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.

Alcoa responds to Gov. Perdue’s request to intervene in the federal relicensing of the Yadkin Project

Alcoa Power Generating Inc. issued the following statement in response to a motion filed by N.C. Gov. Bev Perdue today to intervene in the federal relicensing of the Yadkin Hydroelectric Project in central North Carolina: 

The State of North Carolina took an unprecedented step today by pursuing the takeover of a privately-owned business that has roots in North Carolina dating back to 1915.  It’s a move that could ultimately cost North Carolina taxpayers more than $500 million.

Alcoa does business in 34 countries around the world and it’s extremely rare to be faced with a situation where a state government wants to seize one of our businesses and operate it for its own benefit.  Every other business owner in North Carolina should be concerned about the dangerous precedent this action sets.  

Gov. Perdue’s motion to intervene in the federal relicensing of the Yadkin Hydroelectric Project comes more than six years after the federal relicensing process began.  Throughout this process, agencies representing the State of North Carolina have been actively involved and the State’s interests have been well protected.    

Alcoa has invested heavily in the Yadkin Project and will fight to ensure that it receives full value for its property if the State of North Carolina moves forward with this ill-conceived policy.

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Low taxes make North Carolina friendly for business … for now

The Triangle Business Journal reported yesterday that North Carolina ranks as the second best state to do business in, according to a survey of 543 CEO’s conducted by Chief Executive magazine.  Key factors highlighted by business leaders included North Carolina’s low taxes and business friendliness.

But efforts by the State of North Carolina to take over the privately-owned Yadkin Hydroelectric Project could negatively impact the way business leaders view North Carolina in the future.  A tax bill proposed by Sen. Stan Bingham that would allow certain N.C. counties to tax companies that produce clean, renewable energy could also have a negative impact on North Carolina’s efforts to establish itself as a national leader in green energy.

Albemarle Mayor Whit Whitley is among those who have expressed concerns to Gov. Bev Perdue that attacks on Alcoa could make it more difficult to attract new businesses to Stanly County.

JP Donlon, editor-in-chief of Chief Executive magazine, said: “As the nation’s economic problems continue to snowball and an increasing number of states experience budgetary problems, state governments ought to take a hard look at their taxation and unionization policies if they want to turn the page and attract new businesses and capital to their provinces.”

If Sen. Bingham’s bill passes the N.C. General Assembly, other N.C. counties will likely seek similar opportunities to raise much-needed tax revenue by levying additional taxes on private companies.