Power Prices Sting Tacoma, Wash., Chlorine Plant Source: Knight Ridder/Tribune Business News

Publication date: 2000-11-22 Arrival time: 2000-11-24

Nov. 22--Larry Landry and Jeff Aiken have vivid memories of May 22. "Jeff called and said, 'Man, you're not going to believe what the price of power's doing,'" said Landry, who heads Pioneer Chlor Alkali's plant on Tacoma's Tideflats.

Aiken, the plant's production manager, noted with alarm that electricity prices, normally in the $20 to $50 range for a megawatt-hour, had spiked to $1,100.

Life hasn't been the same since for 165 workers at a plant that is Tacoma's largest consumer of electric power.

"Prior to May, things pretty much ran on autopilot," Aiken said.

Managing the plant's electricity supply took a couple of hours a month.

"Now, this is daily, not once a week," Landry said. "This is every day.

"It's physically and emotionally difficult."

Things got even worse this week. Prices for natural gas, also consumed in large quantities by Pioneer's manufacturing process, tripled at the same time that cold weather shot the price of electricity above $200 a megawatt-hour on the Northwest's two major electric markets.

The electric price spike led Kaiser Aluminum, which already has shut down metal production at its Tacoma smelter, to close another production line at its plant near Spokane and to lay off about 130 workers.

Landry cut the Pioneer plant to half its capacity, about the amount that can operate on electricity purchased under long-term contracts that are priced far lower than the open market.

But even that causes Pioneer officials indigestion because it means they have difficulties providing the products they make -- chlorine, sodium hydroxide, muriatic acid and calcium chloride -- to industrial customers who need a steady stream of raw materials.

"Our customers need product to keep their production lines going," Aiken said.

So he and Landry changed their daily routine fairly dramatically.

Before the price spikes, Aiken's morning routine involved checking laboratory reports on product quality, plant efficiency, things like that.

Post-May 22, he began logging onto Internet sites. There he found that some days the Bonneville Power Administration had no energy for sale. He checked daily and hourly prices on West Coast power exchanges, the Mid-Columbia, the California-Oregon Border, the Cal-PX.

There were status reports on electric generating conditions at power stations from Washington as far south and east as Texas. Shutdowns at several could lead to price spikes.

Weather? There were Web site maps for the Midwest and western regions of North America, six- to 10-day forecasts of temperatures and rainfall, both of which could influence market prices.

Aiken downloaded regional electricity demand forecasts, and real-time conditions in the California markets, whose unexpected volatility caused prices to skyrocket in the first place.

"Every day I learn more about what's going on," he said. "It's quite a dynamic system out there."

Then there were the conference calls to Houston, where Pioneer's corporate headquarters is located.

"A lot of them were educational," Landry said. "We had to explain what was going on with Bonneville."

Meanwhile, Landry was busy keeping employees and the world outside the plant informed about what was going on.

Since May, he has issued about 15 e-mails to plant workers.

"And I include financial data -- we have not pulled any punches," he said.

"We had to communicate what we were trying to manage. A lot of people were worried. A lot of people came in and said, 'Tell me about this,'" Landry said.

"A lot of our people were concerned about layoffs."

There were none, although some temporary and contract workers were let go.

Landry also became routinely available for news reporters, and he attended meetings in Portland and elsewhere where energy experts described what was happening, but were lots less sure about why it was happening or -- more to the point -- what to do about it.

Landry became active politically, writing letters to government leaders, questioning the state utility tax, which, since it is based on energy prices, was climbing as the market soared.

Members of Congress received updates and appeals for help.

He sent a thanks-but-no-thanks letter to the Economic Development Board, which had asked him to participate in the board's new Competitive Edge program.

I'm working as hard as I can to keep this plant going, he wrote, but I don't see you folks exactly jumping into the fray to help out.

"We've been able to make a subtle shift (in duties) to let Jeff and me concentrate on this other stuff," Landry said.

Part of the subtle shift also hit their families. Fifty-hour work weeks became 60-hour weeks. Vacations were canceled or postponed. Work went home with them at night.

"It dominated life," said Landry. "There was nothing else we did."

"My kids are used to me having my face in a computer," Aiken added.

"I think everyone understood, that that's what we had to do," Landry said.

With the memory of May 22 never far out of mind, Landry and Aiken are now facing the challenge of keeping the plant operating until Oct. 1, 2001, when Pioneer will again become a customer of Tacoma Power and get an assured supply of power at something above $30 a megawatt hour, a price at which the plant can operate profitably.

"The third quarter (of 2001) will be pretty tough on us," Landry said.

But Landry is ever optimistic.

"We've got an experienced and skilled work force," he said, "and that's not blowing smoke."

And management has learned through the stress of operating under bad economic conditions how to run the plant better.

After next Oct. 1?

"We'll be ready to whip some people," Landry said.

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(c) 2000, The News Tribune, Tacoma, Wash. Distributed by Knight Ridder/Tribune Business News. KLU,

Publication date: 2000-11-22 © 2000, YellowBrix, Inc.

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-- Martin Thompson (mthom1927@aol.com), November 24, 2000