Gov. Beverly Perdue is still hoping the state can gain control of Alcoa’s Yadkin River dams and hydroelectric facilities, even though legislation facilitating the takeover failed to pass the recent session of the General Assembly. Perdue spokeswoman Chrissy Pearson told Carolina Journal that Perdue will continue to pursue the takeover with the assistance of the N.C. Attorney General’s Office.

Perdue supports the creation of a new state agency to manage the Yadkin Project, a hydroelectric plant comprised of four dams and reservoirs located along a 38-mile section of the Yadkin River in Davidson, Davie, Montgomery, Rowan, and Stanly counties. Alcoa operates the project under a license from the Federal Energy Regulatory Commission (FERC). The previous 50-year license was issued in 1958 and Alcoa started the relicensing process in 2002, but the expired license has not been renewed.

Perdue and other takeover supporters, including the Stanly County Commission, believe the state would be a better steward of the water resources, the environment, and the electrical power. Perdue’s strategy relies on convincing the federal government to deny a new license to Alcoa. The federal government would then assume control of the project, letting the state acquire the hydroelectric facilities from the federal government.

Administrative challenges are buying time for Alcoa’s opponents, including prominent state legislators. If FERC has not issued Alcoa a new license by May, the 2010 session of the General Assembly will almost certainly revive the takeover attempt that stalled in August.

The reservoirs in the Yadkin Project, named High Rock, Tuckertown, Badin, and Falls, lie within 38,000 acres of real estate owned by Alcoa Power Generating Inc., a subsidiary of Pittsburgh-based Alcoa. Alcoa bought the land and constructed the hydroelectric dams to supply power to its aluminum smelting plant in Badin, a small Stanly County town east of Albemarle. Aluminum production started in 1917 and continued until 2002, when the company shut down most of the operation. All production stopped in 2007. 



The hydro facilities continue to generate up to 210 megawatts of electricity that Alcoa wholesales to other power companies.

FERC would likely have issued a new license to Alcoa had Gov. Mike Easley not intervened in April 2008. Citing concerns of some local governments in the region, Easley asked FERC to delay issuing a new license until those concerns were addressed. Easley left office in January, but Perdue, his successor, also asked FERC to delay a new license. A legal brief filed by an attorney representing Perdue stated that she “intends to vigorously oppose” a new license for Alcoa.

Alcoa’s local representative Gene Ellis is frustrated with efforts to thwart the relicensing process. “We began the relicensing process in 2002. When we did that we cast a very broad net to try to bring in as many people with an interest in how the project was operating as we possibly could,” he told CJ during an interview at his office in Badin.

Hoping to resolve any issues associated with a new license, Ellis said Alcoa chose to pursue voluntarily a relicensing settlement agreement that addressed local concerns. A formal agreement supported by 23 major stakeholder groups was submitted to FERC in May 2007.

General Assembly acts

State Sen. Fletcher Hartsell, R-Cabarrus, sponsored a bill establishing the Yadkin River Trust, a new public agency that would control the project if the state could acquire it from Alcoa. In early May, by a 44-4 vote, the Senate passed Hartsell’s bill, but a variation of it was defeated in the House. A House committee approved an alternate bill incorporating key components of the original Senate version, but the full House did not act on it. Hartsell and other takeover advocates will likely try to revive legislative efforts when the General Assembly reconvenes next May. [Editor’s note: The online version of this story was corrected to clarify the legislative history.]

Alcoa does not want to surrender the project, but even if forced to, the company says the state would have to pay fair-market value, estimated by the company at more than $500 million.

Faison Hicks, an lawyer with the attorney general’s office involved with Perdue’s effort, acknowledged that even if the state can take over the project, there is no way to know how much it will cost.

The Fiscal Note attached to Hartsell’s bill “anticipates that the cost of acquiring the Yadkin Project would fall somewhere within the range of $24.2 million to over $500 million, with the most likely estimate being something closer to the estimated market value of $176 million,” based on the tax valuation of the property.

Administrative hearings

Administrative challenges are buying time for the Alcoa opponents. FERC spokeswoman Celeste Miller told CJ that the commission is still reviewing Alcoa’s application, but the main unresolved issue is a Water Quality Certificate from the state of North Carolina. The Department of Environment and Natural Resources’ Division of Water Quality issued a certificate earlier this year, but then revoked it because the state made a procedural error regarding a required legal notice.

Subsequently, Stanly County and Yadkin River Keeper Dean Naujoks, Inc., have filed administrative challenges to Alcoa’s water quality permit. Those challenges are now under the jurisdiction of the state Office of Administrative Hearings.

An OAH administrative law judge has ordered all parties to participate in mediation on or before Dec. 14, 2009. If the parties cannot resolve all issues the judge will hear the issues the week of Feb. 22, 2010.

Don Carrington is executive editor of Carolina Journal.