Water war

Alcoa battles government officials over hydropower on the Yadkin River, and Badin is caught in the middle.
By Edward Martin

 

In 1958, the federal government, with the blessing of Tar Heel politicians, awarded Alcoa Power Generating Inc. a 50-year license to create hydropower on a 38-mile stretch of the Yadkin River. The company owned three dams there — it added a fourth in the ’60s — that powered the Badin aluminum smelter owned by Alcoa Inc., its parent. In return, Alcoa promised to create 1,000 jobs. For a time, the New York-based aluminum maker delivered on its pledge, but it closed its Badin plant in 2002. The dams remain active, however, generating electricity Alcoa sells to utilities, making $8 million in profit of 2010. So when Alcoa’s license came up for renewal in 2008, the governor and officials in Stanly County, site of three of the dams, opposed it. “They’ve been using it for free, generating millions in profit for the company but not giving back much,” County Manager Andy Lucas says. Those for and those against relicensing don’t agree on much, except that the Yadkin, North Carolina’s second-largest river, is a wellspring of hydropower and, therefore, money.

Alcoa won a battle toward relicensing in 2009, when the N.C. Department of Environment and Natural Resources issued it a water-quality permit, overriding arguments that it had polluted the river. But the county sued the state over the decision, and in November 2010, an administrative law judge ruled that Alcoa had hidden information about pollution and revoked the permit. Alcoa says the state is trying to filch its private property, a move that could cost the region jobs. That argument gained traction when newly formed Clean Tech Silicon and Bar LLC — a Badin-based maker of silicon and recycled steel — promised Stanly hundreds of high-paying jobs if Alcoa got a five-decade extension.

The allure of new jobs in a state struggling under a 10.4% unemployment rate helped improve Alcoa’s odds. For example, since Clean Tech’s announcement, Gov. Beverly Perdue’s position has grown murky. Still, the river’s long-term energy potential could attract other employers. “China recently relocated a manufacturing plant to Ontario, Canada, for cheap hydropower,” says Roger Dick, an Albemarle banker.

It might be too late for Clean Tech, anyway. Alcoa had set a Dec. 15 deadline for Stanly to clear the way for relicensing or the plant would go elsewhere. When the date passed, Alcoa and Clean Tech said the deal was dead. Stanly claimed that the county and Clean Tech had reached an accord that would have brought 450 jobs to Badin without relicensing, but Alcoa nixed it at the 11th hour. Unless Alcoa reneges on its deadline, the next battle should begin in May, when an administrative law judge hears the company’s appeal of its revoked water-quality permit.

They’re Alcoa’s dams

James Harrison
Mayor of Badin
Harrison was born in Badin Hospital, now closed, and retired from Alcoa after more than 30 years. “That hospital was built by Alcoa and was the first hospital in Stanly County. They’ve always looked after this town.”

The Town Council passed a resolution supporting Alcoa’s relicensing. Why?
Alcoa gave us a grant for the revitalization of downtown. It built the schools, then in the ’30s turned them over to the public for $1. People say it caused pollution. Well, that wasn’t pollution in 1915 or 1930 or 1940. It was business. In 1963, it started sending everything to a lined landfill on its own. Alcoa was proactive. It’s like children turning against their parents.

What does Alcoa own in Badin now?
Not much in Badin. It owns the plant site, the 134 acres behind the fence and 400 acres around it. But on that 38-mile stretch of river, it owns about 38,000 acres. About 22,000 of that is under water. It’s paying taxes on it. How can people say it doesn’t own it if it’s paying taxes on it?

A new company, Clean Tech Silicon and Bar, wants to build a plant there, but only if Alcoa is relicensed.
That’s right, and to have a company in this economic environment say it wants to put $300 million into the business park here and hire hundreds of people, I just don’t understand being against it. Haley Barbour, the Mississippi governor, is begging for them to go there.

Skeptics say Clean Tech exists only on paper, and Alcoa’s using it as leverage to pry loose its license.
No. We’ve already got Fresno, Calif.-based Electronics Recyclers International, which has opened a plant in the Alcoa business center. It expects to hire 200 people. Clean Tech says its average pay would be $55,000, and some people on production teams could make $90,000-$100,000. We’re losing jobs at a rapid rate, and we’ve got to reverse that.

Will Alcoa ever reopen the smelter it closed in 2002?
Not as a smelter. But that’s where Electronics Recyclers comes in. It’s already there. It’s putting $10 million into its plant. Alcoa wants to revitalize the plant as a business park.

Don’t North Carolinians own the river?
Yes, and if the state and Stanly County want to buy out Alcoa, we fully understand. You come to Alcoa and say, I want to give you $500 million or $600 million and buy your whole operation. But that’s not what they’re trying to do. I’ve heard North Carolina Commerce Secretary Keith Crisco say we can’t buy it and operate it profitably. Alcoa can, because it owns it, and it’s all paid off.

Why shouldn’t the state get the revenue from the river?
If somebody’s going to run our dams, it ought to be the people who built and own them and know everything about them, not a government agency. The government doesn’t always do a good job running things.

 

But it’s the state’s water

Roger Dick
CEO of Albemarle-based Uwharrie Capital Corp. and Bank of Stanly
A Badin native, Dick’s grandfather and father worked for Alcoa. “We are an Alcoa family,” he says, but adds, “We should not give away our children’s birthright.”

Why should Alcoa relinquish control of the Yadkin and its dams?
It’s used this resource for free for 50 years. Its 1958 license had the specific understanding that at the expiration, the public could reclaim its resource. It’s a public-trust asset.

Does Alcoa contribute a lot to the region?
In reality, it’s never been a good exchange for the value.

Why not?
With rivers in New York and South Carolina that have this much power capacity, Federal Energy Regulatory Commission licenses stipulate energy capacity at 940 million kilowatt hours. With New York’s Power for Jobs program, the range of jobs that much energy could generate is 10,000 to more than 80,000. Heavy industry like aluminum or steel might be less, but it’s certainly more than the few hundred Alcoa is promising.

Doesn’t Alcoa own these dams and lakes?
Alcoa tells people the state wants to take its property. That’s not true. I build bank branches on leased land, but at the end of those leases, I do not own the buildings, and it’s not fair for me to bitch and complain that somebody’s taking my property.

But the region needs jobs, right?
Businesses come and go, and Alcoa cannot guarantee these jobs. Water will. If you have cheap energy, this will ensure sustainable employment that will take care of the whole region, not just a few hundred local jobs.

Are jobs the only issue?
In the future we’re going to need the water more for drinking than job creation. But Alcoa’s contract says if water is diverted for public use, we have to pay for the value of the electricity it would have generated. Long term, we’re putting our children and grandchildren in the position of having to buy their own water to drink.

As a banker, do you have a personal stake?
Alcoa has done a good job discrediting the people of Stanly County as being a bunch of bleacher-beating rednecks. I’ve got neighbors who think I’m doing this because I want their land for development. I tell them, ‘If I ever take an inch of Alcoa’s land, I’ll give you everything I’ve got.’

So why are you taking such an interest?
Water sustains life, and if a free people aren’t in control of it, are we really free? What’s the next right a private corporation is going to come and lay claim to? We’ve been a company town for much of our history. We were cheap labor, and there was no local leadership willing to push back against the company. This is a natural resource that can be used to put billions in our state treasury and bring tens of thousands of jobs.