Alcoa to Shut Plant, Sell Back Electricity

Alcoa Inc., the biggest aluminum maker, will shut a plant in Washington and sell back almost all the U.S. Northwest hydroelectric power it agreed to buy for the next two years because of a power shortage in the region.

Though the proceeds from the sale weren’t disclosed, Alcoa will use them to pay the plant’s 900 workers, who won’t be laid off, the company said. The Ferndale, Wash., plant will close immediately, eliminating 115,000 metric tons of annual production. Profit won’t be significantly affected, Alcoa said.

The Bonneville Power Administration, a U.S. government agency that sells cheap electricity generated by dams in the Northwest, asked aluminum companies in April to abstain from using power for two years, beginning in October. Demand for Bonneville’s power is rising because of surging prices from other electricity providers, and a lack of water has limited electricity generation from the dams.

For that two-year period, Pittsburgh-based Alcoa agreed to sell back 90% of the power it contracted to buy from BPA. Alcoa shares rose $2.51 to close at $44.51 on the NYSE.