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 plans to use Alcoa payment to invest in strategic priorities

by Kimberlee Craig | Jun 18, 2018

Alcoa Corporation announced today that it will make the $62 million payment tomorrow, June 19, as part of its power sales agreement, a payment that will have a modest impact on the District’s finances.

“While $62 million is a large amount of money, the payment amounts to less than one year of our annual capital investment and barely moves the needle in terms of PUD future borrowing from the capital markets,” said PUD General Manager Steve Wright.

“We will use these dollars to stay focused on implementing our strategic priorities of investing in our assets and people, reducing our debt and implementing the Public Power Benefit program.”

Alcoa’s Wenatchee Works smelter has been curtailed since December 2015. The power sales contract included an $86 million deferred upfront charge that was specifically designed to encourage Alcoa to operate the plant. Alcoa earned a payment discount each year the smelter operated from 2011 to 2015.  Last year, PUD Commissioners agreed to defer the bulk of Alcoa’s remaining charge until June 2018 as Alcoa considered whether to restart the facility. The invoice for $62 million represents the remainder of the deferred upfront charge.

The payment under the contract does not prevent the possibility of a restart, and Alcoa’s contract with the PUD remains in place until 2028.

Alcoa receives 26 percent of the electric generation from the Rocky Reach and Rock Island hydropower projects for its Wenatchee Works aluminum smelter, which is about enough power to operate three potlines. During the curtailment, the PUD sells unused power on Alcoa’s behalf, and the proceeds are applied toward Alcoa’s monthly contract costs. 

Chelan PUD views Alcoa as a valued community partner with a shared history of providing economic benefits to the Wenatchee Valley.