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Northwest aluminum workers protest BPA's death-knell
By DON McINTOSH, Staff Reporter
At a May 4 rally at the Portland headquarters of the Bonneville Power Administration (BPA), union members were taken by surprise when acting BPA administrator Stephen Wright came out to hear what they had to say.
For an hour, wearing T-shirts that read "Wright is wrong," about 400 Steelworkers and Machinists from seven Northwest aluminum smelters had been marching around the entrance chanting challenges for Wright to come out. Emotions were high. Smelter workers worry that their industry may not recover from a wave of closures brought on by soaring electricity prices. An estimated 7,000 jobs are at stake.
Traditionally, a handful of large industrial customers such as smelters have purchased power directly from the BPA, which generates much of the Northwest's electricity at 29 hydroelectric dams and one nuclear plant. BPA generators can produce 8,000 megawatts, but the agency's customers, which also include public and private utilities, are asking for 11,000 megawatts in the next five-year contract cycle, which begins Oct. 1. That would force the BPA to buy 3,000 megawatts of power on the wholesale market, where prices have been sky-high since last summer. Taken together, the smelters account for 1,500 megawatts of this demand.
Thus, looking for ways to reduce its power obligations, Wright began suggesting in early April that the smelters shut down for two years. The BPA would cough up some money to cover wages and benefits for the idled workers, plus a little extra to cover baseline maintenance costs. At the end of two years, the smelters would return to the BPA system, by which time electricity prices would hopefully have fallen due to increased rainfall and new generation plants coming online.
In addition, public utilities and investor-owned utilities would be asked to reduce their demand by 10 percent through conservation.
Wright's proposal had few supporters at the May 4 rally.
"If the aluminum smelters have to shut down two years, they will be gone," said Don Hursey, directing business representative of Machinists District Lodge 160. "He's selling to the public the idea that these large users need to be sacrificed so that the rest can get a decent price."
After listening to appeals from union leaders, environmentalists, and a representative of Ecumenical Ministries of Oregon, Wright took the microphone.
"Bonneville has been a huge supporter of unions and of the aluminum industry," Wright said. "We did ask a huge sacrifice of you Ÿ but you should not have to walk away bearing all the sacrifices."
A smelter worker in the front of the crowd told Wright the amount of aid the BPA is offering won't be enough to cover employee losses. Wright said he was willing to negotiate further that amount.
But ultimately, Wright argued, the smelters have no choice. If they do get significant amounts of power from the BPA, the agency's need to buy that power on the market will mean that, even averaged out with the low-cost power it produces, the price could jump as much as 250 percent. "We think the plants are likely to shut down anyway at those prices," Wright said.
For a time, the aluminum industry and its unions were floating a "two-tier" proposal as a way out of that dilemma. Under such a proposal, the BPA would sell electricity to its customers at two rates - first, its hydropower, at a low price, and then all the additional power it would have to buy, at the market price. Backers of this proposal argued that it would create powerful pressure to conserve, since any power use over the 75 percent of its demand that the BPA could generate would be sold at sky-high market rates.
But representatives of the public and private utilities completely reject this approach, painting it as a self-serving proposal. Smelters can easily cut electricity consumption 25 percent, they argue, by making 25 percent less aluminum. But it would be next to impossible for residential, commercial, and other industrial users to do the same. Jim Woodward, regional director of the Steelworkers, acknowledged that the two-tier proposal is on the back burner because of the utilities' opposition.
The BPA's other customers are united in wanting the smelters cut off from BPA supplies after October. BPA rates are expected to increase 100 percent even with the smelters down; if the smelters were to continue to operate, the rates for all would rise 250 percent, which Jerry Leone, head of the Public Power Council, argues would result in far greater job loss than smelter closures.
"Our members estimate that if power prices jump 250 percent," Leone said, "as many as 56,000 jobs could be lost directly, in mining, agriculture Ÿ"
Six of the Northwest's eight U.S. senators signed a letter in support of Wright's plan to close the smelters for two years in order to save the rest of the BPA's customers.[Oregon's Ron Wyden and Washington's Maria Cant-well declined to sign.]
Given the likelihood that the smelters will stay closed come October, the unions concerned are concentrating their efforts trying to get the best deal for workers. Negotiations are likely to conclude by the end of June.
At the May 4 rally and in ongoing talks, Steelworkers District 11 Director David Foster appealed to Wright for something less than a two-year closure, suggesting instead a closure that unfolds in six month increments. The union is also asking for guarantees of full wages and benefits for the entire workforce as long as the curtailment continues.