Wednesday, April 15, 2009

Alcoa's arguments against Yadkin River Trust

Before the Senate Judiciary II Committee unanimously approved a bill Tuesday creating a Yadkin River Trust to oversee a stretch of the Yadkin River and possibly operate hydroelectric dams owned by Alcoa Energy, the company presented its arguments against the bill. Alcoa is seeking a renewal of its federal permit to operate the power plants. For the record, here’s Alcoa’s side:


Proponents of Senate Bill 967 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, please consider these facts:
Control of the Water
Fact: No one owns the water in the Yadkin River. Under NC 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 any water. 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 the 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 given an interbasin transfer permit to Concord-Kannapolis for 10 million gallons per day. And the State 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 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 Stanly County’s 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 Project through “recapture” at a cost of $25 million to the state. The State cannot recapture the 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 for the Yadkin Project was issued in April 2008 by FERC. FERC staff concluded in the 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 in addition to any costs paid, as well as the costs of takeover.
Fact: Given the capital cost expenditures required to make the required upgrades and modernization for the project, the State would operate at a negative cash flow for many years into the future, meaning the State would have to borrow additional funds to pay operating and maintenance expenses during those years.
Fact: We believe the only way for the State to acquire the Project today is through condemnation – a taking. That would require the State to pay Fair Market Value for the Project 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 – the 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 NC 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.

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