Proposed hydro tax at odds with NC's desire to be a national leader in green energy

North Carolina wants to be a national green energy leader, but a proposed new tax on companies that produce hydropower could hamper efforts to attract companies in the renewable energy industry.     

Sen. Stan Bingham (Davidson County) last week introduced Senate Bill 569, a measure that would allow certain counties to levy a privilege tax on businesses that produce hydropower. Hydropower accounts for 20 percent of the world’s energy and is widely regarded as the cleanest form of renewable energy.

The effort to levy additional taxes on hydropower operators is in stark contrast to North Carolina’s efforts to encourage renewable energy and attract “green collar” jobs in the renewable energy industry.  North Carolina passed a landmark renewable energy bill in 2007 (SB3: Promote Renewable Energy/Baseload Generation) that requires utilities to significantly increase their use of renewable energy by 2012.  In addition, the state has established a “Green Business Fund” that provides tax financial incentives to companies developing renewable energy technologies. 

“It’s disappointing that North Carolina would consider forcing companies that generate hydropower to pay additional taxes, especially at a time when generating clean, renewable energy is a high priority with voters.  This could negatively impact the perception of North Carolina among renewable energy companies that are considering business opportunities in North Carolina,” said Gene Ellis, licensing and property manager for Alcoa Power Generating Inc. (APGI), which that operates the Hydroelectric Project along the Yadkin River in central North Carolina.

This proposed tax has the ability to become widespread and negatively impact other companies that produce renewable energy in North Carolina. 

“If this bill passes, we believe other counties will be lining up at the General Assembly, seeking permission to create all sorts of new taxes,” Ellis said. “In this economic environment, it just doesn’t make sense.  Our state leaders should focus on measures that will make North Carolina more friendly to private business.”

The specific goal of SB 569 appears to be another attempt by Stanly County to push for the takeover of the Yadkin Project, one of 22 privately-owned hydropower projects in North Carolina. The county has stated that the privilege tax is a “Plan B” in the event that it fails to win support for a “State Trust” concept that calls for the state to condemn the Yadkin Project.  The State Trust concept would cost North Carolina taxpayers hundreds of millions of dollars, plus $240 million needed to upgrade the dams.

Stanly County claims if the state managed the project, it could provide new jobs and clean up waste sites associated with Alcoa’s Badin Works.   However, Alcoa is actively working to redevelop the Badin Works site and has already spent $10 million to remediate old waste sites associated with its historic operations.  Alcoa has acknowledged that it has a permanent, legal responsibility to manage waste sites in a responsible manner that will protect public health. Taxpayers will never be asked to pay for the cost of remediation.

APGI has operated the Yadkin Project since 1915.  The company is currently seeking to renew its license with the Federal Energy Regulatory Commission (FERC) and a small group of vocal critics in Stanly County is opposing the license renewal.  Stanly County has already spent nearly $1 million in taxpayer money to oppose a new license for APGI. 

In a March 2 letter to Gov. Beverly Perdue, Albemarle Mayor Whit Whitley expressed concerns that the county’s opposition to APGI would discourage other businesses from locating here.  “What industry or manufacturing plant would be interested in coming to NC or Stanly County if they use natural resources?” Whitley asked. “What would the opinion of reasonable thinking people be when they realize NC and Stanly County no longer have any regard for the free enterprise system?”  (You can read Mayor Whitley's entire letter here.)