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To: Lucretius who wrote (5658)	7/25/2000 1:08:50 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 436258

no inflation - only rising prices: High Energy Prices Cause Kaiser Aluminum to Partially Curtail Capacity in Pacific Northwest Financial Impact to be Mitigated Through Resale of Non-Federal Power HOUSTON--(BUSINESS WIRE)--June 14, 2000--Kaiser Aluminum & Chemical Corporation, the operating subsidiary of Kaiser Aluminum Corporation (NYSE:KLU - news), announced that today it began the temporary curtailment of approximately 128,000 metric tonnes of primary aluminum capacity at its Tacoma and Mead, Wash., smelters due to unprecedented high market prices for electricity in the region. The curtailment will affect about 400 hourly employees at the two facilities. As a result of the curtailment, Kaiser avoids the current high cost of purchasing market power and, in addition, has sold back to the market 100 megawatts of non-federal power that it has under contract through June 30, 2001. Kaiser said the sale of this power is expected to mitigate the impact of high energy prices in the second quarter of 2000 and the foregone profits associated with the curtailed lines. Market prices for Pacific Northwest power have more than tripled in recent weeks, from levels of about $30 per megawatt hour to more than $100 per megawatt hour. This compares to historical contract prices of about $23 per megawatt hour and a world average for the aluminum industry of about $18.50 per megawatt hour. ``Market prices for power are at levels never before experienced in this region,'' said Raymond J. Milchovich, president and chief executive officer of Kaiser Aluminum. ``We are fortunate to have our remaining Northwest power needs covered by a competitive fixed-priced contract with the Bonneville Power Administration (BPA) that runs through September 30, 2001.'' Milchovich said long-term regional energy supply is a key issue for Kaiser. ``We have to continue our dialogue on this issue with BPA, especially in light of its important and long-standing role as the marketer of cost-based federal power to the aluminum industry. We are hopeful that, between now and 2001, these discussions will result in a solution that will sustain the health of the Northwest aluminum industry and ensure that this is a short-term rather than a long-term problem. ``Although we are not happy about this curtailment,'' said Milchovich, ``we believe our decision best balances the long-term interests of all of our stakeholders. We sincerely regret the near-term impact it will have on some employees, suppliers, and the community. We have taken steps to ensure that we will continue to meet our aluminum customer commitments.'' To implement today's curtailment of approximately 128,000 tonnes, the company said it will shut down all three potlines at the 73,000-tonne Tacoma smelter (which had been operating at an annual rate of about 65,000 tonnes) and two and one-half potlines at the 200,000-tonne Mead smelter (amounting to approximately 63,000 tonnes). With today's curtailment, the company's primary aluminum operating rate would be roughly 67%, compared to an average of approximately 82% in 1999. Kaiser Aluminum is a leading producer of alumina, primary aluminum, and fabricated aluminum products. MAXXAM Inc. (AMEX:MXM - news) directly and indirectly holds approximately 63 percent of the common stock of Kaiser Aluminum Corporation.