Alcoa begins modernization project in western North Carolina

Alcoa announced the kickoff of a $110 million modernization project at Cheoah Dam, one of four hydroelectric dams that make up Alcoa Power Generating Inc.’s Tapoco Project.  This modernization effort demonstrates Alcoa's commitment to follow through on its relicensing commitments in a timely manner.


Alcoa kicks-off Cheoah Dam Modernization Project: 
New generators, turbines, transformers to increase efficiency

Alcoa today kicked off a $110 million modernization project at Cheoah Dam, one of four hydroelectric dams that make up Alcoa Power Generating Inc.’s Tapoco Project.  The modernization effort will increase the dam’s efficiency and energy output and increase the life of the dam by at least another 40-50 years.

“Hydropower is clean, renewable, reliable and efficient,” said Rick Bowen, Alcoa Energy President. “These attributes equal sustainability – sustainable energy and sustainable jobs. That’s why we are looking forward to replacing the four 90-year-old Francis turbines with four new high-efficiency turbines, generators, and transformers which will provide an additional 22 megawatts of generating capacity at APGI’s Tapoco Cheoah plant.”

The modernization follows the recent relicensing of the Tapoco project by the Federal Energy Regulatory Commission. The new 40-year license was effective March 1, 2005 and outlines protection, mitigation, and enhancement measures for the Project that address ecological resources as well as other beneficial uses of the Cheoah and Little Tennessee Rivers, including hydropower generation, watershed protection, endangered species enhancement, fish passage and recreational opportunities.

Click here to read the complete press release.

When the Cheoah Dam was completed in 1919, it was the world’s highest overflow dam at 225 feet.  The dam was made famous by serving as the backdrop of the jump scene in the 1993 major motion picture, The Fugitive, starring Harrison Ford.

Why Perdue's proposed Yadkin River takeover is so flawed

The Charlotte Observer published an opinion piece today from Rick Bowen, president of Alcoa's energy operations, about Gov. Perdue's attempted government takeover of the Yadkin Project.

Why Perdue's proposed Yadkin River takeover is so flawed

From Rick Bowen, president of Alcoa Energy

When Gov. Bev Perdue decided to pursue an unprecedented government takeover of Alcoa Power Generating Inc.'s hydropower operations along the Yadkin River, she ignored the recommendations of experts in her own state agency, disregarded the actions of the N.C. General Assembly and refused to listen to the citizens who will be most impacted by a takeover.

Instead, she asked the Federal Energy Regulatory Commission to toss aside its own rules and regulations and recommend a government takeover of the Yadkin Project.

Nothing like that has ever been done before... at least not in America.

Gov. Perdue's quest to take our private property stands in stark contrast to the actions of the General Assembly, which rejected takeover legislation this year, and the N.C. Department of Environment and Natural Resources, which studied our operations and in 2007 signed the Relicensing Settlement Agreement supporting a new license for the Yadkin Project.

From the beginning, Gov. Perdue has turned a deaf ear toward the citizens most involved in this process, including homeowners, recreational users, business groups, environmental groups and others who spent years negotiating a relicensing settlement agreement with APGI that offers substantial benefits to North Carolina.

She has dismissed the recommendation of FERC staff that our license should be renewed.

And she ignored the concerns of interested citizens, including grassroots groups such as the N.C. Property Rights Coalition, who have expressed concern that this takeover will set a dangerous precedent that could impact private citizens and small business owners. You have to believe it will affect the way other business owners look at North Carolina, too.

I wish I could ask Gov. Perdue why she is so intent on taking our business. But she has refused to meet with me and others from Alcoa.

So I can't ask her why she conveniently omitted or distorted our history of environmental stewardship and community support. I can't explain that her actions reflect a clear misinterpretation of the Federal Power Act. And I can't point out the glaring errors in her filing.

For example, Gov. Perdue's projections estimate $2.8 million a year for operating and maintenance expenses - but fail to take into account any expenses associated with project land management, depreciation, other contracted costs, power substation and transmission, and general administrative expenses. Those expenses add an additional $11 million a year to the operating costs, meaning Gov. Perdue has underestimated operating expenses by almost 400 percent.

She also estimates it will cost $24.1 million to acquire the Yadkin Project. Even if a government takeover were possible, the price must reflect the updated cost of Alcoa's net investment ($91 million), plus severance damages that could add hundreds of millions of dollars to the cost.

Gov. Perdue argues that North Carolina must "secure a greater degree of control over the water supplies within its own borders." If so, then shouldn't the same rules apply to all rivers in North Carolina and all private hydro operators?

But this battle isn't about protecting the North Carolina's water supplies; it's about taking government control of a private business.

Alcoa responds to NC Governor’s attempts to take the Yadkin Project

I wanted to share with you a press release we issued this morning about our response to Gov. Perdue's Sept. 18 filing with FERC. We filed a formal response yesterday, which you can access here.

Alcoa responds to NC Governor’s attempts to take the Yadkin Project

Company criticizes NC Gov. Bev Perdue’s attempt to circumvent federal law and take its private property

BADIN, NC (October 6, 2009) – Alcoa Power Generating Inc. (APGI), a subsidiary of Alcoa Inc., responded to an unprecedented effort by N.C. Gov. Bev Perdue to seize control of its privately-owned hydropower business along the Yadkin River by filing a formal response with the Federal Energy Regulatory Commission (FERC) on Monday. In a September 18 filing, Gov. Perdue asked FERC to ignore its long-standing rules and regulations, disregard the findings of the state’s own environmental agencies and deny APGI a new federal license to continue generating clean, renewable energy.

“Gov. Perdue is asking FERC to ignore federal law and allow the state to take over a private business that has been a part of the North Carolina business community since 1915. It’s something that has never been done before and with good reason,” said Rick Bowen, president of Alcoa’s energy operations. “We hope that FERC will uphold the intent of the Federal Power Act and promptly reject Gov. Perdue’s effort to circumvent the law and take our property.”

In its response, Alcoa criticizes Gov. Perdue’s zealous pursuit of the company’s business and property. It provides details that show her September 18 filing is fraught with inaccuracies and reflects a clear misinterpretation of the Federal Power Act.

In addition, Gov. Perdue’s actions show a complete disregard for FERC’s rules and regulations. Her request for a government takeover comes three years after deadlines specified in the Federal Power Act and flies in the face of FERC’s April 2009 ruling that, as a late intervener, Gov. Perdue must accept the existing relicensing record.

A complete copy of Alcoa’s response is available on the FERC web site at: http://elibrary.FERC.gov/idmws/file_list.asp?accession_num=20091005-5146

Gov. Perdue’s Takeover Effort Raises Questions

To make her case, Gov. Perdue has conveniently omitted or purposefully distorted Alcoa’s history of responsible environmental stewardship and community support.

“It is disappointing that Gov. Perdue would make such accusations without the supporting facts of the state agencies,” Bowen said. “I wish Gov. Perdue would have given us the courtesy of a meeting with her so we could have addressed some of these issues when she first took office. She has yet to accept a meeting with our representatives.”

The most glaring inaccuracies in Gov. Perdue’s filing involve the misrepresentation of Alcoa’s environmental record and flawed financial projections that grossly underestimate how much it would cost the State of North Carolina to acquire and operate the Yadkin Project.

Environmental Issues: Alcoa and APGI follow all environmental regulations in North Carolina. If Gov. Perdue believes the company has failed to meet any of its environmental responsibilities or delayed taking any necessary action, she already has full regulatory authority over its waste sites.

While Gov. Perdue claims that “pollutants from former industrial operations at the Badin Works site remain a threat to human health and environment,” the N.C. Department of Environment and Natural Resources (DENR) has stated on the record that the sites do not pose a threat to public health or the environment. The company is committed to continue testing and monitoring these sites and is legally bound to make sure they don’t create any environmental concerns in the future.

Financial Projections: Gov. Perdue’s financial projections include glaring errors and omissions. She has projected $2.8 million a year for operating and maintenance expenses but failed to take into account expenses associated with project land management, depreciation, other contracted costs, power substation and transmission, and general administrative expenses. Those expenses – which add an additional $11 million a year to the operating costs – demonstrate that Gov. Perdue has underestimated operating expenses by almost 400%.

In addition, the financial projections reflect a price of $24.1 million to acquire the Yadkin Project. Even if a government takeover were possible, the price would include the updated cost of Alcoa’s net investment ($91 million), plus severance damages. Alcoa believes severance damages alone could be hundreds of millions of dollars.

Gov. Perdue’s relentless attacks on Alcoa stand in stark contrast to the actions of the N.C. General Assembly and her own N.C. Department of Environment and Natural Resources, and show a disregard for the 23 organizations who negotiated a relicensing settlement agreement with Alcoa that offers substantial benefits to North Carolina.

Consider:

• A bipartisan group of legislators in the N.C. House voted in overwhelming numbers (66-39) to defeat takeover legislation supported by Gov. Perdue. (August 2009 vote on SB 967)

• The N.C. Department of Environment and Natural Resources has closely studied every aspect of Alcoa’s operations – including water quality, water resources and waste management issues – and support granting a new license for APGI. The Division of Water Quality issued APGI a required water quality certificate in May that clears the way for FERC to issue a new license, and the Division of Waste Management has said that waste sites on Alcoa’s other industrial property do not pose a health risk.

• A collection of 23 organizations – representing state and federal agencies, local homeowners, recreational users and business organizations, environmental interest groups and other stakeholders – negotiated and signed a relicensing settlement agreement that supports a new license for Alcoa.

• Grassroots organizations such as the N.C. Property Rights Coalition have expressed strong opposition to Gov. Perdue’s attempts to take Alcoa’s private property, raising concern that private citizens and small business owners may be subject to the same type of government takeover.

• 82% of North Carolina voters oppose the state taking over a privately-owned business (Public opinion poll of 600 likely voters conducted in May 2009 by McLaughlin & Associates)

Despite these factors, Gov. Perdue and Commerce Secretary Keith Crisco continue to relentlessly pursue a takeover of Alcoa’s hydropower business. In fact, Gov. Perdue has even supported a lawsuit against her own Department of Environment and Natural Resources over the issuing of the water quality certificate for the Yadkin Project.

Alcoa believes FERC, the federal agency that regulates all hydropower projects in the United States, should dismiss Gov. Perdue’s motion and issue the company a new long-term license for the Yadkin Project. FERC staff has already recommended a new license for Alcoa, and the agency has all of the information it needs to make a final decision regarding a new license.

# # #

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.