Northwest Pwr Co To Decide Aluminum Smelters Fate In March

NEW YORK--The Bonneville Power Administration, which provides power to aluminum smelters in the U.S. Northwest, expects to release in Mid-March its final decision on whether to end its long-term business with several aluminum companies in about four years.

"It looks like we will be making a decision in the next month," Mike Hansen, a BPA spokesman, told Dow Jones Newswires on Thursday.

The utility said in early September that it originally expected to decide in January because that region faces a struggle with rising power prices and less availability of power, forcing the BPA to re-evaluate its relationships with all its customers, not just the aluminum industry.

"It's not about just [the aluminum companies], we serve about 20,000 customers - that accounts for 40% of the Northwest," Hansen said. The area includes Washington, Oregon, Idaho and western Montana.

"The decision is taking more time than first thought but we are hoping to get it out in the next month," he added.

The BPA decision will affect its long-standing business relationships with aluminum giant Alcoa Inc. (AA), Columbia Falls Aluminum Co. and Golden Northwest Aluminum Inc.

Alcoa, which began a new five-year contract with the BPA to power its Intalco smelter in Ferndale, Wash., in October, has called the "singling out" of the aluminum industry unfair.

The BPA along with those three aluminum companies agreed to a five-year power contract, which will expire on Sept. 30, 2011.

In that contract, instead of providing direct power to the smelters, the BPA said it would provide a financial benefit to the companies to go to the market and find the power.

Hansen said recent reports that Alcoa and Columbia Falls have increased production at their smelters in the Northwest are a good sign.

"We think its a good indication that the current contracts are working," Hansen said.

Alcoa spokesman Kevin Lowery said the current contract with the BPA is seen as a temporary arrangement.

"We view it as an interim agreement until we can buy power just as other industries are able to do in that region," Lowery said. "The aluminum industry is being singled out, and there are other big industries that use a lot of power and we want to be able to buy it the same as they do."

Lowery added that before the end of its current contract, Alcoa would like to put together a new contract with the BPA that would allow it to buy power as it has in the past.

The BPA's customers include about 120 utilities. It also provides a surplus of power to brokers and others throughout the West Coast.

If the BPA couldn't meet all of its customers' needs, it would have to go to the market to buy power, a costly proposition. The BPA said these costs would then be passed on to its customers.