Big Aluminum's power plan doesn't sell here (Washington)

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Editorials & Opinion : Tuesday, March 13, 2001

Editorial Big Aluminum's power plan doesn't sell here

The aluminum industry is lobbying the Bonneville Power Administration for another five years of cheap federal power. It is more than the region can afford.

Kaiser and several other companies are offering a plan to save their industry. On the surface, it looks like good economics. Underneath, the plan is asking for a gift.

Here is what the argument is about: In the five years beginning Oct. 1, the Bonneville Power Administration is obligated to supply 11,000 megawatts of power. It has about 8,000 and has to buy 3,000. The first basket of power is cheap. The second basket will be expensive. The question is: Does BPA mix the two baskets or sell out of each separately, and if so, who gets the cheap power?

The aluminum companies propose that each wholesale customer - City Light, Puget Sound Energy, Kaiser Aluminum, etc. - get a proportional share of the power at a cheap price and any additional power at an expensive price. Imagine power at $20 and $200. A utility like Snohomish PUD might get three-fourths of its needs at $20 and one-fourth at $200.

Under a system like that, everyone would conserve like fanatics. That is the good part. But how could, say, Snohomish PUD convince its customers to cut back power use by one quarter? It would be an immense job, maybe impossible. The aluminum companies could do it instantly. Close some pot lines and all their power is at $20.

That is why they want their plan.

Their plan assumes that they have an equal claim to the power. But they don't. By law, the power belongs first to the City Lights and the PUDs of the region. The next claimants are the private utilities. The smelters get what's left. And because there is none left, every megawatt of $20 power BPA gives to the smelters will have to be replaced by $200 power bought on the market and paid for by everyone else.

The public utilities make this calculation: Next year, if demand and supply are unchanged and the aluminum companies get their 1,500 megawatts, Bonneville will raise its rates to Seattle, Tacoma, Snohomish and the other utilities by 255 percent. If the aluminum companies are unplugged from the federal grid, the rates to everyone else go up by 121 percent.

That is a stunning difference.

Over a five-year period, the difference is less but still significant: a wholesale rate increase of 91 percent versus 38 percent. In dollars, it's essentially a tax - a new tax - of $1 billion per year on this region to maintain 7,500 aluminum jobs.

These jobs are valuable. But to sustain them will snuff out many more jobs elsewhere, as electric bills raise business costs and soak up the buying power of consumers all over the region.

http://archives.seattletimes.nwsource.com/cgi-bin/texis/web/vortex/display?slug=alumed13&date=20010313

-- Martin Thompson (mthom1927@aol.com), March 13, 2001


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