Stanly County Applauds Indy Week Article On Alcoa
RALEIGH, N.C. – The Stanly County Board of Commissioners is commending the Independent Weekly for its Nov. 18 cover story on how the application by Alcoa Power Generating, Inc. (“Alcoa”) before the Federal Energy Regulatory Commission (FERC) for another 50-year license to monopolize control of the Yadkin Hydroelectric Project will harm North Carolina economically and environmentally. The article, written by Bob Geary, includes interviews with leaders for and against Alcoa’s application for the Project, which includes dams and powerhouses along a 38-mile stretch of the Yadkin River at High Rock, Tuckertown, Narrows and Falls Reservoirs in Davie, Davidson, Rowan, Montgomery and Stanly counties.
“Give Back the Yadkin” highlighted these specific arguments by the Stanly County Board of Commissioners regarding Alcoa’s relicensing, as shown in excerpts:
1) Alcoa has caused pollution at the Project, yet refuses to admit it. Geary talked with Gene Ellis, relicensing consultant for Alcoa, who conceded that Alcoa’s now-closed smelter that operated in conjunction with the Project for most of the last 50 years generated hazardous contaminants that were improperly disposed on site. “Waste oils, PCBs and PAHs (polycyclic aromatic hydrocarbons): They all were poured on the ground, into a lagoon next to the plant or into the town dump, he admits,” wrote Geary.
Yet when Clemson University water quality expert John Rogers, Ph.D., released findings this year that connected PCBs in the Yadkin water to those generated by the smelter, “Alcoa disputed Rogers’ findings, saying the PCBs in the lake were commonplace in industry and could’ve originated elsewhere.” However, Alcoa has not even bothered to conduct its own study to prove that assertion.
Before that study emerged, Geary noted, “the state Division of Public Health, a unit of the Department of Health and Human Services, posted a fish consumption advisory for Badin Lake because of the elevated levels of PCBs and mercury. Most people should limit themselves to one meal per week of largemouth bass and catfish caught there, it said. Pregnant women and children under 15 shouldn’t eat any.” Alcoa – or rather Ellis – did not explain to Geary why the firm tried unsuccessfully to block the posting of information about this threat to public health. We are still asking the same question and awaiting Alcoa’s response.
While Ellis told Geary “there’s no link between the power plants and the pollution in Badin Lake,” a filing by the state against Alcoa’s relicensing cites the fish advisory in a section titled “Environmental Degradation of Yadkin Water Quality Remains a Public Concern.”
2) Additional testing is needed to determine the extent of Alcoa’s pollution at the Project. Geary talked with Dean Naujoks, the Yadkin Riverkeeper, who complained that Alcoa has refused to allow an independent assessment of the plant site’s contamination in the wake of pollution reports. “Ellis says it’s not necessary. The Division of Water Quality has certified that Badin Lake is safe for swimming, he noted. And the Division of Waste Management, another unit in DENR [the Department of Environment and Natural Resources], found that wherever the PCBs came from, they pose no threat to human health.”
But it was just such statements by DENR that led the Stanly County Board of Commissioners and Naujoks to challenge the issuance of a required 401 Water Quality Certification to Alcoa. Joined by Gov. Bev Perdue’s office, the plaintiffs charged that DWQ neglected to follow federal Clean Water Act requirements and state provisions regarding water quality protections and environmental review when it approved the permit for Alcoa. Until this matter is determined by the appropriate state officials next year, the FERC has indicated it will not conduct a final review of Alcoa’s relicensure application.
Geary noted as well that Alcoa was not even satisfied by the original terms of the permit. “DWQ approved the 401 permit, but with a requirement that before it was issued, Alcoa must post a $240 million bond to ensure that it will make necessary improvements to the turbines in the power plants. The old ones are reducing dissolved oxygen levels in the river, impairing water quality for the fish. Alcoa didn’t dispute the need, but neither did it post the bond. Instead, it appealed the requirement as exceeding the division’s authority.” The FERC rejected that argument in its entirety on October 15.
3) The actual cost for recapture is much less than what Alcoa has been claiming. As Geary wrote, “Under the Federal Power Act, if Alcoa lost its license, it would be entitled to compensation for its property but not the ‘fair market value’ if it were to sell, for example, to a public utility like Duke Energy. Instead, the law requires compensation to be calculated using a formula based on a company’s net investment: the cost to build, minus depreciation. Until recently, when Alcoa started spending money on turbine upgrades, its net investment in the Yadkin Project was just $24 million, according to FERC records.”
Checking with Alcoa on the costs, Geary noted that “Ellis says that with the turbine upgrades, Alcoa’s net investment is now $91 million. But he maintains that in a recapture, the company would also be entitled to ‘severance payments’ based on the amount of its lost future earnings, which could amount to hundreds of millions of dollars more.”
Yet Ellis admitted that the statement is Alcoa’s opinion and not fact. “Severance, he concedes, isn’t defined in the law; nor is it part of the compensation formula. The state doesn’t buy Ellis' severance definition, and it estimates in its filings to FERC that the license can be recaptured for $150 million tops, including the cost of deferred maintenance that Alcoa didn’t count.”
The final amount for recapture would be nowhere near the half-billion (or more) Alcoa has claimed in the past. As for when North Carolina would recoup recapture costs, Geary wrote, “The state estimates that the Yadkin River Trust would earn at least $20 million a year on the power plants – at current revenue levels of about $40 million annually – and more when acquisition costs are repaid. And if electricity rates increase, so would the profits.”
4) This is a battle over water rights, not private property as Alcoa states. Geary reviewed the history of water rights in America and noted that when the Federal Power Act passed in 1920, the federal government “allowed leases to public or private enterprises for limited periods – with ‘recapture’ permitted when the license expired.” This is the situation here because Alcoa specifically granted an option on the land to the federal government when it received its first 50 year monopoly of the Yadkin.
Roger Dick, president of Uwharrie Capital Corporation, told Geary that Alcoa is unhappy even with the generous compensation terms offered by law if the state is allowed to recapture its water rights for the Project. “Now, the Perdue administration is ready to pay them exactly what their license – their contract – promised when they signed it, but that’s not good enough for them?”
If Alcoa receives the license, it will have an exclusive monopoly on water rights to conduct hydroelectric operations on the Yadkin River for another 50 years, and the opportunity to make many millions in profits selling electricity generated from waters belonging to North Carolina citizens. Unlike other companies that generate electricity in North Carolina, Alcoa is not regulated by the N.C. Utilities Commission, and sells its electricity on the wholesale market rather than to N.C. customers.
The Stanly County Board of Commissioners have been strong opponents of allowing Alcoa to continue its monopoly of the Project because of Alcoa’s poor environmental history with its operation on the Yadkin River, the abandonment of operations by Alcoa at the Badin Works with its related loss of 1,000 jobs and the right of the people to control the water that belongs to them.
“We appreciate the fine job reporter Bob Geary did in covering all sides of this dispute while giving it the proper perspective it needs – that this is a fight over who has rights to our state’s water and, by extension, our future,” said Stanly County Commissioner Lindsey Dunevant. “This in-depth article reviewed all aspects of our arguments against Alcoa’s application for another 50-year license, and we hope everyone from FERC officials to lawmakers to all residents of North Carolina read it carefully to understand the grave issues involved here and the negative consequences that will result if Alcoa remains in control and continues to abuse the Yadkin Hydroelectric Project for private profiteering rather than public good.”
About This Effort:
In 1958, Alcoa, the world’s leading producer of primary aluminum, secured a federal hydroelectric license for the Yadkin Project on the Yadkin River in Stanly, Davidson, Montgomery and Rowan Counties in the Central Piedmont. In return, Alcoa promised aluminum manufacturing jobs for Stanly County for years to come. Alcoa has now essentially disappeared as a major employer in the region and shut down its manufacturing plants, but it wants to continue reaping the benefits of the Yadkin River after its license expires in April of this year. In addition, Alcoa discharged hazardous pollutants into North Carolina air and waterways for decades while harvesting immense profits from the Yadkin River, but has yet to finish cleaning up that contamination. It has filed an application with the Federal Energy Regulatory Commission (FERC) to obtain another 50-year license. If Alcoa is successful, one of North Carolina’s most valuable water resources will be used to maximize Alcoa’s profits, instead of being used to benefit the people of North Carolina, who themselves are in dire need of affordable electricity, local economic development, and clean, adequate drinking water.