Progress at the Yadkin Project: Part 1

Over the last few months, we’ve heard a lot of feedback about what Alcoa Power Generating Inc (APGI) needs to be doing in North Carolina. 

I’m going to spend the next few blog postings covering what we’ve done.  Today’s topic: our financials.

On March 5, we responded to requests to be more open about our financial operations by publicly sharing our financial reports for the Yadkin Project for 2008-2010 (audited by PricewaterhouseCoopers).

Before releasing the financial data, we sat down with Department of Commerce Secretary Keith Crisco and others to show that the Yadkin Project has an average net profit of $8 million a year and a projected negative cash flow due to significant capital investments. Only a skilled operator with a long-term outlook can be successful, particularly given the $180 million investment that APGI is planning.

Looking at the audited numbers, you’ll see that operating costs are more $12 million a year and continue to increase.  Those costs include:  

• Cost of power generating: More than $4 million a year for labor, maintenance, tools, parts, paint, vehicles – costs that will continue to rise over time.

• Cost of transmission: More than $450,000 a year to maintain APGI-owned transmission lines which are required to transmit electricity from the dams to the grid.  

• Operating and overhead expenses: $7.78 million a year to operate the dams, including over $1 million a year for FERC-required property and shoreline management and over $3 million in business costs such as engineering, insurance, environmental and safety related expenses, and technology. 

Compare those figures with The State of North Carolina’s 21^st Century Plan, which estimates it will cost $2.79 million a year to run the Yadkin Project and shows those costs remaining at a fixed rate for the next 50 years. In other words, the state believes it can operate and maintain the dams for nearly 80% less than APGI and hold those costs steady for 50 years. What do you think?

Stay tuned for my next posing on water quality.