NC group: Sales, jobs could flow from Alcoa’s Yadkin River dams

Published 12:00 am Wednesday, February 6, 2013

RALEIGH (AP) — Local jobs and millions of dollars in investment could flow if North Carolina reclaimed control of four Yadkin River dams from Alcoa Inc., according to a nonprofit development group opposed to the company’s bid for another 50-year license.
Depending on the future price of electricity, the state could see between $750 million and $1.2 billion in hydropower revenues for its economy if it got the federal operating license Alcoa also wants, according to a report prepared for Central Park NC, a sustainable economic development nonprofit group.
State management of the dams would result in about 350 to 560 more permanent jobs, said the report authored by economist Michael Shuman of Cutting Edge Capital in Oakland, Calif. His fee was primarily paid through a grant from a U.S. Commerce Department unit that aims to spur economic growth in distressed communities.
Alcoa used the dams since World War I to supply electricity to a riverside aluminum plant that once employed nearly 1,000. The plant closed about a decade ago and Pittsburgh-based Alcoa now sells the electricity to commercial customers.
Former Democratic Govs. Mike Easley and Bev Perdue opposed Alcoa continuing to generate energy and profits now that the jobs are gone. New Republican Gov. Pat McCrory hasn’t yet announced his position.
This may be the first estimate of what the electricity generation is worth to North Carolina residents, said Nancy Gottovi, Central Park NC’s executive director.
“If we’re going to hand over an important economic resource, we needed to know what we’re giving up,” Gottovi said.
Alcoa Chief Sustainability Officer Kevin Anton said the company needed time to digest the report, which he said was flawed in the premise that the state could gain the operating license. The Federal Energy Regulatory Commission has never decided against renewing a hydroelectric operating license. If it did in the North Carolina case, Congress would have to decide whether a state or municipal body should take over the hydroelectric project after compensating Alcoa.
Alcoa has said it sees the renewable energy generated by dams it operates in North Carolina, Quebec, Brazil, and Suriname as key to its future.
Perdue’s administration said the licensing battle was about the need to control a key water source for one of the country’s largest and fastest-growing states and the chance to attract companies to one of North Carolina’s job-scarce regions by offering low-cost electricity.
Alcoa estimated 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.
The company released financial statements in 2011 showing the dams returned profits of between $8 million and $7.3 million in each of the three previous, recession-scarred years on electricity sales that averaged about $30 million a year.
The Yadkin dams generated $21.7 million in revenues in 2011, down because of low water levels, the company said. Alcoa declined to describe its 2011 profits from electricity sales, and representatives did not respond when asked about 2012 revenues.
The company reported to federal regulators that the dams generated 715,000 megawatt hours of electricity in the year ending last September. Based on an average price of $26.87 per megawatt hour provided by energy information company Platts, that would have generated revenues of about $19.2 million over the 12-month period.