WInston-Salem Journal
journalnow.com
April 11, 2009
Valuable Resource: N.C. officials look askance at Alcoa's revenue of $44 million from selling power created by using the Yadkin River
By Michael Hewlett
LEXINGTON - A battle that has been brewing for years between Alcoa and a small group of local officials, environmental activists and residents has now spilled over into the governor's office.
Last week, Gov. Bev Perdue asked the Federal Energy Regulatory Commission to hold an emergency meeting so that the state could make its argument for taking over Alcoa's hydroelectric project along the Yadkin River.
It was the latest action in an increasingly heated debate over a private company using a public resource, such as the Yadkin River. Alcoa Inc., the world's largest producer of aluminum, has had a federal license since 1958 to operate four reservoirs, including High Rock Lake in Davidson County, to generate hydroelectric power. That power had been used to operate an aluminum smelter in Badin, which provided thousands of jobs, but the plant closed in 2002. The company now sells hydroelectric power on the open market, generating about $44 million in revenue each year.
And that bothers state officials.
"The motion to intervene in the Alcoa relicensing issue is about the Yadkin River -- one of North Carolina's last pristine rivers -- and its status as a public resource," said Chrissy Pearson, a spokeswoman for Perdue's office, in an e-mail.
A state takeover of Alcoa's license would be an unprecedented move that would require the approval of Congress and a recommendation from the federal energy-regulatory agency. The commission has never taken up the issue before, and it's not clear what the cost to the state might be.
As federal regulations on plants fueled by coal and gas increase, existing hydroelectric projects will become more valuable, said Dalia Patino, an assistant professor of energy systems and public policy at Duke University in Durham.
But water is also a scarce resource, which means that hydroelectric companies have an obligation to either pay for using that resource or provide some other benefit to communities in which they have plants, Patino said.
"The truth is that there was a license for 50 years," she said. "Every investment Alcoa has made had to account that the license was for 50 years and not for 100," Patino said.
Alcoa has been trying to get a new 50-year license for the past six years. Davidson County officials and residents who live along High Rock Lake have complained for years that fluctuating water levels have resulted in beached boats, dead fish and poor water quality. But in recent years, objections from Stanly County officials have received much of the attention. Officials in Stanly have accused Alcoa of not doing enough to deal with contamination from the aluminum smelter in Badin.
The controversy was enough to get the attention of former Gov. Mike Easley, who asked the federal agency to delay for a year any granting of a new 50-year license. Alcoa is now operating under a one-year license. The company is also waiting for the state to issue a water-quality permit that is needed before the new 50-year federal license can be issued.
In addition to Perdue's actions, state legislators have filed bills in the past month that would allow counties to impose a tax on Alcoa and other companies that generate hydroelectric energy.
There's also a bill that proposes creating a state trust to acquire Alcoa's hydroelectric project.
Alcoa officials have said they will fight aggressively against these efforts by the state to take over the project.
"While we fully respect the state's right to ensure that high environmental standards are maintained in and around the Yadkin River, it is also important to recognize that the hydroelectric dams were built, maintained and operated with private funds, not taxpayer money," said Rick Bowen, the president of energy for Alcoa, in a letter to Perdue.
One Davidson County commissioner, Max Walser, said that Alcoa hasn't been willing to bend much in its negotiations with the county, but he isn't sure whether a state takeover is the answer. But he understands why Perdue is concerned, he said.
"They have no jobs practically (in North Carolina) and getting $45 million out of that river, and that's not quite right," he said.
- Michael Hewlett can be reached at 727-7326 or at mhewlett@wsjournal.com.
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