Washington mill closes due to high electricity rates

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Wednesday, June 28, 2000

600 workers laid off

John Stark, The Bellingham Herald

JIM CUNNINGHAM

Cites high electricity rates

Georgia-Pacific West Inc. announced a surprise temporary shutdown of its Bellingham mill Tuesday night, blaming a crushing increase in the price the plant pays for electricity.

Some workers will remain on the job performing environmental, clerical, security and administrative duties, but more than 600 of the mill's 820 employees are out of work this morning, company spokesman Orman Darby said. Employees with vacation benefits can use them to tide themselves over, he added.

Union officials contacted Tuesday evening had not heard about the shutdown. Don Patterson, president of Local 194 of the Association of Western Pulp and Paper Workers, said the company need not notify the union when shutdowns occur, and there is no contract provision for pay.

"They don't need our permission to close it or shut it down," Patterson said. " We have no control over that."

Company officials refused to speculate about when the shutdown was likely to end. General Manager Jim Cunningham said the mill can't reopen until the price of electricity allows profitable operations.

"We need to resolve the electricity problem," Cunningham said. "It's out of control. ... We cannot run the plant under these electrical rates."

During the next three days, Cunningham said, the company had been told to expect its electricity costs to be about 20 times normal. Faced with that forecast, local managers and corporate officials in Atlanta headquarters agreed late Tuesday that the shutdown was necessary, he said.

Beyond three days, there is no way to accurately predict the price of electricity on the spot market, Cunningham said. That spot price determines the price that G-P must pay Puget Sound Energy under the terms of a five-year contract that still has one year remaining.

Most of Puget Sound Energy's residential and business customers and some industries have power rate schedules or contracts with fixed prices, and are thereby protected from short-term fluctuations.

Will the spot market price picture brighten soon? Cunningham was not optimistic.

"It's not going to get better until late fall, unless there's a change in how we run the electricity business," Cunningham said.

But power price relief could come if G-P, Puget Sound Energy and Whatcom County Public Utility District No. 1 can agree on some way to get cheaper power to the plant.

Although this shutdown came with little warning, plant shutdowns are nothing new for G-P. Darby said about two years ago, the mill was shut down for a couple of weeks for maintenance. Accidents also have forced unscheduled temporary closures in the past.

"If we are able to find a solution to this (power price) in a few days, this will be no more than a typical maintenance shutdown," Darby said.

Bellingham Mayor Mark Asmundson said the shutdown is bad news for the community. And he noted that another 1,200 jobs are at stake at Bellingham Cold Storage, which has been struggling with the same power cost crunch.

The Bellingham City Council has scheduled an emergency meeting for 6:30 p.m. today at City Hall. Asmundson said the council will consider an ordinance giving Whatcom County Public Utility District No. 1 permission to operate within the city limits. The PUD is trying to make a deal with Puget Sound Energy that will allow the PUD to provide G-P and Bellingham Cold Storage with cheaper power that would have to be delivered on Puget Sound Energy lines. State law requires the city to give the PUD its permission before operating in the city.

Asmundson stressed that the emergency ordinance does not give the PUD permission to construct its own transmission lines. The council has scheduled a series of public meetings to consider that issue.

http://news.bellinghamherald.com/

-- Martin Thompson (mthom1927@aol.com), June 28, 2000


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