October 13, 2008

Alcoa Signs Power Contract With Bonneville Power Administration

Alcoa has signed a memorandum of understanding with Bonneville Power Administration for a power contract to supply its Alcoa Intalco Works aluminum smelter through 2028.

The memorandum of understanding (MoU) provides the framework for a contract which would begin in October 2011. It would provide up to 240MW of direct power sales, enough to operate the facility at 50% capacity, contingent upon Bonneville Power Administration (BPA) acquiring additional power to augment the NW power system, within certain threshold price levels.

Under the terms of the contract, Alcoa would commit to minimum payroll levels, based on the amount of power supplied. In addition, assuming at least 10 years of power can be assured prior to the contract start, Alcoa would commit to spending between $125 million and $160 million by 2028.

John Thuestad, president of Alcoa's US primary products, said: "Alcoa Intalco Works has been a part of the Northwest community for more than 40 years. With the passion of our employees and support of the local community we have survived difficult periods including the NW power crisis of 2001.

"While there is still much work to do, I am confident we will bring this negotiation to a successful conclusion in an effort to increase the competitiveness of the plant and continue to provide family wage jobs and value to the region. There are opportunities to improve the overall environmental performance of this plant as well as improve its productivity. We realistically cannot do that without some certainty on a long-term power solution. This MoU helps create the framework to eliminate that barrier."