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Alcoa Pays Chelan PUD $62 Million, Says Reopening Of Malaga Smelter Still Possible

Yesterday, Tuesday June 19, was the deadline for Alcoa to either restart the smelter in Malaga or pay $62.4 million to the Chelan PUD. The global distributor of aluminum and bauxite announced Monday evening it will permanently close one of five potlines at the fully curtailed facility and make the payment to the PUD.

The potline planned for closure has not operated since 2001, and the investments needed to restart that line are cost prohibitive, Alcoa said. Another line at the site was permanently closed in 2004.

The three other lines at the site, with 146,000 metric tons per year, have been curtailed since December 2015. The closed portions at the plant will be evaluated for potential redevelopment, which will not affect the status of the three remaining curtailed potlines. The company said this leaves open the possibility of restarting the curtailed lines sometime in the future.

Under the agreement with the utility, which expires on October 31, 2028, Alcoa receives 26 percent of the electric generation from Rocky Reach and Rock Island Dams for the Wenatchee smelter. During the smelter’s curtailment, Chelan PUD sells unused power on Alcoa’s behalf, and the proceeds are applied toward Alcoa’s costs under the agreement.

Chelan PUD General Manager Steve Wright said the $62 million-dollar payment will have a modest impact on the utility’s finances – it’s less than one year of their annual capital investment. Wright said they will use the money to reduce debt and continue implementing the Public Power Benefit program.

Dan Langager talks with the Chelan PUD’s Chief Finance/Risk Officer Kelly Boyd for more.

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