It was concerning to see the Op-Ed by Washington State Labor Council President Larry Brown accusing the Bonneville Power Administration (BPA) of standing in the way of jobs by not plugging a defunct aluminum smelter back into the Northwest grid. [“BPA stands in way of green-aluminum jobs in Whatcom County,” March 11, Opinion].

Not only would that plant take away the clean, renewable hydro serving other Northwest communities — many of them in the lowest income counties in our region — but it would be illegal under the terms outlined by Congress that regulate how BPA is to sell its lowest cost power in the Northwest. Such illegal offerings to aluminum smelters have been tried before, repeatedly challenged and rejected by the courts.

We at the Public Power Council — representing consumer-owned electric utilities that purchase power from the BPA — welcome economic development efforts that provide good jobs and recognize the value of domestic production of clean, renewable domestic energy. However, we cannot support the request from Blue Wolf Capital, a private equity investment firm, to acquire and restart Alcoa’s Intalco aluminum smelter in Ferndale with other citizens and businesses essentially subsidizing the new venture. Blue Wolf’s proposal is not only in violation of the law, but Brown’s Op-Ed also relied on unsupported assertions.

Blue Wolf and its supporters claim that BPA is walking away from a long-term relationship. In fact, Alcoa shuttered the Intalco smelter, conducted layoffs and in August 2018 issued a notice of termination to BPA that became effective on Aug. 31, 2019. From that point, Alcoa turned to the wholesale energy marketplace to secure electricity supplies from other providers. The law is clear: BPA’s obligations to Intalco ended with Alcoa’s deliberate notice of termination. Alcoa is no longer an “existing direct service industrial customer” of BPA, and there is no “existing” contract between BPA and Alcoa that could somehow be transferred to Blue Wolf.

The law is also clear that BPA shall not sell power to new direct service industrial customers in the same manner and at the same rate it served the direct service industrial customers that existed at the passage of the Northwest Power Act in 1980. Specifically, Congress added this statutory prohibition to ensure that BPA could not use low-cost hydropower to lure industry away from other regions. 

All of BPA’s firm power is currently allocated to nonprofit, consumer-owned utilities in the Northwest under contracts that run through 2028. BPA does make “surplus” sales, but those are sales of short duration — not the firm, long-term power that Blue Wolf seeks. And any surplus power must be offered to public utilities first, before it can be offered to Blue Wolf.

If BPA were to somehow serve Intalco, it would need to acquire that power on the wholesale market or enter into a long-term power purchase agreement. Blue Wolf can do this itself, as Alcoa had decided to do in 2018. The new plant owners can access the very same power supply options that BPA would explore on its behalf. Put simply, without a sweetheart deal, there is no advantage to having BPA providing power to the plant versus some other supplier. Also, because BPA would need to supply Intalco from the market, it would include significant amounts of power generated by fossil fuels, undermining Blue Wolf’s statements about producing “green” aluminum.

Since BPA does not have power to serve the plant, what is Blue Wolf seeking? The only way that BPA service can be advantageous compared to Intalco securing power supply on its own is if the contract subsidizes the cost of power or shifts the risks to other BPA customers. There is a long history in the Northwest of aluminum plants closing and reopening due to the volatile nature of aluminum as a global commodity. Each time, BPA’s public power customers have been left paying the bill. Northwest public power utilities serve predominantly the lowest income counties in Washington state and the rest of the region. Why should families and businesses already struggling to pay their bills be asked to underwrite a private equity firm seeking a sweetheart deal?