By the OGJ Online Staff
HOUSTON, Mar. 30, 2001Kaiser Aluminum Corp. Friday said it will realize net proceeds of about $130 million from sale of the remaining power it had under contract through September with the Bonneville Power Administration.
Kaiser said it sold substantially all the remaining power it had under the BPA contract to various buyers. It said the proceeds are before applicable nonenergy charges. The impact of the power sales will be reflected in the company's first quarter 2001 financial results, Kaiser said.
It said it will receive proceeds of the electricity sales periodically through October, when a new power contract with BPA becomes effective.
Aluminum smelters throughout the Northwest have curtailed production in response to rising electricity prices. Several companies, including Kaiser, have remarketing rights under contracts signed in 1995.
The contracts allowed them to remarket the power to mitigate the risk of having to purchase BPA power when aluminum markets were poor and production curtailed. In 1995, when BPA executed the agreements, no one contemplated that power markets would be as high and as volatile as they have been in recent months.
Golden Northwest Aluminum Inc., Norsk Hydro ASA, and Kaiser have either reduced production or shut down facilities to sell electricity instead of aluminum.
No other industry has the privilege of buying power direct from BPA at wholesale prices except the aluminum industry, BPA said. This arrangement was begun after World War II so the aluminum companies would remain viable in the region. BPA has since renegotiated contracts with some producers that include less generous provisions.
Like California, the Northwest is suffering from a electricity shortfall, due to a drought that has curtailed hydroelectric production, growth in demand, and a shortage of new power facilities. The region is preparing for a tough summer that could include blackouts.