NCPA - National Center for Policy Analysis

Bonneville To Aluminum Industry: Drop Dead

June 6, 2001

The Bonneville Power Administration (BPA), the federal agency which provides electrical power to the Pacific Northwest, has decided to stop selling electricity to that region's aluminum industry, effective October 1, 2001.

The BPA defends it action as necessary because the demand for energy has outpaced its supply. However, it is generally agreed that the BPA over-promised electricity to customers -- pledging to sell more than it can produce. Now the agency faces the option of refusing to sell energy to certain customers or to spread the pain among all customers equally. It has chosen the former.

  • If its decision stands, it will put a sudden end to the region's extensive, 60 year-old aluminum industry.
  • It would mean an end to 7,500 aluminum jobs and 23,000 jobs in related fields.
  • BPA officials say they'll allow the aluminum smelters to restart in two years -- but observers say that is unlikely after a costly shutdown.

The Seattle Times says the death of the region's aluminum industry will keep wholesale energy price increases at 38 percent over a five-year period as opposed to 91 percent. According to a Times editorial, keeping those aluminum jobs represents an unfair "tax" on the region.

Ironically, by targeting the aluminum industry, BPA is punishing the customer that has demonstrated the greatest improvement in energy efficiency.

  • Since 1995, the aluminum industry has cut its megawatt usage in half from 3,000 to 1,500 megawatts.
  • The biggest increases in electricity usage come from Washington state's internet-driven high tech economy.

Targeting specific industries isn't equitable, says policy analyst John Carlisle, but it does show there is an energy crisis -- and increased production and supply is needed.

Source: John K. Carlisle, "Energy Crisis Spreads: Aluminum Industry Faces Shutdown, Layoffs Due to Electricity Shortage," National Policy Analysis Paper No. 338, June 2001, National Center for Public Policy Research, 777 North Capitol Street NE #803, Washington, D.C. 20002, (202) 371-1400.

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