Just as the impact of the natural gas shortage appears to be easing, the severe drought in the western part of the country is beginning to affect industrial production and employment there as companies which rely on hydroelectric power face energy cutbacks.
First to be hit is the energy-intensive aluminum industry which has one-third of its total domestic production capacity located in the Pacific times the Columbia River generates ample and cheap hydroelectric power.
Today the aluminum division of the Anaconda Co. announced an immediate 10 per cent curtailment of production and 30 layoffs at its giant aluminum smelter in Columbia Falls, Mont., as a result of power cutbacks by the Bonneville Power Administration. The Columbia smelter is Anacondas' largest, normally producing 3 million pounds of aluminum a month.
Other major aluminum producers which also have said they must cut back production including Alcoa, Martin Marietta, Kaiser and Reynolds - all with facilities in the northwest region.
Total direct layoffs now tally fewer than 1,000, it is estimated, but many more could be thrown out of work as a result of the drought and the forecasts say no significant rain in anticipated for at least the next 30 days.
Bonneville Power Administration is the country's largest marketer of hydroelectric power, supplying the states of Oregon, Washington, Idaho, the western part of Montana and a few sections of Nevada. Hydroelectric power supplies 90 per cent of the total energy for this region.
On Friday, BPA asked all users to voluntarily cut back electricity use by 10 per cent, enough it is hoped to get the region through the record drought with a minimum number of layoffs and also free up 5 million acre feet of water for agricultural irrigation.
But the big industrial users who receive a quarter or more of their total power needs on an "interruptible" basis had this interruptible portion cut off entirely on Sunday night by BPA.
Ordinarily, industrial users can buy extra electricity from fuel-generated power plants, but there is currently very little surplus available, according to a BPA spokesman, and the price has soared to 4 cents per killowat hour, or more than 100 times the cost of hydro power.
Some aluminum producers rely on interruptible hydro power foras much as 40 per cent of their total energy needs which is why they seem to be hit first.
The reduction of aluminum ore into finished metal is also one of the most energy-intensive of all industrial processes, requiring 8 kilowatt hours to produce one pound of aluminum, or 32 cents a pound for power alone at current spot prices. The market price of aluminum is meanwhile only 50 cents, which makes buying extra energy unprofitable.
"Electricity is our main raw material," lamented an official at the Anaconda plant in Montana.
Besides aluminum, however, a number of other industries have lcoated large plants in the pacific northwest to take advantage of the normally inexpensive power.
These include chemical, paper and other metal processing companies. And while no production cutbacks have yet been announced, some are expected since plants of companies like Union Carbide, Georgia Pacific, Crown Zellerbach and Hanna Nickel also rely on interruptible power for about 25 per cent of their energy supplies.
The last time interruptible hydro customers were cut off by BPA was in 1973 when a voluntary 7.5 per cent reduction in electricity use by other customers also was successfully achieved.
But the current year is so far the driest on record. Ordinarily, 106 million acre feet of water flow down the Columbia between January 1 and July 1. In 1926, the driest year to date there was a flow of 59 million acre feet.
"We would have to have normal precipitation between now until July 1 to get to 59 million feet this year," said William H. Clagett, BPA's assistant administrator in the utility's Washington D.C. office, who indicated this was not in the cards.
On March 1 BPA will officially survey the snowpack to determine how much water will be released into the Columbia River by melting snow in the spring. Depending on the assessment further water conservation or rationing measures may be required.