Changes in the energy market is allowing aluminum smelters in the northwest US to sell electricity back to the Bonneville Power Administration (BPA), which is marketing power generated by the Columbia river hydro dams. BPA can then resell this power to the power starved California market.
Five years ago, a power glut in the market led to complaints by northwestern industrial customers that BPA rates were higher than market rates. Aluminum companies told BPA that they would tear up their contracts and seek supplies from independent suppliers. At the time BPA negotiated with the aluminium industry, allowing aluminum companies under contract, the chance to resell power if they were forced to shut down production.
Aluminium companies are now taking advantage of this clause in their agreements by reselling power back to BPA, at the current high market rates. Kaiser Aluminum Corporation has said it can make more money (US$52M) by selling electricity back to BPA than it can making aluminum, so it has shut down its smelter in Spokane.
Recently, Golden Northwest Alu-minum, which has two plants in the Columbia river Gorge, said it was reducing production to 10% and would sell power back to BPA.
Columbia Falls Aluminum Company in northwestern Montana said it was cutting production and returning more than 100MW of power to the grid.
BPA provides about half the electricity consumed in Washington, Oregon, Idaho, Montana and Nevada. Aluminum producers consume about one quarter of the electricity available from BPA.