill closure alone will suck $60 million in wages directly out of the local economy. Considering that every dollar in wages is estimated to be respent at least 2 1/2 times before it leaves the local retail area, the pulp mill closure alone could inflict a $150 million hit on the area's $2 billion annual taxable sales base, Brennan said.

The aluminum mill closure would more than double the hit on the tax base, he said.

The city is gearing up to fight back, Brennan said. Meetings are scheduled today with U.S. Rep. Rick Larsen and with a representative from Gov. Gary Locke's office to outline political strategies to save the aluminum plant, and to outline relief plans for workers that have already been laid off.

As regulators and industry officials prepare to talk, the United Steelworkers of America will launch its own campaign at the end of the week to pressure public officials and voters to help preserve jobs and wean the local aluminum industry off federal power by 2006.

The plan calls for a two-tiered system, granting BPA customers 75 percent of allocated power for the next five years at original rates and the rest at higher rates.

Workers would receive assistance, but the union didn't rule out shutting down some smelters, at least temporarily.

"The issue of temporary curtailments of aluminum (concerns) ... after October 1, 2001, should be individually negotiated," union leaders wrote in a March 26th letter to the BPA.

Meanwhile, the aluminum industry will take its case to the Bush administration, according to Washington, D.C.-based The Aluminum Association Inc.

The group will "seek a transition period with return to power or energy prices to a fair market and during that period protect the viability of that industry and its workers," said Aluminum Association spokesman Robin King.

King said a two-year shutdown isn't settled. The industry group is also pushing other options, including a different pricing structure for plants running at night during off-peak times.

Despite the efforts of private and public officials, some workers remained unconvinced yesterday that an aluminum industry that helped define the region would survive in the Northwest.

"There was always a future. Now, I am not convinced there is a future," said Hannah, the Longview smelter worker who expects to be laid off next month.

"I can't believe it happened so fast." http://seattlep-i.nwsource.com/business/18170_aluminum11.shtml

-- Carl Jenkins (somewherepress@aol.com), April 11, 2001.

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