New legislative proposals target Alcoa

I wanted to let you know that three bills have recently been introduced in the NC General Assembly that are directly targeted at Alcoa.  Those bills, introduced by Sen. Fletcher Hartsell and Sen. Stan Bingham, include:

Senate Bill 628: This bill would make fundamental changes in how water quality permits and certificates are currently processed and granted.  First and foremost, it would require the Division of Water Quality to conduct an environmental compliance review for every applicant. This change would impose additional costs and burdens on both DWQ and applicants for water quality permits and certificates.

In addition, the proposed legislation would change the standards under which new and renewed water quality permits and certificates are evaluated for past compliance. The bill would require the Environmental Management Commission to deny a water quality permit or certificate if information that is material to a permitting or certification determination is intentionally withheld, or if a false statement, representation, or certification is knowingly made in an application for a permit or certification or in any data, plan, or other document submitted in support of an application for a permit or certification. Intentionally withholding or omitting information that is material to a permitting or certification determination would be punishable by a new Class 2 misdemeanor.

Senate Bill 629: This bill imposes an annual 6% privilege tax on the gross taxable receipts of an unregulated company that sells electricity or water. (Companies with revenues below $6 million a year are generally excluded.). By unregulated, it appears to mean utilities whose rates are not regulated by the N.C. Utilities Commission.     

Senate Bill 626: This bill calls for a legislative study surrounding the progress of cleanup efforts at Alcoa's former Badin Works smelter in Stanly County, and the NC Department of Environment and Natural Resources’ handling of contamination at the site. Results would be submitted to the Environmental Review Commission and the Joint Legislative Program Evaluation Oversight Committee by February 1, 2012.

We are following these bills closely and will continue to keep you updated about the status of these bills as the legislative session moves forward.

Alcoa responds to Senate committee

Alcoa has delivered a letter to Sen. Fletcher L. Hartsell, Jr., chairman of the Senate Judiciary II committee, defending the company’s safety and environmental record in North Carolina.

“Alcoa has been a good corporate citizen for more than 120 years, including nearly 100 years in North Carolina, is proud of both its environmental and worker safety records and wants to ensure there is a fair exposition of the matters discussed by your Committee,” wrote William J. O’Rourke, Alcoa vice president of sustainability, environment, health and safety.  The letter responded to questions raised during a meeting of the Senate Judiciary II committee on July 6, 2010. 

Click here to read the entire letter.

NC House rejects government takeover of Alcoa property in decisive vote

A great victory at the North Carolina General Assembly last night. See press release below:

NC House rejects government takeover of Alcoa property in decisive vote

N.C. RALEIGH – The N.C. House voted in overwhelming numbers to reject an unprecedented and costly government takeover of Alcoa’s hydroelectric business along the Yadkin River in central North Carolina. Senate Bill 967, sponsored by Sen. Fletcher Hartsell, failed in a floor vote by a wide margin, 66-39, with bipartisan support.

“Legislators sent a clear message that they do not support the taking of private business. The more they learned about this issue, it became evident that passing this legislation would set a dangerous precedent for North Carolina,” said Gene Ellis, an Alcoa spokesman. “We appreciate the strong support of the N.C. House and remain committed to fighting any future efforts by Gov. Perdue to take our business against our will.”

The bill would have established a state trust with the authority to seize the Yadkin Hydroelectric Project, a privately-owned business that has been generating clean renewable energy in North Carolina since 1915.

Legislators tried to quickly maneuver the bill through the General Assembly this week after the House Water Resources Committee reversed itself and voted the bill out of committee. The bill was heard twice Thursday by the House Public Utilities Committee, which passed the bill at a hastily called afternoon meeting. The bill then bypassed the House Finance Committee and was sent straight to the House floor.

Opponents of a state takeover –including lakefront homeowners, property rights advocates and local officials in Stanly County – expressed serious concerns about the proposed takeover this week. Their concerns included the potential cost to North Carolina taxpayers of $500 million or more; the fundamental violation of Alcoa’s private property rights; and the need to support the federal licensing process and the Relicensing Settlement Agreement that Alcoa reached with stakeholders.

The Federal Energy Regulatory Commission (FERC), the federal agency that regulates hydroelectric projects in the United States, has all of the information it needs to issue a new long-term license for the Yadkin Project. FERC staff has already recommended issuing a new license to Alcoa.

“We remain eager for a new license and look forward to implementing the many positive benefits included in the Relicensing Settlement Agreement,” Ellis said.

Under the terms of the relicensing agreement, Alcoa will continue to improve water quality in the Yadkin River; allow for increased water withdrawals by local municipalities; better protect the water supply when drought conditions are present; set aside thousands of acres for long-term land protection; create new parks, public swim areas and other recreation opportunities; provide more stable lake levels and a consistent downstream flow of water; and give homeowners more flexibility regarding shoreline development.

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Responding to the NC Water Rights Committee

I don’t usually like to respond to far-fetched accusations that have absolutely no basis in fact, but I feel compelled to respond to some of the outrageous claims being made by the N.C. Water Rights Committee.

In a recent press release, the N.C. Water Rights Committee speculates that the Yadkin Project may generate as much as $80 million a year in profit and implies that Alcoa is not being truthful with its financial filings with FERC. Irresponsible allegations like that can’t go unanswered.

The financial information we have submitted to FERC is accurate and has already been independently verified by auditors. Here are the facts:

1. Alcoa Power Generating Inc. is required to follow standard accounting practices – specifically the Uniform System of Accounts (USOA) – in all financial filings at FERC. There is no “creative accounting” taking place.

2. Our annual financial filings at FERC are independently audited by PricewaterhouseCoopers to verify their accuracy. The numbers are not misleading or inaccurate.

The profit numbers being floated by the N.C. Water Rights Committee are pure fantasy. But if anyone out there can tell me how to create an $80 million profit from a business that only generates about half that in gross revenues, please give me a call.

Water Resources Committee Cancels Meeting for Next Week

The N.C. House Water Resources Committee has cancelled plans to hold another committee meeting next week regarding Senate Bill 967, the government takeover bill sponsored by Sen. Fletcher Hartsell.

The meeting, originally scheduled for Tuesday, July 21, was to provide members of the public an opportunity to share their views on the proposed government takeover of Alcoa’s Yadkin Hydroelectric Project.

I will let you know when and if the meeting is rescheduled.

Report from the NC General Assembly

I was back at the N.C. General Assembly again this week for another meeting of the N.C. House Water Resources Committee on Tuesday. The meeting was designed to give committee members an opportunity to ask questions about Senate Bill 967, a bill that would authorize North Carolina to take over Alcoa’s privately-owned hydroelectric business along the Yadkin River.

A couple of highlights worth sharing:

1. Faison Hicks, a lawyer with the N.C. Attorney General’s office who has been involved in Gov. Perdue’s push for a government takeover, acknowledged that it is impossible to know what a government takeover of the Yadkin Project would cost. Alcoa believes a takeover will cost North Carolina more than $500 million.

2. When pressed about why the legislature needed to pass Senate Bill 967 this year – without knowing the potential price tag associated with it – Mr. Hicks said it wasn’t necessary to pass this legislation for the state to continue its pursuit of a takeover. He said the state can continue its efforts at the federal level regardless of whether this bill is approved or not.

3. Richard Whisnant, a professor with the UNC School of Government who has extensively studied water issues in North Carolina, acknowledged that control of the water in the Yadkin River will still be subject to federal regulation even if North Carolina succeeds in taking over the Yadkin Project.

Committee members asked a lot of thoughtful and probing questions that underscore the complexity and uncertainty of a government takeover and the associated cost for North Carolina.

One member asked whether a takeover of the Yadkin Project would be a pilot project that could ultimately lead to a state takeover of other privately-owned hydro projects, such as those operated by Duke Energy and Progress Energy. “I don’t know,” Mr. Hicks said.

Report from the NC General Assembly

I spent Tuesday afternoon at the NC General Assembly, speaking to members of the NC House Water Resources Committee. It is one of three House committees that is considering legislation (SB 967) that supports a government takeover of the Yadkin Project.

Here is a copy of my remarks:

My name is Gene Ellis and I represent Alcoa Power Generating Incorporated. I was born and raised in North Carolina and I have lived in Stanly County for more than 30 years. For the past seven years, I’ve been working on the relicensing of the Yadkin Hydroelectric Project.

I have to tell you, I never thought I’d see the day when the State of North Carolina contemplated taking over a private business. And that’s exactly what this State Trust bill is – the taking of a privately-owned business that Alcoa started here in 1915.

And, it could cost the state of North Carolina $500 million or more – a half-billion dollars – at a time when the state is in the midst of its worst budget crisis in years.

Some people say this bill doesn’t really do anything – it just puts a structure in place to operate the Yadkin Project if a takeover happens. But a vote to create a Yadkin River Trust is a clear indication that the General Assembly supports a government takeover despite the cost. If this bill becomes law, it will be possible for the state to pursue a government takeover.

Before I discuss the bill, let me touch on a few basic facts about the Yadkin Project.

Alcoa bought and owns the land – more than 38,000 acres along the Yadkin River, including the land underneath the lakes.

Alcoa built the dams. With our own private money and no government funding.

Alcoa has a license to run the dams, not a lease. Much like the FCC provides a license to radio stations to use the airwaves.

Alcoa provides jobs and pays taxes on its property, just like other businesses in North Carolina. In fact, we are the single largest taxpayer in Stanly County.

Alcoa’s Yadkin profits are not hundreds of millions. As stated in our new license application, we generate about $44 million a year in gross revenue, but after operating costs, taxes, depreciation and other expenses, we earn a profit of about $8 million.

Let me address the three main reasons why you should oppose Senate Bill 967 and a takeover of our hydroelectric project.

1. The cost to North Carolina taxpayers;

2. The violation of private property rights; and

3. The fact that the State of North Carolina does not need to take our dams, generating facilities and land to have control over the water in the Yadkin River.

First, Control of the Water

Supporters of this bill have expressed concern about a private company controlling the water. Alcoa doesn’t control the water in the Yadkin River.

We don’t claim to own the water. Our hydropower operations don’t consume the water – it just flows through. And we don’t determine who can withdraw water. The state and federal governments have that authority.

State law gives North Carolina the authority to regulate water use within the Yadkin River, including the right to issue new water withdrawal permits. That’s a right the state has exercised in the past by approving inter-basin transfers, most recently on the Yadkin and Catawba Rivers.

Granting Alcoa a new federal license for the Yadkin Project will not change the State of North Carolina’s ability – in any way – to control withdrawals of water.

There are 21 other privately-owned hydro businesses in North Carolina just like ours. And in each and every case, the state controls the water.

The Cost to North Carolina

Now, I would like to spend a few minutes talking about the cost of a government takeover. As I said earlier, a takeover could cost North Carolina more than $500 million.

Let me first say that we don’t believe a government takeover is possible. The deadline to pursue a government takeover expired more than three years ago, and the staff of FERC – the Federal Energy Regulatory Commission – has recommended against any further consideration of a government takeover.

In fact, the federal government has never taken over a private hydro project at the end of the license. We believe the only way for the state to take our private property is to condemn it and pay fair market value.

But let’s assume that a government takeover is possible. The Federal Power Act requires that Alcoa be reimbursed for its net investment in the Yadkin Project – a figure that is about $91 million today before being adjusted for inflation.

On top of that, Alcoa is entitled to severance damages… which would add hundreds of millions of dollars to the price tag. That’s what it would cost for Alcoa to develop comparable energy assets today.

And finally, if a government takeover did take place, the state would inherit an outstanding obligation for an additional $200 million in required upgrades and refurbishing responsibilities for the dams, generators and turbines. Because of these expenditures, Alcoa expects to operate these facilities at a negative cash flow for the next several years. The state would have to bear that same responsibility if it took over the Yadkin Project.

So, a government takeover isn’t necessary for North Carolina to control the water. And a government takeover would be extremely expensive.

Now, let’s go back to the issue of private property rights.

Taking Private Property

A few days ago, we celebrated the Fourth of July and everything that is wonderful about America. But the taking of a private business by the government goes against one of America’s fundamental values – the protection of our private property rights.

This bill would take Alcoa’s private property. And that’s not a very popular idea. A few weeks ago, we hired McLaughlin & Associates, a respected national pollster, to conduct a public opinion poll of North Carolina voters on this issue. And they spoke loud and clear.

Here’s what the voters said:

81 percent of North Carolina voters are opposed to the idea of our state government using taxpayer money to take over a privately-owned business.

63 percent oppose the government getting into the power business.

And by an overwhelming 3 to 1 margin, voters in North Carolina trust a private company to manage a hydropower project more than they would trust our state government to do it.

That final point is an issue worth discussing. Make no mistake, this is a complex business to operate. To the best of my knowledge, the state does not have any expertise in running hydro facilities or daily energy trading or transmission of power to the grid.

There has been the suggestion that the state could simply take our business and then turn around and hand it over to another private company to manage and profit from. But how can North Carolina take a business from one private company, then hand it over to someone else?

Before I finish, I would like to address a couple of other issues that have been raised.

The Environmental Issues

Let me start with the environmental issues.

Alcoa has been working with the State through the Department of Environment and Natural Resources and the Division of Waste Management for years to clean up waste sites associated with our operations in Stanly County. And you should know that these waste sites aren’t the result of Alcoa failing to follow any state or federal regulations… these are waste sites that date back to the early part of the last century, long before anyone fully understood the need to take precautions when disposing of waste materials.

The truth is, we take full responsibility for our waste sites. We’ve already spent more than $10 million on remediation efforts and have followed the direction of the state.

As I told you earlier, I live in Stanly County myself ... I’ve raised my family there, including two daughters who mean the world to me, so I care just as much as anyone else that we protect public health and the environment.

Testing has shown that these waste sites don’t pose any human or environmental threat – and the State concurs. We have agreed to continue testing and monitoring these sites to make sure they don’t pose any danger in the future. Alcoa has a permanent legal responsibility for these sites.

If there is any evidence that Alcoa needs to be doing more to clean up these waste sites, then the state of North Carolina already has the full authority to require additional steps. Taking over the Yadkin Project won’t add to the control the State already has.

The Issue of Jobs

Now, let’s talk about jobs. There has been a suggestion that our original 1958 license was conditioned on providing jobs at Alcoa’s aluminum plant in Badin. That is simply not true. If you look at the documents – and I will be happy to share them with you – you will find only a singlereference to jobs. It is mentioned in the hearing examiner documents where the length of the license is being discussed. It is not even mentioned in the license order where requirements are laid out for the Project owner.

We are all concerned about the loss of traditional manufacturing jobs in North Carolina. We worked hard to minimize the impact to our employees and our community. But, the fact is, no hydro business in America is required to support a certain number of jobs in order to receive or maintain a license. FERC staff made that point in the final Environmental Impact Statement for Yadkin it issued in 2006.

An Open Process

Last, let’s talk about process. All privately-owned hydro businesses like ours are regulated by the federal government. And the federal government has a thorough licensing process in place.

We started our effort seven years ago and we did it with the active involvement of state and federal agencies… local governments… local residents and business owners… environmental groups … and other interested stakeholders.

Those groups – nearly two dozen of them, including DENR – support a new license for Alcoa. And so has the staff of FERC. After studying this issue for two years, FERC staff issued an environmental impact statement that recommended issuing Alcoa a new long-term license for the Yadkin Project. After an equally thorough review, North Carolina’s DWQ issued a water quality certificate for the Yadkin Project, stating that Alcoa will meet all required water quality standards.

So what you have here is a situation where Alcoa followed an established, very open process involving over a hundred people… where it gained the support of state agencies representing North Carolina’s interests … where it gained the support of lakefront property owners represented by groups like High Rock Lake, Badin Lake and the Uwharrie Point Community Associations …. where it gained the support of local governments – including two communities in Stanly County – the City of Albemarle and the Town of Badin… where it gained the support of environmental groups like The Nature Conservancy and American Rivers … and where it gained the support of the staff of the Federal Energy Regulatory Commission.

You have all of these groups who support a new license for Alcoa. And, remember, these are groups with tremendous experience… groups who care deeply about protecting our water quality… groups that have a direct interest in how the Project and its lakes are managed.

Closing

At the end of the day, this bill is not about protecting North Carolina’s control of the water. It isnot about protecting the environment. It is not about economic development.

It is about taking private property.

It is about a dangerous precedent that threatens North Carolina’s business climate.

It is about the $500 million burden to North Carolina taxpayers.

Thank You. Mr. Chairman.

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.

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. 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.

State Senate should consider the facts before moving forward with takeover bill

A bill introduced by Sen. Fletcher Hartsell to establish a trust with the authority to seize control of our privately-owned hydropower business along the Yadkin River was approved by a state Senate committee today and now moves to a state Senate Finance committee for further consideration. 

The proponents of a state government takeover claim:

•     The State of North Carolina will lose control of its waters if APGI gets a license and the citizens of the state may not get access to drinking water.

•     Because Alcoa no longer has jobs at its smelter, it doesn’t deserve to keep the dams – that its “lease” is up, and the State can acquire this Project for $25 million.

•     Alcoa has polluted the lands it owns, and the State needs to own the Project so it can protect the land.

Before North Carolina takes the historic step toward seizing the private property of a company doing business in the state, it should consider these facts:

CONTROL OF THE WATER

Fact: No one owns the water in the Yadkin River. Under North Carolina law, property owners along a river have the legal right to make reasonable use of the water running through their property. By virtue of the 38,000 acres it owns along the Yadkin River and the dams and generating equipment it built with private capital, Alcoa Power Generating Inc. (APGI) makes a reasonable use of the water which crosses its property.

Fact: APGI does not consume the water. The water simply passes through the turbines to generate clean, renewable energy.

Fact: APGI does not decide who can and cannot withdraw water from the Yadkin River.  That is the federal government’s responsibility.  All water withdrawals in excess of one million gallons per day require FERC approval, regardless of who owns or operates the Yadkin Project.   So even if the State of North Carolina took control of the Yadkin Project, it would be subject to the FERC’s rules and regulations just like it is now.

Fact: The relicensing of the Yadkin Project will not limit the State of North Carolina’s ability in any way to withdraw water from the Yadkin River.  State law gives North Carolina the authority to regulate water use within the Yadkin River, including the right to issue new water withdrawal permits. The State has already issued an interbasin transfer permit to Concord-Kannapolis for 10 million gallons per day. And the State of North Carolina can go straight to FERC for any request to withdraw water – it does not need APGI’s consent to do so. This ensures that North Carolina will always have access to water from the Yadkin River regardless of who owns and operates the project.

Fact: Ownership of the project has no bearing on the State’s control over the waters of the Yadkin.  Proponents of the bill have asked what will happen if the Chinese take over the Yadkin Project via ownership of Alcoa. “Any” owner is subject to the laws of North Carolina and the United States.

Fact: The State Trust bill includes a list of benefits that are, in fact, a recitation of enhancements that APGI has already outlined in the Relicensing Settlement Agreement.  Stronger drought protection, improved water quality and these other issues are already guaranteed by the settlement agreement.

RECAPTURE ISSUES

Fact: Despite claims to the contrary, the original license for the Yadkin Project was not granted to Alcoa in exchange for a promise of jobs.  Although there were comments in the Hearing Examiner’s report from the 1958 license that referenced the jobs as it related to the length of the license, there was no requirement for jobs in the 1958 license.

Fact: Proponents of this bill claim they can acquire the Yadkin Project through “recapture” at a cost of $25 million to the state.  The State cannot recapture the Yadkin Project, period, because the deadline has passed.  Under federal law, the time for “recapture” passed nearly three years ago.

Fact: After a comprehensive and lengthy environmental review process, a Final Environmental Impact Statement (EIS) for the Yadkin Project was issued in April 2008 by FERC.  FERC staff concluded in the Final EIS that a federal takeover of the Yadkin Project was not a reasonable alternative and said it would not be considered further. 

Fact: No project regulated by FERC has been taken over by FERC in the 89-year history of the Federal Power Act.

Fact: Even if recapture were still an option, it would cost much more than $25 million.  The Federal Power Act specifically calls for reimbursement to APGI for net investment, plus severance damages. Since a recapture has never occurred before, there is no precedent for what those severance damages would include, but APGI believes the severance damages inflicted by a takeover to be significant. What we do know is that that the state would need to invest $200 million to upgrade and modernize the dams, as well as the cost of a takeover. 

Fact: Given the capital cost expenditures required to make the required upgrades and modernization for the project, the State of North Carolina would operate at a negative cash flow for many years into the future, meaning it would have to borrow additional funds to pay operating and maintenance expenses during those years.

Fact: We believe the only way for the State of North Carolina to acquire the Yadkin Project today is through condemnation – a taking. That would require the State to pay Fair Market Value, which APGI estimates at more than $500 million. And it sets a precedent that North Carolina should never consider – that if the State sees a benefit in your business, it will take it for its own use.

Fact: Should the State take over APGI’s hydroelectric generation process, it will find itself involved in a highly complex engineering and business operation, including the daily trading of electricity for which it is not prepared.

ENVIRONMENTAL FACTS

Fact: Twenty-three stakeholders, including environmental groups such as American Rivers, The Nature Conservancy and the Land Trust of Central North Carolina support the relicensing of the Project to APGI. The bill’s claims that the State can better provide for the environmental protections of the river than APGI are not valid.

Fact: This State Trust bill says it will “Conduct environmental testing and assessment of all properties located in Stanly County currently or formerly owned and operated by Alcoa Power Generating Inc., or Alcoa Inc., and its subsidiaries, in order to evaluate danger to public health or the environment.”  Alcoa has been working alongside state and federal officials since the 1980s to identify, investigate and remediate waste sites associated with its Badin Works plant.  This work is being done under the close supervision of the N.C. Department of Environmental and Natural Resources, Division of Waste Management.  Studies show — and the State of North Carolina has agreed — that there is no threat to human health or the environment and that no further action is necessary for these sites at this time.  A plan for additional remediation and/or ongoing monitoring is currently being reviewed by state officials. 

Fact: Alcoa has a permanent legal responsibility to responsibly manage all waste associated with the Badin Works plant.  Neither Stanly County nor the State will ever have to spend a dime if further remediation is needed.  

Fact: Stanly County has speculated that additional waste sites may exist.  Alcoa has investigated every suspected waste site provided by Stanly County in conjunction with State or County officials.  In each instance, the sites had already been identified and were being managed; no evidence of waste was found; or issues associated with the site were resolved.  Data on all waste sites has been provided to the N.C. Department of Environment & Natural Resources.

Fact: This Trust bill sets a standard for Alcoa that is higher than what the State asks of every other company in North Carolina managing waste sites. It asks that these sites be “remediated to levels over and above the level that would be required under current law.”   If the state wants to see remediation levels changed, it should change its laws for the entire state – not single out one company.