PORT TOWNSEND — The Port Townsend Paper Corp. mill has struck a contract agreement with Bonneville Power Administration to lock in the mill’s power rate for at least two years, a move heralded by the mill’s president as “sustaining 300 family-wage jobs.”
The new contract for Jefferson County’s largest private employer will provide more than two years of low-cost federal power to Port Townsend Paper Corp.
“As a longtime BPA customer, PTPC is pleased to have signed this power contract,” said Roger Loney, Port Townsend Paper Corp. president, in a statement.
“The reliable power allows us to supply our products to regional and international customers while sustaining 300 family-wage jobs in our local community,” he said.
Contacted Thursday, Loney declined further comment.
Port Townsend Paper’s current contract with BPA ends May 31. The new BPA contract will begin June 1 and run through Aug. 31, 2013.
BPA agrees to provide 20.5 average megawatts at BPA’s industrial power rate.
Twenty average megawatts is enough electricity to serve more than 17,000 homes for a year.
“It’s a lot of energy,” said BPA spokesman Mike Hansen.
“It is giving them an opportunity to stay working and be competitive in their market,” he said.
BPA Administrator Steve Wright said the deal was “a really good outcome for everyone involved.
“While Port Townsend Paper, its employees and the local economy benefit from the purchase of BPA’s low-cost power, it also makes good business sense for our other ratepayers because the net benefits from serving Port Townsend Paper exceed the cost of service,” he said.
Just like the current contract between Port Townsend Paper and BPA, the service period of the new contract is limited by a 2009 decision by the U.S. Court of Appeals for the Ninth Circuit.
The court ruled that contracts with direct-service industries, certain electricity-intensive industries that are allowed to buy wholesale power directly from BPA, must be consistent with sound business principles.
In other words, the benefits to BPA of serving the direct-service industry must equal or exceed BPA’s cost of serving their energy needs during the period of service.
BPA has long provided direct-power service to Port Townsend Paper’s mill.
In response to the court’s ruling, BPA did an analysis called an equivalent-benefits test to determine if net benefits would flow to BPA and its ratepayers through a contract with Port Townsend Paper.
The test showed net benefits but, given the volatility of the economy, could guarantee them only through May.
At that time, BPA left the door open for another service period if a subsequent equivalent-benefits test showed the same results for extended periods.
Following Port Townsend Paper’s most recent request for extending service, BPA conducted another equivalent-benefits test, followed by a public comment period.
The new analysis indicated that service can be provided through at least August 2013 while continuing to benefit BPA and its ratepayers.
Wright said Port Townsend Paper has a recurring option to request that BPA conduct another equivalent-benefits test to determine if the contract can be extended beyond 2013.
BPA is a nonprofit federal agency that markets renewable hydropower from federal Columbia River dams, operates three-quarters of high-voltage transmission lines in the Northwest and funds one of the largest wildlife protection and restoration programs in the world.
Renewable energy is the future, said BPA officials, who also said BPA delivers more of it than any other electricity provider in the nation.
In recent years, Port Townsend Paper has closed two box-making plants in British Columbia and Alberta, Canada, that the Port Townsend Paper mill supplies with products.
The Port Townsend Paper Family of Companies in Port Townsend and Canada employs about 660 people and annually produces more than 320,000 tons of unbleached kraft pulp, paper and linerboard in Port Townsend.
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Sequim-Dungeness Valley Editor Jeff Chew can be reached at 360-681-2391 or at jeff.chew@peninsuladailynews.com.