The shutdown of a building at Magnesium Corporation of America will yield the company money for electricity sold back to Utah Power and maybe result in not-so-high electricity bills this summer for the utility's customers.
The company has agreed to shut down through September Building 3 at its Tooele County processing plant, which is used in the production of magnesium. PacifiCorp will pay Magcorp $100 per megawatt-hour saved during each month, so long as the company's total remaining demand does not exceed certain limits specified in the agreement.
The action is expected to save PacifiCorp up to 20 megawatts per hour in demand and associated energy and cut down on the amount of emissions from the company.
The Public Service Commission has approved the agreement between Magcorp and the utility. The Division of Public Utilities and the Committee of Consumer Services reviewed and recommended approval of the agreement.
Magcorp officials declined to comment on the matter, but Utah Power spokesman Dave Eskelsen said the buyback agreement is unusual. It will help keep PacifiCorp from buying wholesale electricity to augment its own generation during the peak usage periods — usually 4 p.m. to 8 p.m. weekdays — this summer, he said.
"Most of the time, we have sufficient generation to supply our needs," he said. "It's only during the peak hours that we have had to go to the open market to purchase electricity. We haven't had to do much, but it has been expensive. It's the largest part of the current rate case we have with the Public Service Commission, and it's had a similar effect in our other states."
The agreement will join other efforts by PacifiCorp to increase generation and provide efficiency and curtailment options for customers this summer.
A major program allows large customers to use the Internet to determine if posted prices are attractive enough for them to cut their energy use.
The energy saved through the Magcorp agreement will be used only to offset market purchases and won't just be tabbed for sales on the high-priced wholesale market, Eskelsen said.
"PacifiCorp has been a buyer and seller of energy, but only after its regulated customers are taken care of," he said. "We would never make a sale to California to the detriment of our regulated customers."
Chip Ward, chairman of the environmental group Families Against Incinerator Risk, which monitors Magcorp activities, said the company has been installing equipment that would reduce emissions and cut company costs.
"It sounds to me like they are making the transition to the new technology and are willing to go offline while doing it," Ward said. "And they've figured out how to take advantage of the energy crunch here to release some energy back to the utilities and collect money."
FAIR's concern is about emissions, he said.
"If they cut energy as well, that's good. Conserving energy is always good. It seems they were doing this (transition) at the right time and figured out how to make a buck. Hey, they're a business. They're designed to do that."
The Committee of Consumer Services also recommended that approval of the agreement not set precedent and that the contract approval not replace formal review as needed in a future rate case.
The Public Service Commission approved the agreement but said cost-recovery issues could be considered in another docket or proceeding. It also said the company would submit supporting analyses in any similar future applications.
E-MAIL: bwallace@desnews.com