Aluminum's 'shameless subsidy'

Industry power plan would cost others big time, utilities contend

By Kathy Day Herald Writer

A two-tier electricity rate proposed by a group called the Northwest Power Alliance amounts to a "shameless subsidy" that will cost ratepayers dearly, a Snohomish County PUD official said Wednesday.

PUD general counsel Mike Gianunzio told members of the South Snohomish County Chamber of Commerce that the aluminum industry's proposal would cost each residential customer of the district about $247 more a year. On average, he added, it would cost the average business customer about $1,500 more, and large industrial customers like Boeing would pay millions more if the proposed rates were adopted.

On the other side is a group described by its director, John Wilson, as a coalition of aluminum companies, other major industries and trade, community and union officials. They united in late 2000 to spread the word that jobs and communities are at risk because of the energy crisis.

"The question here is whether one sector, one set of communities should assume all of the burden for Bonneville's overcommitment" of resources and for agreeing to sell power to California and others while askng a key Northwest industry to curtail operations," Wilson said. "Who's next? Boeing? Farmers?"

BPA sells power to public utilities, private utilities and companies in "direct service industries" such as aluminum makers. In 1996, when BPA power was more expensive than the open market, some utilities and the industries went where the rates were lower, said spokesman Ed Mosey. As a result, to keep the agency on firm financial footing, it sold power to several California cities and the Bay Area Rapid Transit District.

Now that the market has turned around, BPA has more demand than it has power.

As a result, the agency is asking aluminum smelters to shut down for one to two years to reduce the amount of power it must buy in the volatile spot market. To encourage the shutdowns, BPA has offered to assist companies in helping their displaced workers.

Instead, the alliance is suggesting a plan it says would encourage conservation, something Wilson said is needed to help get the Northwest through the current crisis.

It wants BPA to charge all customers a lower rate for 75 percent of the power they need. The remaining 25 percent would be at a rate that would recover the costs of open-market purchases "if the customer chooses to buy this full amount and does not conserve," according to the alliance fact sheet.

Under the new BPA contracts, which take effect on Oct. 1, rates are blended so all customers pay an average of the low rates for power BPA generates itself and the higher rates for purchased power.

BPA officials said if aluminum companies don't agree to the call to shut down, and utilities don't cut use by 10 percent, all customers will face rate increases that could top 250 percent. PUD officials estimate that would mean an additional 75 percent rate hike for its customers.

The two sides are in the midst of a war of words that promises to escalate before BPA rates are finalized in June.

Wilson estimates 6,000 jobs will be lost under the BPA plan, although the agency counters that the number actually employed in plants using its power is "closer to 3,000."

Mosey said BPA estimates that six jobs in other industries will be lost for every one saved in the aluminum and related industries.

The alliance has launched a Web site and hired a respected public relations firm to help in its advertising and lobbying campaign. And utility officials such as Gianunzio are on the speaking circuit spreading their side of the story.

You can call Herald Writer Kathy Day at 425-339-3453 or send e-mail to kday@heraldnet.com.

This story can be found at:

http://www.heraldnet.com/Stories/01/4/26/13687265.cfm#top

-- Martin Thompson (mthom1927@aol.com), April 26, 2001