Intalco gets long-awaited 10-year power deal for Ferndale-area smelter

After many months of negotiations, Alcoa has announced a new 10-year electric power supply deal with the Bonneville Power Administration that should help maintain 625 jobs at the Alcoa Intalco Works smelter west of Ferndale.

Before the new power deal is final, it must undergo a public comment process. In a press release, the company said it expects the deal to be finalized in early December.

The proposed agreement would provide up to 300 average megawatts through September 2022, BPA spokesman Doug Johnson said. He also noted that 300 megawatts is enough electricity to serve more than 200,000 Northwest homes. BPA will take public comment on the proposed power sales through Nov. 7 as part of the process of making the deal official.

BPA's current power sales contract with Alcoa was set to expire May 26, 2012, but has been extended month by month since then while long-term contract negotiations have continued.

BPA conducted an analysis to determine whether all BPA ratepayers would get some benefits from the deal. They concluded that they would, mostly because the long-term market price for Northwest electricity is expected to remain low because of low natural gas prices.

In addition to providing Alcoa 300 average megawatts at BPA's industrial rate, the proposed agreement requires Alcoa to employ a specified minimum number of workers at the Intalco smelter for the duration of the contract, depending on how much power they use. At 300 megawatts, that level is 495 full-time jobs, which is significantly less than the 625 people now employed there.

Intalco spokesman Josh Wilund said there are no plans to reduce that labor force.

The new contract with BPA obligates Alcoa to take a 10 percent cut in its power supply if BPA needs that power to respond to a power supply disruption in the system.

The Intalco smelter produces approximately 278,000 metric tons of aluminum metal per year and has three potlines. It began operations in 1966. Intalco is now the only smelter directly served by BPA.

BPA is a nonprofit federal agency that markets renewable hydropower from federal Columbia River dams.

Along with 625 jobs, the smelter supports about $118 million in personal income in Whatcom County, $5 million in local taxes and $240,000 in annual charitable contributions, the company says.

BPA officials said they were convinced that keeping Intalco in business was an overall economic plus for the region, and Gov. Chris Gregoire has provided her support to Intalco. BPA officials have said that their economic analysis indicates that Intalco supports about 1,500 indirect jobs, in addition to its own payroll.

The Intalco smelter is among the last in a region where the industry once flourished, thanks to abundant hydropower from federal dams. But most other Northwest smelters shut down in the past 10 years as regional power demands increased and prices rose. The Intalco smelter represents about 6 percent of Alcoa's worldwide aluminum-producing capacity, the website indicates.