Alcoa’s Relicensing Effort For The Yadkin Hydroelectric Project Poses Challenge To NC Drought Bill

Published: Tue Oct 07 2008

The N.C. Water Rights Committee is announcing that while new legislation signed into law on July 31 by Gov. Mike Easley does expand the ability of the governor and local communities to respond when drought conditions worsen, it does not apply to Alcoa’s hydroelectric operations on the Yadkin River, also known as "the Yadkin Hydroelectric Project." The law, titled "An Act to Improve Drought Preparedness and Management in North Carolina," calls for cities and counties to obtain approval from the state Department of Environment and Natural Resources (DENR) of water shortage response plans developed pursuant to Environmental Management Commission (EMC) rules that became effective in 2007, or else implement default conservation measures developed by the state. However, it also includes a provision stating that none of the local drought management or state minimum conservation measures contemplated by the legislation may be implemented if they "conflict with … any license for a hydroelectric generating facility issued by the Federal Energy Regulatory Commission (FERC)." Alcoa currently has such a license for the Yadkin River and thus remains in control of water management there, despite the new state law.

Alcoa has also applied for another 50-year license for a monopoly on hydroelectric operations from the FERC, and should it be granted, Alcoa would be bound by the Low Inflow Protocol it negotiated in that proceeding. The state could not require modification of the Low Inflow Protocol in response to changing conditions, even in a drought emergency. While other members of communities along the Yadkin can face increasingly stringent water conservation measures pursuant to DENR-approved local management plans and EMC minimum standards, Alcoa will not be held to an equal standard if doing so conflicts in any way with the company’s FERC license, which will be in effect for half a century.

Additionally, one of the standard conditions included in FERC licenses provides for the licensee to receive compensation for non-power uses of project waters by other entities, including state and municipal uses. Thus, if Alcoa is granted another 50-year license, and the State of North Carolina wanted to make reasonable use of a reservoir licensed to Alcoa for the purpose of protecting the public water supply, the State could not only be required to seek permission from Alcoa and FERC but also must compensate Alcoa for any electricity sales revenue lost as a result of the state’s water use.

In July the General Assembly voted unanimously to direct the Environmental Review Commission, a bipartisan group of legislators from across the state, to study the impact of granting Alcoa’s request for another 50-year license for the Yadkin Hydroelectric Project. The N.C. Water Rights Committee encourages members of the Commission to examine these exemptions for Alcoa under the license as part of its mission, which includes considering and developing proposals regarding assurance of an adequate, clean future water supply for the region and the allocation of water for non-power uses from the Yadkin Hydroelectric Project. (The Commission is to report on its final recommendations by Feb. 1, 2009, and Alcoa’s application for relicensing is on hold until that date.) The N.C. Water Rights Committee believes that under current conditions, Alcoa benefits greatly in being able to control water use on the Yadkin at the expense of North Carolinians who use its water for drinking, recreational activities and other purposes.

"We know the Governor and his staff had excellent intentions when developing this drought management plan, and we thank him for his attention and devotion to critical water issues facing North Carolina," said Keith Crisco, president of the N.C. Water Rights Committee. "However, the fact remains that Alcoa, not the state of North Carolina, is ultimately in charge of determining the water withdrawals on the Yadkin River, even under the new law. Given the Yadkin’s status as the second-largest river in North Carolina, as well as the continued severity of North Carolina’s drought, we urge officials to correct this oversight so that its water management remains with state and local leaders and not in the hands of an out-of-state private firm with a monopoly on its hydroelectric rights."

About the N.C. Water Rights Committee:
The N.C. Water Rights Committee is a coalition of North Carolina businesses and concerned citizens who have joined this state-wide effort to inform citizens of the critical issues and decisions concerning water rights that affect all North Carolinians now and for many decades to come. For more information, visit

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