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Control of Yadkin discussed; Lawmaker and company consultant differ on what state should do

Staff report
More than 100 people from Anson, Montgomery, Stanly, Davidson and Rowan counties attended a hearing Tuesday in Raleigh where state legislators were considering possible creation of a Yadkin River Trust.
Most in the crowd wore stickers asking the N.C. House Water Resources and Infrastructure Committee to “Vote YES on SB 967.”
Senate Bill 967 would allow the state to acquire and operate the Yadkin Hydroelectric Project instead of Alcoa Power Generating Inc., which is trying to renew its federal license for the project.
The Yadkin Project, regulated by the Federal Energy Regulatory Commission, includes dams and powerhouses along a 38-mile stretch of the Yadkin River and includes the High Rock, Tuckertown, Narrows and Falls reservoirs.
The project touches Davie, Davidson, Rowan, Montgomery and Stanly counties.
N.C. Sen. Fletcher L. Hartsell Jr., R-Cabarrus, a primary sponsor of SB 967, and Bruce Thompson, a lobbyist for Stanly County, made presentations in favor of the legislation.
Gene Ellis, a consultant for Alcoa, also spoke to the committee.
Committee Chair Cullie Tarleton plans to conduct further hearings to address questions from committee members and allow the public to comment on the bill.
Hartsell spoke to Alcoa’s claim that the legislation is “about taking over a private business.”
Hartsell said Alcoa’s own relicensing application acknowledged the right of the federal government to have the license returned.
In that application, bill supporters say, Alcoa correctly stated federal law in admitting that the repurchase price is “net investment,” not to exceed “fair value” plus any “severance damages” suffered.
Alcoa’s own application states that the repurchase price is $24.16 million, according to Hartsell.
But Ellis said Tuesday a takeover of the Yadkin Project would cost the state at least $500 million “at a time when the state is in the midst of its worst budget crisis in years.”
A vote to create a Yadkin River Trust “is a clear indication that the General Assembly supports a government takeover despite the cost,” Ellis said.
Hartsell also addressed Alcoa’s claims that it was too late for the federal government to exercise this recapture right, citing FERC’s recent order allowing Gov. Bev Perdue to intervene in the relicensing case and ask for recapture on the state’s behalf.
Hartsell said the company’s promise of creating 1,000 jobs was the reason Alcoa received a 50-year license to operate the hydro facilities in 1958.
With the shutdown of the Badin Aluminum Works and the resulting loss of manufacturing jobs, there is no longer a public benefit upon which to base another license for Alcoa, Hartsell said.
“That operating license was issued on behalf of the people of the Yadkin River basin and the state of North Carolina,” Hartsell said, “and that license has expired.
“It has been so long that we have forgotten that Alcoa is our tenant, and the tenant would have us forget that we are the landlord. The lease is up, and it is time for the waters of the Yadkin to be returned to the benefit of the citizens.”
Ellis said the original 1958 license was never issued on the condition of Alcoa’s providing jobs.
No hydro business in America is required to support a certain number of jobs to maintain a license, he added.
Thompson said Alcoa has demonstrated poor stewardship of the water resources in the Yadkin River and the reservoirs. He referred to a fish tissue study conducted by the N.C. Division of Public Health at Badin Lake which found elevated levels of PCBs in the fish.
DPH ordered a “Fish Consumption Advisory” and required signs to be posted at the lake.
Thompson said Alcoa’s legal challenge to the warnings “is a move that is fundamentally irresponsible, especially in light of the fact that our experts have traced those PCBs directly to the lake sediments adjacent to Alcoa’s operations.”
Proponents say SB 967 would establish a trust to develop, sell and distribute hydroelectricity generated by the project for the benefit of the people of North Carolina.
The trust also would maintain recreational facilities “and ensure equitable distribution of water for public purposes at all times,” supporters say.
Alcoa negotiated a Relicensing Settlement Agreement with local governments and environmental groups in 2008, and it ensured water for the city of Albemarle, a comprehensive drought management plan, water quality improvements for the Yadkin and new and expanded public recreation facilities.
SB 967 supporters say the RSA would be honored by the trust.
If approved and made into law, the Yadkin River Trust would provide FERC officials with the option of rejecting Alcoa’s application in favor of allowing the state to pursue ownership of the Yadkin Hydroelectric Project through the federal government.
Stanly County Commissioner Lindsey Dunevant said the Yadkin River is a public water resource that “is being neglected by the project’s current operator in favor of selfish interests rather than the betterment of our state.”
Ellis, speaking for Alcoa, said there are three main reasons why legislators should oppose SB 967:
– The cost to taxpayers.
– The violation of property rights.
– “The fact that the state of North Carolina does not need to take our dams, generating facilities and land to have control over the water in the Yadkin River.”
Ellis said Alcoa doesn’t control the water.
“We don’t claim to own the water,” he said. “Our hydropower operations don’t consume the water ó it just flows through. And we don’t determine who can withdraw water.
“The state and federal governments have that authority.”
There are 21 other privately owned hydro businesses in North Carolina, “just like ours,” Ellis said.
“And in each and every case, the state controls the water,” he said.
On the property rights issue, Ellis said the taking of a private business goes against one of America’s fundamental values. “This bill would take Alcoa’s private property, and that’s not a very popular idea,” he said.
Ellis cast doubt on the state’s ability to run a hydroelectric operation.
“Make no mistake,” he said, “this is a complex business to operate. To the best of my knowledge, the state does not have any expertise in running hydro facilities or daily energy trading or transmission of power to the grid.”
He noted the suggestion that the state could turn around and hand management of the project over to another company.
“But how can North Carolina take a business from one private company, then hand it over to someone else?” he asked.
Ellis also attempted to address the environmental concerns.

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