Alcoa to challenge North Carolina effort to seize 210-MW Yadkin

Alcoa Power Generating Inc. said efforts by elected officials in North Carolina to seize its 210-MW Yadkin hydroelectric project would cost state taxpayers hundreds of millions of dollars and harm the state’s “business friendly” reputation.

Alcoa announced its intention to fight seizure of its business March 26, in a statement responding to a bill introduced a day earlier by state Sen. Fletcher Hartsell Jr., R-Concord. The bill, S.B. 967, would create a state trust that would allow the state to take over the Yadkin project.

Alcoa said seizure of Yadkin (No. 2197) would result in millions of dollars in costs to North Carolina, including $240 million required to improve water quality and maintain and upgrade dams and the project’s four powerhouses.

“This has absolutely nothing to do with protecting North Carolina’s water. It has everything to do with the government trying to take a privately owned business for its own benefit,” Alcoa Licensing and Project Manager Gene Ellis said. “It’s a bad idea and sets a dangerous precedent for other North Carolina businesses. We will fight it.”

Beginning in 1915, Alcoa invested $80 million in private money to purchase more than 38,000 acres of land along the Yadkin River in central North Carolina and to develop four dams and powerhouses, the company said. Alcoa has operated the project under a federal license since 1958. The license now is up for renewal. Federal regulators are considering Alcoa’s application for a 50-year relicense.

“There are established state and federal processes for relicensing hydroelectric projects and Alcoa has played by the rules,” Ellis said. “Since 2002, we have pursued a new hydropower license through proper channels and with the active involvement of state agencies, local governments, and the residents who live in nearby communities. There are 22 privately owned hydropower projects in North Carolina and this project should not be treated any differently –- or held to a different standard –- than other business in this state.”

Alcoa filed a relicense application for Yadkin in 2006 and a settlement agreement with stakeholders in May 2007. Federal Energy Regulatory Commission staff issued an environmental impact statement supporting relicensing in 2008. The EIS considered and rejected the alternative of a federal takeover of the project, an option allowed by the Federal Power Act, but never implemented.

Alcoa’s original license expired April 30, 2008. The project, which features the 31-MW Yadkin Falls, 108-MW Narrows, 38-MW Tuckertown, and 33-MW High Rock developments, is operating under an annual license.

Alcoa needs water quality certification under Clean Water Act Section 401 from the North Carolina Division of Water Quality along with a relicense order from FERC to continue to operate the project. The Division of Water Quality’s decision has been delayed at least until May, due to a Feb. 11 study that prompted further water quality tests in Badin Lake, a group opposed to Alcoa’s continued ownership said.

Water rights group commends bill filing

The North Carolina Water Rights Committee, which favors seizure of the Yadkin project, issued a statement commending filing of the bill. It said a Yadkin River Trust would address key issues associated with relicensing the project, including operation of powerhouses and dams along a 38-mile stretch of the Yadkin River. (HydroWorld 8/8/08)

It added the trust would provide more benefits to state residents than what is proposed in the settlement agreement.

The Water Rights Committee charges Alcoa will have an “exclusive monopoly on water rights to conduct hydroelectric operations on the upper Yadkin River for another 50 years,” if the company is granted a water quality certificate and new FERC license.

Alcoa opposes proposed tax on hydropower

Alcoa said it also opposes a separate bill introduced by Sen. Stan Bingham, R-Denton, that would allow certain counties to levy a privilege tax on businesses that generate hydropower. The company said the effort to levy additional taxes on hydro operators stands in stark contrast to North Carolina’s efforts to encourage renewable energy and attract “green collar” jobs in the renewable energy industry.

The specific goal of the bill, S.B. 569, appears to be an attempt by Stanly County to push for the takeover of the Yadkin project, Alcoa said. The company noted the county has stated the privilege tax is a “Plan B” in the event it fails to win support for the state trust proposal. Alcoa said Stanly County already has spent nearly $1 million in taxpayer money to oppose a new license for Alcoa.

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