20070812 Ver 2_Alcoa ready to battle over Yadkin_20101215

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Alcoa ready to battle over Yadkin
Activists.-call on feds to deny company's permit renewal
BY BOB GEARY
n the battle for control of the Yadkin
River, Alcoa sustained a major
setback in early December when the
state Division of Water Quality revoked
a critical permit it had issued in 2009,
saying Alcoa had withheld important
information about its operations on the
Yadkin. (For background, see our cover
story, "Give back the Yadkin, dammit,"
Nov. 18, 2009.)
"[Alcoas] application and its supporting
information were incorrect through intentional
withholding of information material to" whether
the dams could ever meet the permit standards,
DWQ Director Colleen Sullins said in a revoca-
tion letter sent to Alcoa Power Generating Inc., a
subsidiary of the giant worldwide corporation.
The permit, known as a 401 water quality
certification, was based on Alcoa's assurances of
improved performance at its four very profit-
able hydroelectric dams, built long ago to supply
power to a giant smelting plant in Stanly County
that shut down in 2007.
Without the state permit, Alcoa cannot be
relicensed by the federal government to continue
operating the dams.
Alcoa has operated three of the dams for the
last 90 years under a license originally issued
when the Federal Water Power Act was enacted
in 1920. With no objection from the state, the
Federal Energy Regulatory Commission (FERC)
renewed the license for 50 years-and a fourth
dam-in 1958.
With the federal license now expired, how-
ever, and the Alcoa smelter dosed, a coalition of
state and local officials and the nonprofit Yadkin
Riverkeeper have called on FERC to deny Alcoa's
application for yet another 50-year renewal. They
argue that Alcoa 's right to control and profit
from the rivet was predicated on its continuing
to employ hundreds of people at the plant
No jobs, no license, they say.
Alcoa, on the other hand, insists that it has a
vested right to the dams because it built them-
and FERC has never failed to renew a licensee.
Under the proposed state legislation backed
by Gov.-Bev Perdue and Statily County, though,
the General Assembly would create a Yadkin
River Trust Authority to assume the license and
take over the dams if the FERC ruling goes their
way. Under the never-exercised recapture section
of the federal statute, Aloca would be entitled to
compensation for its net investment in the dams
only, not their much greater fair-market value.
The fair-market value of the dams, accord-
ing to Alcoa, is in the hundreds of millions of
dollars, based on the profits produced from the
sale of generated electricity. By contrast, the net
investment value-essentially the depreciated
value of Alcoa's equipment-was estimated by
the company's subsidiary at about $25 million
a few years ago. Since then, Alcoas additional
investments in new turbines, designed to meet
the 401 water quality standards, have pushed
that figure into the $100 million range, accord-
ing to both the company and Stanly County
Manager Andy Lucas.
Were FERC to strip Alcoa 's license under the
terms of the proposed state legislation, Lucas
says, the newly created Yadkin trust authority
would be empowered to issue revenue bonds
sufficient to pay off Alcoa. The profits to the
authority from electricity sales would far exceed
the amount needed to back the bonds.
]p' WQ's revocation abruptly ended the
case before a state administrative law
' judge over whether the 401 permit was
properly issued in the first place. The judge had
stayed the permit while he took testimony from
Alcoa officials and anti-Alcoa witnesses called by
Stanly County and the Yadkin Riverkeeper. In the
course of the testimony, internal a-mails from
Alcoa surfaced indicating that what company
Alcoa has operated three dams along the
Yadkin River for 90 years.
FILE PHOTO BY D.L. ANDERSON
officials were telling DWQ wasn't necessarily so.
The issue was whether the new, aerated tur-
bines Alcoa was installing would definitely solve
the problem of low dissolved oxygen levels in the
water being released (the "tailwatere') from two
of its dams. A string of Alcoa a-mails indicated
they might not One, written by company official
Gene Ellis, nonetheless counseled against tell-.
ing DWQ. "If we even begin to suggest to DWQ
that [the new equipment] may not allow those
tailwaters to meet state standards, Ellis advised,
"DWQ can't issue us a 401." His advice: Get the
permit, and if the turbines don't work, negotiate
with. DWQ about "next steps'
Alcoa has 60 days to challenge the revocation,
or it can start the 401 application process again._
Ride Bowen, the Alco4 official in charge of its
hydropower operations, said the company will
challenge the ruling, calling it neither justified
nor appropriate. "No material information was
withheld," Bowen said in a statement
The same equipment is widely used in other
locations, Bowen said, and in fact dissolved-
oxygen levels have been improving since last year
when it was installed on the Yadkin ?
iTORY CULTURE CLASSIRECS
WEDNESDAY, DECEMBER 15,2010 5 e