20070812 Ver 2_Associated Press_20090506

Dorney, John
From: Massengale, Susan [[e-mail]]
Sent: Wednesday, May 06, 2009 10:05 AM
To: [e-mail]
Subject: NC Senate signals desire to control Alcoa dams
Attachments: ATT00001.c
NC Senate signals desire to control Alcoa dams
BY EMERY P. DALESIO - ASSOCIATED PRESS WRITER
RALEIGH, N.C. -- A water fight between North Carolina and Alcoa Inc. over control of nearly 40 miles of the Yadkin River
ramped up Tuesday as the state Senate signaled support for taking control of four electricity-generating dams the largest
U.S. aluminum producer has operated for more than half a century.
Alcoa had North Carolina's backing in 1958 when it won a federal license to operate the dams, which powered an
aluminum smelter that employed nearly 1,000 people. But the company closed the plant in 2002, its 50-year license
expired, and state official said they see no reason the corporation should keep running the dams and the $44 million a
year in electricity sales they generate.
The Senate voted 44-4 on Tuesday to tentatively approve creating a state corporation that would acquire and control the
dams if North Carolina is able someday to get control away from Alcoa. The Yadkin River Trust would produce and sell
electricity, devote some of the power to local economic development projects, and clean up the closed smelter site
beyond what Alcoa would be required.
"I think it's important for us as North Carolinians to be able to control our water, clean up our environment and encourage
appropriate economic development in the area," said Sen. Fletcher Hartsell, R-Cabarrus. "The dams are going to be run,
but the first thing they're going to be run for is for the people of this state."
Alcoa is promising a long and determined fight for control over dams that produce 215 megawatts of clean energy, an
asset sure to grow in value as the country demands more electricity in the coming half-century.
"Alcoa's position is that we are going to fight this. We are not negotiating with anybody," Alcoa spokesman Kevin Lowery
said.
The company's lobbying has compared the state's effort to nationalization of foreign corporate assets by Venezuela's
socialist president Hugo Chavez. The company contends since it's not selling its dams, power lines and land around the
lakes, North Carolina can get them only by taking the property with its condemnation powers.
Alcoa also would demand more than $500 million in compensation; state legislators said if the license isn't renewed Alcoa
would walk away with repayment for its net investment, about $24 million, plus undetermined severance damages.
Legislative fiscal researchers estimate the market value of the property at about $176 million.
Pittsburgh-based Alcoa has been hit particularly hard by the global recession, which has slashed demand and prices for
aluminum used in products ranging from cars to soda cans. The company last month reported its second consecutive
quarterly loss despite recent production cuts and plans to trim its global work force by 13 percent.
Hartsell has said both sides are positioning for advantage in what's likely to be a long tussle before what he believes will
be a negotiated conclusion.
The fight over the river and who controls it is expected to heat up after this week. The state's water-quality division has
until Thursday to report to the Federal Energy Regulatory Commission how relicensing the dams to Alcoa would affect
water quality. After that, FERC could decide on a last-minute bid by Gov. Beverly Perdue asking the federal agency to
block Alcoa's request for a new license. If FERC decides against renewing a hydroelectric operating license, electricity
generation has to stop, said Mark Robinson, whose FERC division oversees hydro programs.
FERC then could recommend to Congress that a state or municipal body take over a hydroelectric project, with
compensation, but that has never happened, Robinson said.
Alcoa's Lowery said a state takeover would signal to other companies how unfriendly to business North Carolina has
become. But the Senate vote and sponsorship of a similar bill in the House signal bipartisan support in the generally
business-friendly Legislature. A moderate Republican, Sen. Stan Bingham, has filed two bills that would allow his home
county of Davidson and neighboring Stanly County to begin imposing local taxes on Alcoa.
Susan Massengale
Public Information Officer
DP;NR- Division of Water Quality
1617 MSC, Raleigh, NC 27699-1617
[phone]; fax [phone]
Please note: my e-mail address has changed to susan.massengalePncdenr.gov
E-mail correspondence to acrd fi-orrr this address rnai? be subject to the
Xorth Carolina Public Records Law and rnav he disclosed to third parties.