Factory closes because of electricity cost

MISSOULA (AP)  Louisiana Pacific Corp. closed its Missoula fiberboard plant Wednesday because of high electricity prices. The plants 240 workers continued reporting to work to perform maintenance and other tasks.

Plant manager Art Green said the shutdown might end by late Friday if the spot price of electricity in the Northwest comes down.

Normally, electricity is not a major cost or concern for the plant. But its contract for seven megawatts expired Monday, and prices were so high that running the mills equipment would have been a money loser.

Company executives in Portland decided to unplug Wednesday morning and pin their hopes on prices they hope will recede heading into the weekend. The decision does not affect Louisiana Pacific mills in Deer Lodge and Belgrade, which are still buying fixed-rate power under separate contracts.

Were planning to keep everybody working. This caught us completely by surprise, Green said. Unfortunately, in the future we cant say we can keep everybody working.

The mill had been buying electricity from Enron Corp. at $25 per megawatt for the past year, but the contract expired Monday. By Tuesday the daily spot price reached $457 a megawatt. The temporary closure paid off immediately on Wednesday when the price per megawatt reached more than $500.

To make money, the mill needs electricity at no more than $110 per megawatt.

The company decided to shop the open market for power after the Legislature passed a law in 1997 that began dismantling the states longstanding laws regulating the electric industry.

Company spokesman David Dugan said the mill saved money immediately when it bought power from Enron at $25 per megawatt. The mill had paid about $50 per megawatt when it was required to buy from the regulated Montana Power Co.

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-- Martin Thompson (mthom1927@aol.com), August 04, 2000