By Olivia Webb
Saturday, April 17, 2009
State seeking control of dams
A state trust could control four hydroelectric dams on the Yadkin River if the combined efforts of local lawmaker Melanie Wade Goodwin, among others, and North Carolina Governor Bev Perdue are successful.
On April 9, eight days after Perdue filed a motion to intervene in the relicensing of Alcoa Inc.’s hydro project, Goodwin and three other State Representatives filed N.C. House Bill 1455 - Creation of Yadkin River Trust.
“We are at a critical juncture in the federal relicensing process,” said Goodwin. “And we had to take immediate state action to preserve the people’s rights to this important water resource.”
The bill passed in the N.C. House of Representatives Monday and was referred to the Coalition on Water Resources and Infrastructure. Its counterpart in the N.C. Senate, Bill 967, passed Tuesday and will proceed to the Finance Coalition.
When Alcoa Power Generating, Inc. (APGI) applied in 2006 for another 50-year license of its four dams, local and state officials voiced a variety of environmental and economic concerns.
The global aluminum manufacturer’s smelter in Stanly County, which once provided jobs to 1,000 North Carolinians, is no longer in operation. That same smelter has been implicated as a possible source of PCB contamination in Badin Lake - a matter that is currently under investigation by the N.C. Division of Water Quality (DWQ). Alcoa has since appealed the related Feb. 11 fish consumption advisory issued by the state, saying that Badin Lake was held to different set of standards.
The Pittsburgh-based company continues to sell electricity produced by its dams on an open market.
“While the state and the surrounding communities have largely lost their stake in the original arrangement, APGI continues to operate the dams and generate and sell power at a significant profit,” reads Perdue’s motion, filed April 1. “The state therefore moves to intervene to curtail APGI’s vestigial private control of this segment of the Yadkin River and to rededicate this valuable resource to significant public use.”
Sponsored by Rep. Goodwin (D-Montgomery and Richmond), Rep. Harold Brubaker (R-Randolph), Rep. Justin Burr (R-Stanly) and Rep. Lorene Coates (D-Rowan), House Bill 1455 proposes a state trust control hydro operations on the Yadkin if Alcoa’s FERC license is, in fact, recaptured.
“If the trust ends up with the license, there will be a huge benefit to the people of North Carolina,” said Christopher Bramlett, Treasurer of the North Carolina Water Rights Coalition, a state-wide advocacy group. “We will have control of our own water; Stanly and other counties in the area can use the electricity produced as an enticement to businesses that need it.”
As established in House Bill 1455, a seven-member board of directors would be appointed by the governor and approved by the General Assembly to oversee the trust and its goals.
“It will be a lot easier to negotiate with a state trust that has local interest than deal with an international corporation whose primary concern is getting money,” Bramlett said.
The Trust addresses three key issues associated with the Yadkin project relicensing, which includes powerhouses and dams in Davidson, Montgomery, Rowan and Stanly Counties: water control, job creation and environmental cleanup. But achieving these goals through state recapture has been compared to socialist takeover.
“Since Alcoa is not a public utility, this is the best course of action for us to take as a state to ensure this water resource is protected for the people of North Carolina,” said Goodwin. This is not the only way to approach the situation, but it is one way to approach it, and we are not closing the door on any other actions that we might take in the future.”
In an April 9 letter to Gov. Perdue, Alcoa Energy President Rick Bowen said the state is holding his company to different standards.
“Alcoa has followed well established state and federal processes from the start, the same processes deployed by Duke Energy and Progress Energy in their relicensing efforts,” wrote Bowen. “Your intervention comes as the relicensing process is nearly complete and represents vastly different treatment for Alcoa.”
If Yadkin River Trust is approved, APGI would be entitled to its “net investment” ($24.16 billion according to their license application), not to exceed “fair value,” plus any “severance damages” if the federal government requires the license to be returned.
In his letter, Bowen explained there was more to it than that:
“Alcoa has been doing business in North Carolina for nearly 100 years. We planted roots here in 1915 and have invested our shareholders’ capital to build the hydroelectric dams on the Yadkin River,” he wrote. “We continue to contribute millions to the Stanly County economy each year and remain the county’s largest taxpayer.
“In light of that background, we are incredibly disappointed that you are pursuing a government takeover of our business in central North Carolina.”
The trust is designed with the ability to issue revenue bonds for the purchase of dams and improvements, a feature that supporters say would make it possible for the trust to finance the project without costing North Carolina taxpayers.
“No one has ever questioned that the owners of the Alcoa should be compensated fairly and adequately for their property,” said Goodwin. “But this legislation is about the water, and the Yadkin River’s importance to our region’s future.”
According to Bramlett, that future is full of business and recreational development to accommodate North Carolina’s growing population.
“We’re very much interested in expanding the economy based on tourism - mountain biking, boating, hiking - that sort of thing. We need appropriate levels to accommodate that. Again, a trust will be much easier to negotiate that with.”
The City of Rockingham, Montgomery County and American Rivers are currently headed to court against Progress Energy and the state over an issue that the trust would be responsible for on the Yadkin, but not Richmond County’s section of the Pee Dee River: Water control. The city claims the state-approved water levels maintained by Progress Energy’s dam at Blewett Falls Lake are not sufficient for recreational use or healthy wildlife habitat.
The announcement of Perdue’s intervention was applauded by Rockingham City Manager Monty Crump as a step in the right direction, a step that would hopefully set some kind of precedent downstream. But, unlike Alcoa, Progress Energy is a public utility.
“That (lawsuit) is a completely different issue,” said Goodwin. “Progress Energy is regulated by the Utilities Commission. Alcoa is not. By creating the Yadkin River Trust, we will ensure that North Carolina retains control of the river upstream, rather than a privately-owned company that does not answer to the state and that could sell its license to China or any other foreign interest.”
Anyone can buy and sell shares of Alcoa or Progress Energy on the New York Stock Exchange. As Bowen pointed out, those Alcoa shareholders paid for the Yadkin 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,” wrote Bowen. “We would have preferred to discuss this matter personally with you before your decision to seek to use taxpayer dollars to displace that private sector investment.”
Bruce Thompson, a lobbyist with the Raleigh Law firm that represents the Stanly County Board of Commissioners in the Alcoa dispute, said recent alarmist cries of “state takeover” are wrong. He pointed to other state-owned electric and water utilities, like Santee Cooper in South Carolina, as examples.
“Alcoa doesn’t want to acknowledge what the federal law says,” said Thompson. “In Alcoa’s license application it is acknowledged that the federal government has the right to recapture. This is not takeover. It’s not condemnation. This is operating on a license.”
“Alcoa is essentially a tenant on the river. The rent’s due, and they don’t want to pay it.”
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