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 evaluating Alcoa contract to maximize long-term energy value

by Rachel Hansen | Jun 01, 2026

Chelan PUD is exploring early termination of its long-standing power contract with Alcoa. If the Alcoa contract ends early, Chelan PUD would consider replacing the contract with new agreements that better reflect today’s market.

Energy markets currently put a premium on carbon-free hydropower, which allows buyers to meet clean energy requirements. In addition, new regional programs require utilities to be prepared to generate more electricity on demand to ensure reliability.

Chelan PUD customer-owners pay some of the lowest electrical rates in the nation because of Chelan PUD’s ability to sell most of the hydropower it generates on the wholesale energy market. Proceeds from surplus energy sales allow the utility to invest in projects that improve the quality of life in Chelan County, such as broadband internet and parks.

“By adapting to today’s energy market, we’re putting Chelan PUD in a good position to maintain long-term financial stability and continue the steady, low rates that our customer-owners have enjoyed for years,” said Chief Energy Resource Officer Janet Jaspers.

History

In 2008, Chelan PUD and Alcoa entered into a long-term power sales agreement to provide power for aluminum smelting at Wenatchee Works. Smelting was curtailed in 2015, and Alcoa announced permanent closure in 2021.

The Alcoa power sales contract – and its related agreements – expire in October 2028. While the aluminum smelting is curtailed, Chelan PUD sells the unused energy in short-term markets. The proceeds are used to cover energy production costs.

Benefits

The possible change would bring several key benefits to customers:

  • Continued predictable, stable rates by securing longer-term, higher pricing that captures the full value of the PUD’s surplus hydropower.
  • Improved long-term portfolio plan: Longer contracts with staggered expiration dates provide more certainty and protection from market swings.
  • Continued high reliability: If needed, the utility would have flexibility to retain more of its locally generated hydropower to meet state requirements.

“As part of Chelan PUD’s new vision, we are committed to creating bold, enduring value for future generations,” said General Manager Kirk Hudson. “The agreement with Alcoa served our community well for many years, but the energy landscape is changing rapidly. To respond to new opportunities and growing reliability needs, we must adapt and continually reassess our strategies.”

 

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