Washington Smelter to Reopen

Michigan Avenue Partners plans to start making metal at its Longview aluminum smelter in April, rekindling an industry that was shut down amid last year's power crisis.

"Restarting has always been our plan and it's still our plan," said a spokeswoman for the Chicago investment group that owns the smelter.

Profits may be elusive, however, as prices for aluminum hover around 65 cents per pound. A year ago, a pound of the metal fetched more than 75 cents.

Those low prices are among the reasons that eight aluminum smelters in the Pacific Northwest - about 40 percent of the United States' capacity - remain quiet.

It's an unsettling time for the region's smelters and workers, who openly worry about the ability of smelters to reopen as recession lingers and foreign suppliers prepare to compete for market share.

For Michigan Avenue Partners and Golden Northwest Aluminum Corp., which operates smelters in The Dalles, Ore., and Goldendale, Wash., the cost of not restarting may be steep.

The companies have what are called "take-or-pay" contracts with the Bonneville Power Administration. Basically, if the companies refuse BPA power deliveries, the federal agency will sell the allotment on the spot market and charge the companies the difference between the contract price and the price collected.

The contract price is about $37 per megawatt. On the spot market, electricity is worth less than $20.

Bonneville is awash in power, said spokesman Ed Mosey, and anticipates revenues from power sales to Longview and Golden Northwest.

"We'd love to sell them power," Mosey said. "We have no intention to waive (the take-or-pay obligations) at this time."

The agency lost $216 million in 2001, and has forecast losses for 2002 unless demand and power prices rise.

Instead, BPA is ready to send 100 megawatts to Longview beginning in April. The number will jump to 280 megawatts in July, which will put some of its 700 Steelworkers back in the smelter.

Golden Northwest faces a similar scenario. Its power deliveries are scheduled to begin in April. Eventually, Golden Northwest will collect 236 megawatts.

Kaiser faced a similar take-or-pay dilemma last October, but turned to U.S. Department of Energy officials to suspend the costly contract provision for a year.

Mosey said he didn't know if Golden Northwest and Michigan Avenue Partners were pursuing the same tactic.

Michigan Avenue Partners isn't commenting on its take-or-pay situation, the spokeswoman said. Spokesman Review