Stanly County Commissioners Rebut Alcoa Claims

Published: Fri Apr 04 2008

In an effort to win renewal of a 50-year federal license for a monopoly on hydroelectric power from the Yadkin River in Stanly County ("the Yadkin Project"), the multinational firm Alcoa has circulated related information it claims are "facts." As with previous statements, the "facts," according to Stanly County Commissioners, are incomplete and sometimes erroneous, and fail to reply to the main arguments made by Stanly County officials.

It is the position of the Stanly County Commissioners that the best way to provide for the future of the Yadkin River is for the State of North Carolina and its public to be the undisputed owner of the Project. In an effort to help inform all North Carolinians of the facts at hand, the Stanly County Commissioners have released updated comments to respond directly to the Alcoa fact sheet, released to the public on Monday, March 31. The local government’s response to Alcoa’s claims is set out below.

1) Alcoa will keep the substantial portion of the benefits generated by a public resource for itself and its shareholders. In its 1958 licensing, Alcoa obtained a valuable asset – the exclusive federal right to use the Yadkin River for hydro purposes – and supported its claim to this right with evidence that granting the exclusive right would support about 1,000 jobs in Stanly County at Alcoa’s adjacent Badin Aluminum Smelting Works. That number of jobs is now down to just 31.

2) Talking with Alcoa is not equivalent to getting hard facts or commitments. Alcoa has yet to provide adequate disclosure of information requested by the County, like the true cost of cleaning up the Badin Smelting Works, nor has Alcoa been willing to fund studies consistent with the best scientific approach on contamination, for example on the condition of Badin Lake.

3) Alcoa’s references against state ownership of the Yadkin Project are not dispositive. The same federal law that provides for relicensing also provides for transfer of ownership of the Project at a cost-based price, which reflects what Alcoa actually paid for the Project, and not an inflated market value. A transfer to a State is unusual, but there is a process set out in the law that would allow such a transfer. That process includes final approval by Congress; and such approval would not be unreasonable if the State were to participate before the Federal Energy Regulatory Commission and seek full control and ownership as an alternative to continued ownership and control by Alcoa under a new 50-year license.

4) Alcoa’s claim that a change in ownership would not make a difference assumes too much. Alcoa claims that ownership of the Yadkin Project makes no difference because "the same set of federal and state laws" would apply. Stanly County does not quarrel with the statement that the same laws would apply. But Alcoa’s claim flies in the face of the common sense observation that ownership of property can make a difference in how it is operated and maintained: ask any homeowner.

5) Alcoa never states how much it expects to make from the Yadkin Project in the future. Alcoa claims that it will net only $8.4 million per year in profits. What Alcoa fails to note is that that figure is based on 2006 data, including prices received from power contracts with local utilities that have since expired. Currently and over the next 50 years, Alcoa expects to sell the power at market rates, as would any privately-held, profit-oriented company. That means it has no obligation to hold prices to actual costs, or to sell to consumers within North Carolina. As for the $200-plus million that APGI plans to spend to refurbish the dams and to perform routine major maintenance, the question is why APGI did not spend the money earlier. Would a mindful steward of the resource have waited until needed maintenance and improvements added up to more than $200 million?

6) Alcoa’s response does not rebut Stanly County’s reasonable conclusion that more money would expedite the cleanup of the Alcoa waste sites in Stanly County. Alcoa’s only response is that it is doing "required remediation." The real facts are that the process has been ongoing for a dozen or more years. Alcoa is liable, but future liability is not the only thing that matters to Stanly County. The County and its citizens are significantly affected by the rate at which Alcoa must clean up its waste sites so they can be returned to productive alternative uses. That is not answered by Alcoa in its response, nor has it ever been answered in Alcoa’s discussions with the County.

7) Alcoa’s response again is that ownership of the Yadkin Project has no effect on the well-being of the citizens of the State of North Carolina. It argues that it doesn’t matter who owns the Project because the State of North Carolina and FERC exercise regulatory authority over the Project. But regardless of regulatory requirements, wouldn’t a difference in ownership make a difference in how the welfare of the citizens is considered? Alcoa is a privately-owned corporation run by individuals who are obligated to maximize returns to their shareholders, consistent with applicable laws. If closing a plant in North Carolina improves the Company’s overall profits, that will be done. If selling the electricity from the Yadkin Project to New York City makes economic sense, that will be done. If lowering the elevation of the reservoir within a rule curve means more profits, it will be done. If charging for water from the reservoir for consumption makes more money, it will be and has been done.

"About 100 years ago, Congress decided the Yadkin River was a public resource," said County Commissioner Lindsey Dunevant. "As such, it provided for private development and public development. But every 50 years or so, the public could look at the record and decide whether the use of the river was so important that the public might be better served by a change in ownership. Asking questions and getting answers to them are the responsibility of public officials."

"What most concerns Stanly County today is the future," said Roger Dick, president and CEO of Uwharrie Capital Corp. "Alcoa’s 31 local jobs and a property ownership legacy from the past are not enough to claim the right to determine how best the Yadkin Project and the Yadkin River will be operated for the next 50 years."

About This Effort:
In 1958, Alcoa, the world’s leading producer of primary aluminum, secured a federal hydroelectric license for the Yadkin Project on the Yadkin River in Stanly, Davidson, Montgomery and Rowan Counties in the Central Piedmont. In return, Alcoa promised aluminum manufacturing jobs for Stanly County for years to come. Alcoa has now essentially disappeared as a major employer in the region and shut down its manufacturing plants, but it wants to continue reaping the benefits of the Yadkin River after its license expires in April of this year. In addition, Alcoa discharged hazardous pollutants into North Carolina air and waterways for decades while harvesting immense profits from the Yadkin River, but has yet to finish cleaning up that contamination. It has filed an application with the Federal Energy Regulatory Commission (FERC) to obtain another 50-year license. If Alcoa is successful, one of North Carolina’s most valuable water resources will be used to maximize Alcoa’s profits, instead of being used to benefit the people of North Carolina, who themselves are in dire need of affordable electricity, local economic development, and clean, adequate drinking water.

Patty Briguglio
MMI Associates, Inc.
(919) 233-6600
PR Firms Raleigh, NC

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