A water fight between North Carolina and Alcoa Inc. over control of nearly 40 miles of the Yadkin River ramped up yesterday as the N.C. Senate indicated support for taking control of four electricity-generating dams that Alcoa has operated for more than 50 years.
Alcoa, the largest U.S. producer of aluminum, had North Carolina's backing in 1958 when it won a federal license to run 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 officials said they see no reason why the company should keep running the dams and keep the $44 million a year in electricity sales they generate.
The Senate voted 44-4 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 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, which produce 215 megawatts of clean energy, an asset expected to grow in value as the country demands more electricity over the next 50 years.
"Alcoa's position is that we are going to fight this. We are not negotiating with anybody," said a company spokesman, Kevin Lowery.
Alcoa's lobbying has compared the state's effort to nationalization of foreign corporate assets by Venezuela's socialist president, Hugo Chavez. Alcoa contends that 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 powers of condemnation.
Alcoa would also demand more than $500 million in compensation; state legislators said that 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.
Alcoa, based in Pittsburgh, has been hit particularly hard by the global recession, which has cut demand and prices for aluminum used in products ranging from cars to soda cans. Last month, the company reported its second consecutive quarterly loss despite recent production cuts and plans to trim its global work force by 13 percent.
Hartsell has said that 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. Bev Perdue asking the 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.
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