Alcoa Energy Supply

On May 1, 2017, Chelan County PUD commissioners agreed to a requested change in the power contract with Alcoa Corp. that the company says will preserve the opportunity to further consider restarting its aluminum smelter located south of Wenatchee. Alcoa’s $7.3 million partial payment, which includes a charge for being able to “buy time,” was recommended by staff and provides that the one-year deferral on the balance will keep the financial impact neutral for PUD customer owners.

Board members took the action after reviewing staff analysis, discussing comments gathered from the community and Alcoa workers, and confirming with Alcoa and union representatives that workers will not lose any benefits if part of the $67 million payment due in June is deferred.  

Kelley Woodard, Wenatchee Aluminum Trades Council president, thanked PUD commissioners for the District’s support over the years of continued plant operations. “My goal is to get the plant restarted and get my members back to work. I think this gives us the best chance to make that happen … so I’m in favor.”

After approving the amendment, Commissioner Ann Congdon said the union’s support for the approach of paying a portion now and deferring the balance of the payment a year was key. “I had reservations, but based on what Kelley said, and that he supports it, because of that I did vote ‘yes.’ “

Michael Padgett, Alcoa senior vice president for energy, updated PUD board members on the company’s positive earnings for the first quarter of 2017, that the worldwide surplus of aluminum is smaller and that the Trump administration launched a recent inquiry into unfair trade practices in the global aluminum market.  

A 1953 view of Rock Island Dam and Alcoa Wenatchee Works

A 1953 view of Rock Island Dam and Alcoa Wenatchee Works

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Alcoa News

Chelan PUD discussing future of Wenatchee Works with Alcoa Corporation

by Kimberlee Craig | Mar 17, 2017

As Alcoa Corporation considers options for its Wenatchee Works smelter, Chelan PUD is engaging Alcoa Corporation based on the principle that any potential changes in the plant’s existing power contract must have a neutral to positive financial impact on Chelan PUD customer-owners, according to General Manager Steve Wright. The utility looks favorably on an option that can preserve the potential for a smelter restart and local jobs as long as the financial principle can be achieved.

Elements of a possible agreement with the aluminum smelter to achieve that result would be subject to negotiation.

Alcoa Corporation officials told Chelan PUD staff that no decision on the facility’s future has been reached. However, they are discussing ideas with the PUD that will preserve the opportunity for a restart in the future.

Alcoa Inc., the former parent company of Alcoa Corporation, curtailed operations at the plant in December 2015. The plant employed more than 400 workers at the time. 

When Alcoa Corporation separated from its former parent company, it kept the primary aluminum business, which includes the Wenatchee Works smelting operations. Chelan PUD agreed to assign the existing power contract for the Wenatchee Works smelter to the new company in October 2016, after receiving additional credit and other assurances.

The company has a contract with Chelan PUD through late 2028 to receive 26 percent of the electricity made at Rocky Reach and Rock Island dams to power the aluminum smelter south of Wenatchee. Since operations ceased, Chelan PUD has continued to sell unused Alcoa Corporation power and to apply the proceeds against outstanding contract obligations. Under the existing contract, Alcoa Corporation would owe a $67 million payment if the plant remains curtailed in June.

Wright said it is the PUD’s goal within the next month or two to resolve the request from Alcoa Corporation for contract terms that provide more time to allow the company to reach a decision regarding the plant’s future.