Control of plants at stake: State officials considering taking over from Alcoa Inc.

Jun 30, 2008 (Winston-Salem Journal - McClatchy-Tribune Information Services via COMTEX) -- North Carolina legislators are contemplating a state takeover of hydroelectric-power plants along the Yadkin River.

The company that runs the plants, Alcoa Inc., is firmly opposed to the idea. But that may not be enough to stop the state from taking control of the dams, reservoirs and power-generating facilities.

A provision that would have the state study the issue was inserted into the 2008-09 budget bill that was passed earlier this month by the N.C. Senate. The provision calls for a study of whether North Carolina should create a "Yadkin Power Authority" to "produce, distribute and sell hydroelectric power for the benefit of the people of North Carolina."

Senate and House leaders are negotiating a final state budget plan, and it is unclear whether the hydroelectric proposal will be included in the final budget.

Alcoa hopes not.

"The state could have the opportunity to simply condemn the land, seize it from the present property owner -- Alcoa Power Generating -- and take over the project that way," said Gene Ellis, the licensing and property manager with the company. "That just does not seem to be good policy at all."

Alcoa, which is one of the world's leading producers of aluminum, has had a license for the past 50 years to run four reservoirs along a 38-mile stretch of the Yadkin River. One of the sites is High Rock Lake in Davidson County.

The company once used the hydroelectric power to help run its smelting plant in Badin. But that plant is now closed, and Alcoa now sells the electricity it generates on the open market, bringing in about $44 million a year in revenue.

Hydroelectricity is the world's most common form of renewable energy.

"It doesn't seem like the state entering the public-power business is necessary, since the private sector is covering those needs as it stands," Ellis said.

But critics have several complaints against Alcoa. Residents in Davidson County have complained about water quality and water levels in High Rock Lake, and Stanly County officials have called for further investigation of contamination left by the Badin smelting plant.

Some people also say that the power-generating capacity of the Yadkin River -- a critical public resource for central North Carolina -- should not be controlled by a single private company, especially one that no longer provides many jobs in the region.

"The Alcoa of the 1950s is not the Alcoa of today," said J. Keith Crisco, the president of the N.C. Water Rights Coalition.

Crisco suggested that some sort of public ownership of the Yadkin reservoirs would better serve the people of central North Carolina.

"They would have control over the use; they would have control over attracting industry," said Crisco, who is also the president of Asheboro Elastics Corp. "It would be a great engine for the economic vitality of that area."

The issue has taken on some urgency because Alcoa is currently trying to renew its 50-year license, which expired in April. The license was postponed last month for up to a year, after Gov. Mike Easley and other state officials requested a delay.

State Sen. Tony Rand, D-Cumberland, defended the inclusion of the study in the Senate's budget. Rand, who is the Senate majority leader, said that there are a number of issues related to water rights that need to be sorted out.

"This is North Carolina's water," Rand said. "It is a truly significant natural resource, so we need to make sure that the state's rights are protected."

He also suggested that Alcoa was granted control over the reservoirs 50 years ago because the company was a major employer in the area.

"In the coming days and years, all this will become far more valuable, in my opinion. Is this a resource that the corporation acquired under circumstances that no longer exist?" he said.

James Romoser can be reached at 919-210-6794 or at jromoser@wsjournal.com

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