Power sales from Alcoa’s Yadkin River dams rise to $30M

  • Posted: Friday, October 25, 2013 10:52 a.m.

RALEIGH (AP) — Four Alcoa Inc. dams at the heart of a years-long fight over control of the water and electricity coming from the state’s second-largest river system are delivering better revenues.

Alcoa reported to federal regulators this month that the dams generated 964,216 megawatt hours of electricity in the year ending in September. Based on an average wholesale price of $31.04 per megawatt hour provided by energy information company Platts, that would have generated revenues of about $30 million over the 12-month period.


Alcoa declined to provide details about operating costs for the Yadkin River dams, or how much the company banked as profit from selling the electricity generated to commercial customers, spokesman Robert Brown said.

The dams powered an aluminum smelter the Pittsburgh-based company closed in 2007. Alcoa is seeking a new federal license that would allow it or a future buyer to continue operating the dams for up to 50 years.

Electricity sales have dropped from $47 million in 2005 to about $30 million a year during the recession on lower electricity demand and reduced rainfall. Power sales fell again to about $19 million in the year ending in September 2012.

Alcoa has been reluctant to describe its profit from power sales, but released financial statements in 2011 showing the dams returned profits of between $8 million and $7.3 million in 2008, 2009 and 2010 on revenue that averaged about $30 million a year.

The company has said the dams need about $180 million in upgrades but it needs the license in hand to know it will be able to recoup the costs.

Alcoa projected in 2006 that the dams generated almost $44 million a year in revenues. Over 50 years, that could mean revenues of more than $2 billion, an amount that could multiply if demand for clean power booms.

Republican Gov. Pat McCrory this summer joined his predecessor, Democrat Beverly Perdue, in opposing a new federal license. Inexpensive energy resulting from public control of the dams could produce thousands of jobs in the coming decades, and as water supplies tighten for North Carolina’s 9.5 million residents, it is important that the state have the freedom to use the river’s water, Perdue said.

The Federal Energy Regulatory Commission has never rejected the renewal of a hydroelectric operating license. If it did so in this case, Congress would have to decide whether a state or municipal body could take over the hydroelectric project after compensating Alcoa.

State officials said in an August lawsuit that Alcoa has no ownership rights to the bed of the Yadkin River over which the dams were built beginning a century ago. The lawsuit asks a federal judge to rule North Carolina has had riverbed ownership since it became a state after the American Revolution and that the state now has a stake in Alcoa’s dams.

“The Yadkin River is a North Carolina River,” Gov. Pat McCrory said August. “We should be able to use it for North Carolina water needs and to create North Carolina jobs. The benefits of the Yadkin River belong to North Carolina’s people.”

Lawyers for the Alcoa operating subsidiary, Alcoa Power Generating Inc., responded by saying that if North Carolina ever had any ownership rights in the dams or the riverbed under them, they were lost because state officials failed to claim them until now.

“The State filed this lawsuit in an attempt to hijack the dams (and the revenue they generate) by arguing, for the first time in the several decades that APGI has operated the dams, that the riverbeds on which they were built have belonged to the State all along,” Alcoa lawyers said in a filing in the federal lawsuit.

Critics warn that a new operating license would allow Alcoa to sell the dams. Alcoa last year sold its four dams on the Little Tennessee and Cheoah rivers in eastern Tennessee and western North Carolina for about $600 million. Alcoa received a new 40-year license for the Tapoco dams project in 2005, shut down production at the nearby smelter in Alcoa, Tenn., in 2009, and last year announced the smelter’s permanent closing.

Alcoa executives have declined to say whether the company planned to sell the Yadkin dams or any other asset.

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