A win-win on watts

ROWLEY, Tooele County — When 100-degree summer days push electricity use to peak levels, one Utah company stands ready to shut down its operations to save power.

In fact, US Magnesium, formerly known as MagCorp, has been shut down 39 times in the first seven months of 2005, each time freeing up 95 megawatts of electricity on PacifiCorp's grid. That is enough power to light up roughly 50,000 homes.

The interruptible operations are all part of a new demand-side management contract that provides cheap power to US Magnesium and in turn allows PacifiCorp a guaranteed cushion in meeting electricity needs of its customers on record-hot days.

Big industrial companies, like US Magnesium, typically enter into curtailment provisions in their electric service contracts. However, this is the first contract tied to temperature interruptions, according to Paul Clements, who oversees PacifiCorp's commercial and trading contracts.

The contract contains two main provisions. When temperatures exceed the monthly average, PacifiCorp can interrupt electricity service for up to four hours. If temperatures reach 100 degrees or higher, an additional two hours of interruption can be called upon.

"We've never had that in previous agreements," Clements said. "That 95 megawatts is very valuable to us. Temperature is typically the highest driver in peak demand for us."

Roger Swenson, a consultant to US Magnesium, said the interruptions amount to a couple hundred hours each year, resulting in lost magnesium production and employees that have to be redirected to other tasks.

"It's never good to be interrupted," said Lee R. Brown, vice president of contracts at US Magnesium. "There are still people that think that this special contract rate that we get is some sort of gift. What I'm telling you is it is no gift. We are working very hard to earn that lower rate. We feel like we more than provide the system benefits to justify it."

US Magnesium pays roughly 2.6 cents to 3 cents per kilowatt hour for its electricity, a 1-cent savings over other industrial customers, according to Dave Eskelsen, a spokesman for PacifiCorp.

Operators at US Magnesium are trained to take action at a moment's notice, with a direct phone line linking PacifiCorp's load center in Portland to US Magnesium's control room.

"With a 10-minute notice we can call up US Magnesium and take 95 megawatts of load off of our system on days when it is over 100 degrees," Clements said. "Often we're not seeing eye to eye on other issues, but on this contract it is beneficial to both parties."