NC’s last-minute effort to take Alcoa’s hydro project creates challenge for renewable energy industry

The State of North Carolina’s last-minute effort to takeover Alcoa’s hydro project on the Yadkin River could discourage private investment in hydropower, the nation’s largest source of renewable energy, and make it more difficult to meet President Obama’s renewable energy goals.

That’s the message from Rick Miller, president of the National Hydropower Association, in a Charlotte Business Journal article published on May 22, 2009.  “Allowing stakeholders to short-circuit the process to address other agendas at the last moment, after they had the opportunity to voice their opinions during the public process, jeopardizes the integrity of regulatory review. It also discourages private investment,” Miller writes.

You can read the entire article below:

Charlotte Business Journal | May 22, 2009

No need to open the floodgates
Last-minute attempts to influence license-renewal process at Alcoa’s facilities could undermine attractiveness of a clean source of energy

By Rick Miller

Efforts by state and local officials to take control of Alcoa Inc.’s hydroelectric facilities along the Yadkin River are a challenge to those who support the competitive development of clean, affordable and domestic energy resources.

Hydropower is the United States’ largest renewable resource. It generates 6% to 8% of the nation’s electricity. Three-quarters of all electricity produced by renewables comes from hydropower. According to the Federal Energy Regulatory Commission, hydropower can double its capacity during the next 20 years.

While some of this new capacity will come from efficiency improvements to existing facilities, much can come without the need for new dams. Only 3% of America’s dams have hydroelectric facilities, so converting them to electricity-generating resources will be a high priority.

Developers and entrepreneurs are also looking at new technologies that can generate electricity in oceans and tides. Earlier this year, Hydro Green Energy installed the first commercial hydrokinetic facility on the Mississippi River, near Hastings, Minn. This small, entrepreneurial company is creating jobs, attracting investment and generating electricity.

In fact, many cutting-edge hydropower technologies — all of which increase energy output without a significant additional environmental footprint — come from private-sector companies that demand stability and certainty in their business dealings to attract investment and innovate. They need to know that when they invest in a facility or technology — and meet the strict regulatory guidelines imposed on all hydropower projects — governments, regulators and other stakeholders aren’t going to change the rules to suit other agendas.

Hydropower is one of the most highly regulated energy sectors in the United States. Hydropower operators typically begin their consultations on licensing and environmental issues years before licensing deadlines so they can be sure every stakeholder group can make its voice heard during the licensing process.

Many, including Alcoa, negotiate settlement agreements so relicensing conditions reflect the many stakeholder priorities and needs.

These consultations and reviews can stretch over years. For the Yadkin River projects, Alcoa began its relicensing efforts in 2002, having started its stakeholder outreach several years before that.

The U.S. hydropower industry supports this lengthy, collaborative process because it addresses stakeholder concerns and provides certainty. If a company plays by the rules, and goes through the licensing process in a transparent, community-minded way, it will secure the right to operate.

Allowing stakeholders to short-circuit the process to address other agendas at the last moment, after they had the opportunity to voice their opinions during the public process, jeopardizes the integrity of regulatory review. It also discourages private investment.

President Obama has challenged the renewable sector to double its output. The U.S. hydropower industry is prepared to meet this challenge. We urge stakeholders to work with us to make their voices heard through the mechanisms offered in the relicensing process rather than supporting alternative scenarios that undermine a collaborative approach.

By working together, we can continue and expand the benefits hydropower offers communities throughout the country.

Rick Miller is president of the National Hydropower Association and senior vice president of hydropower services at HDR|DTA in Charlotte.

Another unnecessary delay: Judge stays water quality certificate for the Yadkin Project

Another unnecessary delay. 

That’s the result of a ruling today by an administrative law judge in Raleigh who agreed to stay the 401 water quality certificate that was issued for the Yadkin Project just two weeks ago.

The decision was reached after Gov. Perdue took the unprecedented step of publicly disagreeing with the professionals in the N.C. Division of Water Quality who have the technical expertise to best evaluate water quality issues.  The experts at DWQ carefully studied these issues for two years and acted properly by issuing a water quality certificate for the Yadkin Project. 

We are confident that the 401 certificate will be upheld when all is said and done.  But for now, we wait to see what the Federal Energy Regulatory Commission (FERC) will do. 

Despite the stay, FERC still has the authority issue a new long-term license.  And it should.  

High Point Enterprise criticizes N.C. Senate vote, says bill amounts to "forced takeover of private property by state government"

The High Point Enterprise published an editorial today criticizing the N.C. Senate’s vote last week to approve a bill that would pave the way for a government takeover of Alcoa’s privately-owned hydro business along the Yadkin River.  The editorial harshly criticizes the “forced takeover of private property by state government in order to reap financial benefits of that company's business.”

The entire editorial is posted below:

State government takeover of hydroelectric power generating property along the Yadkin River moved a step closer to a disappointing reality last week as the N.C. Senate voted 44-4 to approve a bill creating the Yadkin River Trust.

If approved by the House and signed into law, that innocently enough sounding entity would move to take over Yadkin River dams and lakes owned by Alcoa Power Generating Inc. Alcoa, however, prefers to continue owning and operating the plants to produce electricity as it has for more than 70 years.

Unfortunately, all of our area state senators supported this bill, which amounts to a forced takeover of private property by state government in order to reap financial benefits of that company's business.  We've heard it said many times that the citizens of the state own their water resources, such as the Yadkin River, and this is true.  But this argument over the federal relicensing of Alcoa Power Generating has become a move by state government to take over that business and its assets to grab the tens of millions of dollars worth of electricity that Alcoa generates each year.

Certainly, there are issues with Alcoa that still need to be addressed during the permitting process, particularly cleanup of the company's abandoned aluminum plant at Badin Lake in Stanley County. There also are unresolved issues related to High Rock Lake in Davidson County, including agreements on lake levels throughout the year. And then there's the question of how much Alcoa should pay federal, state and local governments under terms of a new permit, if granted.

But none of these issues rise to levels that justify a state government takeover/buyout of private property and a private business - especially one that is producing huge amounts of clean energy - just because the state sees potential profit there. 

John Locke Foundation blog criticizes North Carolina's effort to seize Alcoa's property

The John Locke Foundation is the latest group to speak out against efforts by Gov. Perdue and the N.C. Senate to seize Alcoa’s privately-owned dams along the Yadkin River.

In a May 6 blog posting, policy analyst Daren Bakst says:

Both Republicans and Democrats are trying to seize a business so the state can run the business.  

Here’s a little nugget from Senator Hartsell (R-Cabarrus):

“I think it's important for us as North Carolinians to be able to control our water, clean up our environment and encourage appropriate economic development in the area," said Sen. Fletcher Hartsell, R-Cabarrus. "The dams are going to be run, but the first thing they're going to be run for is for the people of this state.”

Hugo Chavez couldn't have said it any better.  

Try distinguishing what  Venezuela is doing and what state Republicans and Democrats want to do.  Good luck.

North Carolina approves water quality certificate for Yadkin Project, clears the way for FERC to issue Alcoa a long-term license

The N.C. Division of Water Quality today issued Alcoa Power Generating Inc. (APGI) a required water quality certificate for the Yadkin Hydroelectric Project. The action clears the way for the Federal Energy Regulatory Commission (FERC) to issue a new long-term license for the Yadkin Project.

“Obtaining this water quality certificate was the last major milestone in the relicensing effort that we began in 2002,” said Gene Ellis, APGI licensing and property manager. “We hope FERC will now move quickly to issue a new long-term license for the Yadkin Project so that we can begin implementing the important benefits in our relicensing settlement agreement.”

Once FERC issues a new long-term license for the Yadkin Project, APGI will begin implementing the relicensing agreement that it negotiated with state and federal agencies, local governments, homeowners and recreational users, business organizations, environmental interest groups and others. The agreement will improve water quality in the Yadkin River, create new recreational opportunities around the lakes, better protect the water supply during drought, provide for increased water withdrawals by local municipalities and set aside land for conservation purposes.

You can find the offiical 401 Certification online at http://h2o.enr.state.nc.us/admin/pubinfo/DWQPubInfoNewsReleases.htm

N.C. Senate approves takeover bill that could cost taxpayers more than $500 million

The N.C. Senate voted today to support an unprecedented bid to take Alcoa’s privately-owned hydroelectric business on the Yadkin River.  The takeover effort could ultimately cost North Carolina taxpayers more than $500 million.

The passage of Senate Bill 967, introduced by Sen. Fletcher Hartsell, approves the creation of a Yadkin River Trust with the authority to seize the Yadkin Hydroelectric Project, a private business owned and operated by Alcoa Power Generating Inc., a subsidiary of Alcoa.  The N.C. House has yet to consider the bill.

“We continue to be shocked that a historically business-friendly state like North Carolina is pursuing a costly government takeover of a privately-owned business, especially at a time when many taxpayers are struggling to make ends meet.  It sets a bad precedent and sends a bad message to individuals and business owners about North Carolina’s priorities,” said Rick Bowen, president of Alcoa’s energy operations.  “I hope the leaders in the N.C. House will take a closer look at the negative impact this bill will have on the state and its taxpayers.” 

Beginning in 1915, Alcoa purchased more than 38,000 acres of land along the Yadkin River and developed a private hydropower business that generates clean, renewable energy from water that flows down the river.  While advocates claim that a takeover is necessary to regain control of the water, existing state and federal laws protect North Carolina’s water interests and ensure that it maintains authority over who can withdraw water from the Yadkin River.

Takeover effort based on false premise and outdated cost estimates

Proponents of a state takeover claim that the Federal Power Act allows North Carolina to take the Yadkin Project for as little as $24 million.  But that figure is misleading and inaccurate because it is based on a faulty interpretation of the Federal Power Act, and North Carolina’s ability to pursue a takeover under it.

The deadline to pursue a federal takeover under the Federal Power Act expired in June 2006 – nearly three years ago – and FERC staff has said a takeover will not be given any further consideration.  That leaves the State with only one option: to condemn the Yadkin Project and pay fair market value, which has beencalculated at more than $500 million.

“It’s unfortunate that legislators are being misled about the true cost to North Carolina taxpayers. 

A government takeover could cost taxpayers more than $500 million – money that could be spent more wisely during this budget shortfall,” Bowen said. 

Even if a federal takeover were possible, it would still cost North Carolina taxpayers much more than $24 million.  Alcoa has incurred additional capital costs related to the Yadkin Project since the $24 million figure was calculated and that figure would need to be adjusted for inflation to reflect investments made by the company over time and as far back as 1915.

In addition, under the takeover clause in the Federal Power Act, Alcoa is entitled to “severance damages” in addition to other costs.  Alcoa believes that the severance damages inflicted by a takeover of the Yadkin Project could cost hundreds of millions of dollars.

And if the State of North Carolina takes over the Yadkin Project it will assume some significant financial responsibilities that would require it to spend nearly $200 million over the next several years to upgrade the dams and power generation facilities.

N.C. Property Rights Coalition criticizes North Carolina’s effort to seize Alcoa's private property

The chairman of the N.C. Property Rights Coalition issued a statement today that criticizes efforts by the State to North Carolina to takeover Alcoa’s privately-owned hydropower business and encourages residents to “speak out in defense of their private property rights.” 

The complete statement is posted below:

Chairman of N.C. Property Rights Coalition speaks out on State's effort to seize Alcoa's private property in North Carolina

RALEIGH, NC – Kieran Shanahan, Chairman of the N.C. Property Rights Coalition, today issued the following statement regarding the State of North Carolina’s efforts to seize private property owned by Alcoa: 

“The North Carolina Property Rights Coalition is greatly concerned about the attempt by state government to take over Alcoa’s property in North Carolina.  Alcoa is a private business that paid for and developed the land it owns.  If the state is allowed to seize Alcoa's property, how vulnerable are private citizens and small business owners to the same type of government takeover?  Private property rights are one of the cornerstones of our free society, yet every day we hear more stories of federal, state and local governments infringing on private property rights.  Private property owners all over North Carolina should take notice of this issue and speak out in defense of their private property rights.” 

Background Information on the situation is available here: http://ncpropertyrights.blogspot.com/2009/04/federal-government-grants-state-of-nc.html

The North Carolina Property Rights Coalition (NCPRC) is a 501(c) (4) non-profit organization which advocates public policies which advance and protect the rights and interests of property owners in North Carolina. More information on the N.C. Property Rights Coalition is available at www.NCPropertyRights.com.

Gov. Perdue asks FERC to abandon its rules, further delay relicensing process

Gov. Perdue has asked the Federal Energy Regulatory Commission (FERC) to abandon its established rules by granting a four month delay in the relicensing of the Yadkin Project.  Her request comes more than six years after Alcoa began the relicensing process with the active involvement of agencies representing the State of North Carolina.

When the Commission granted Gov. Perdue’s motion to intervene on April 17, the decision was subject to FERC regulations stating that a late intervention must not cause a delay in the procedural schedule.  Gov. Perdue's attempt to delay the relicensing process is for only one reason – so the state can pursue a government takeover that could ultimately cost North Carolina taxpayers more than $500 million. 

Once the N.C. Division of Water Quality issues a required water quality certificate for the Yadkin Project, FERC has the authority to act quickly.  And it should.  

Almost a year ago, FERC staff issued a Final Environmental Impact Statement recommending that Alcoa Power Generating Inc. (APGI) be issued a new license for the Yadkin Project and stating that federal takeover not be considered further. Besides, according to the explicit timelines outlined in FERC's regulations, the deadline to pursue a government takeover of the Yadkin Project expired nearly three years ago, in June 2006.

There is another reason FERC should act quickly to issue a new long-term license: As soon as the new license is issued, we can begin implementing the relicensing settlement agreement that enjoys widespread supported from local governments, homeowners and recreational users, environmental interest groups, business organizations and others.

The relicensing settlement agreement includes a host of benefits: Better water quality in the Yadkin River.  Land for new public parks and public swim areas.  More stable water levels.  Better protection of the water during drought conditions.  New fishing piers, camp sites and other recreational opportunities that will allow people to enjoy the Yadkin lakes even more.  And much more.    

The sooner FERC acts, the sooner North Carolina residents can start enjoying those benefits.

N.C. Senate prepares to vote on takeover bill

The N.C. General Assembly appears to be moving forward with its unprecedented bid to take Alcoa’s privately-owned hydroelectric business on the Yadkin River.  We have just learned that Senate Bill 967, introduced by Sen. Fletcher Hartsell, approves the creation a Yadkin River Trust with the authority to seize the Yadkin Hydroelectric Project, is expected to be voted on by the N.C. Senate this afternoon.

I continue to be shocked that a historically business-friendly state like North Carolina is pursuing a costly government takeover of a privately-owned business, especially at a time when many taxpayers are struggling to make ends meet.  It sets a bad precedent and sends a bad message to individuals and business owners about North Carolina’s priorities.

While advocates claim that a takeover is necessary to regain control of the water, existing state and federal laws protect North Carolina’s water interests and ensure that it maintains full authority over who can withdraw water from the Yadkin River.

One day after Gov. Perdue announces furloughs, N.C. Senate considers spending $500 million to take Alcoa's private property

I spent Wednesday afternoon down at the N.C. General Assembly, where the Senate Finance Committee approved legislation that would pave the way for the State of North Carolina to take our privately-owned dams along the Yadkin River.

Many of the Senators asked good questions.  Fundamental questions like “Why do we need to do this?” and specific questions about how the state would operate a hydropower plant. 

But no one raised the obvious question: How can our state legislators even contemplate spending $500 million of taxpayer money to take a privately-owned business ... just one day after Gov. Perdue announced mandatory unpaid furloughs for all state employees and school teachers?

North Carolina is facing a $3.2 billion budget shortfall and the pain is being felt by families across North Carolina.  Our school teachers are being forced to sacrifice a portion of their salary… healthcare and education spending is being slashed … new taxes are being proposed.  And yet no one seems to be overly concerned about the potential price tag that comes with a government takeover of Alcoa's dams.

Granted, there are a lot of different opinions about what a government takeover will really cost. Alcoa is confident that the cost would exceed $500 million, but even the conservative estimate offered in a draft fiscal note prepared by Senate staff pegged the likely cost at almost $200 million, not including the cost of required upgrades that could add another $200 million to the price.

What sort of message does this send to North Carolina families who are tightening their belts to make ends meet?  As people struggle with financial challenges – whether it’s cutting back on vacations and summer camps for their kids, or dipping into their 401k savings to pay the mortgage – the politicians in Raleigh don’t seem to have any hesitation about spending half a billion dollars to take over a few privately-owned dams.  

It just doesn't make sense.