Hey Buddy, Can You Spare a Few Mil?

Oregon's homegrown aluminum king has enlisted U.S. Senator Gordon Smith in an effort to get out of a public-power contract that last year was giving him huge profits. So far, it hasn't paid off.

Portland millionaire Brett Wilcox was once a big Oregon success story, mortgaging his home to buy one smelter in The Dalles, then using junk bonds to buy another, in Goldendale, Wash. His company made more than $300 million during the height of the energy crisis by not making aluminum, however. Rather, he shut down his smelters and resold power he had purchased at a far-below-market price from the Bonneville Power Administration, a federal agency that sells hydropower in the Northwest. (See "The Juice Junkie," WW, May 30, 2001).

Today, however, Wilcox's contract to buy BPA power, which allowed his huge profits last year, has become a liability. Not only has the market price of electricity sunk below what Wilcox is paying Bonneville, but more-efficient smelters starting up overseas have dragged down the price of aluminum and sapped the value of Wilcox's Golden Northwest Aluminum Corp. His company remains intact, but his smelters are mostly idle.

On June 26, after Wilcox missed a $9 million payment on his company's high-interest debt, Standard and Poor's downgraded its credit rating from single B- to CC, or from junk-bond status to even worse. Wilcox subsequently made his payment, thus averting bankruptcy.

The same day his credit rating dropped, federal records show, Wilcox wrote the first of three checks totaling $16,000 for campaign contributions. Of that sum, $5,000 went to the Oregon Republican Party, and the rest went to Sen. Gordon Smith, who is running for reelection.

At Smith's request, BPA administrators two weeks later directed staff to look at potential ways to release Wilcox from his contractual obligations to buy power from the BPA, knowledgeable sources told WW.

Smith spokesman Chris Matthews says the contribution and the request were unrelated. "The senator just wants to put people back to work," he says.

The effort has so far been unsuccessful, but Wilcox, whose attorney declined to comment, continues to pepper the agency with requests for special deals to help him stay afloat.

C. Clark Scalzi, who represents public-utility customers of BPA for the Public Power Council, says politically influential aluminum companies have gotten too many special deals already, especially now that BPA is projecting a $1 billion deficit by 2006.

WWeek 2015