A REVIEW
by the
of
Issues with State Take-Over of The Yadkin Project
as outlined & Proposed in Senate Bill 967
A study of his bill (Click for pdf of Senate Bill 967) reveals several areas that demand explanation from our Legislators.
The following is a detailed review of the Bill’s language as it relates to each of these major points:
Where in our United States of America is there any precedent for a State to take-over (Nationalize) private facilities and to go into the electrical generation business?
Who considers the Yadkin Rivers four lakes and their respective dams to be “An Instrumentality of Navigation”? That’s how the author of SB967 describes High Rock, Tuckertown, Badin, and Falls Reservoirs. The High Rock Lake Association Inc. (HRLA) believes these lakes are one of the crown jewels of North Carolina, providing environmental, recreational, economic, and esthetic benefits to the people of North Carolina and beyond. Property owners around these lakes are from all over the US, recognition of the quality of these waters. Why do we need change to these lakes, especially as we have completed a six year period of negotiating changes for Alcoa’s license renewal that will enhance and improve what we now have.
Will the creation of a state empowered “Authority” to take-over this 38 mile stretch of river and lakes to operate the hydro-electric facilities improve the lakes for the public, or offer cheaper power? The HRLA does not think so. To the contrary, the HRLA is scared that the proposed Authority ( the author of SB967 prefers to call it “The Yadkin Trust”) will cause the lakes to be another victim of financial fraud that we are seeing ruin the economy of our country.
From the perspective of people who use the lakes, the Bill offers vague promises of changes similar to those contained in the Alcoa Relicensing Settlement Agreement that has been submitted to FERC; but none of the specifics contained in the RSA.
The Senate Bill would make the sale and generation of electrical power be outside the regulatory authority of The North Carolina Utilities Commission; although the proposed Authority would have the authority to sell electricity to utilities both in and outside the State.
We encourage everyone to study the SB967 and consider the questions it raises. Following is a discussion of the Bill, and our thoughts on the Bill’s proposals.
County payments are the lowest priority. Counties do not share in any revenue stream or Authority “profits”.
Debt and Debt Service – It’s HUGE. Acquiring, upgrading and putting into service as proposed by this Bill will likely require a half BILLION dollars ($500,000,000.00). It sounds like the State of North Carolina is afflicted with the same intentions as the current Federal Government, spend without limits! Interest and fees on a half Billion dollars spread over the 40 years proposed would amount to another ONE BILLION DOLLARS; for a TOTAL OVER 40 YEARS of APPROXIMATELY 1.5 BILLION DOLLARS. That’s about 40 Million a year for debt service. Add in another 20-25 million a year it takes to operate the Project ( that’s what it costs Alcoa, it may take the State twice that amount. Now you are talking about 60 to 80 million a year just to break even. Given the revenue figures Alcoa has provided the Federal Energy Commission of an average annual revenue of 42 million dollars annually, we may be facing a deficit of up to 40 million dollars a year. The tax payers will be asked to make up this deficit.
The Bill’s author was also careful to insert language that prevents the State from interfering with the debt holders in the event the “Trust” defaults on it’s financial obligations. Our guess is the folks who lobbied for this Bill required that clause, so their long range plans could not be upset by the State when they plan to take control of the project upon the “Trust’s” inevitable financial default.
The Bill exempts the State from interfering in the operation of the Project in any way that would impair the Trust from meeting all debt obligations. That will exempt the operations from being responsive to drought conditions, lake levels, etc. if generation is needed for revenue to meet debt service obligations. That is EXACTLY why High Rock Lake was drained in the summer of 2002, as Alcoa strove to meet its financial goals. The proposed new license terms would not allow Alcoa to do that again.
It appears SB967 intends for the Trust to acquire Alcoa lands outside the boundaries of the hydro-electric project, and to assume responsibility for toxic waste remediation in Stanly County and throughout the river basin.
This Bill presumes to establish “The Yadkin River Trust” as a State Entity processing broad powers, including environmentally related power and authority that would exceed the power of the United States Environmental Protection Agency of the North Carolina Department of Environmental and Natural Recourses.
We do not need another Environmental Agency to pay for with NC Tax Dollars !!!
Land around lakes may become property of the proposed Authority. Alcoa currently owns a lot of land above the boundary of the hydroelectric project. Will the Authority acquire those lands also? If it does, how will those lands be used? Will they be sold to help with debt service? The Bill does not address this issue.
Hydropower is a primary source of “Green” energy. It utilizes a renewable natural resource without actually consuming water. That’s especially important as our water supplies become more precious. The Yadkin Project makes an important contribution to the national power grid. We should all be concerned about the cost of electrical energy. Stop and think about which entity will be able to produce the lowest cost energy; Alcoa or The Yadkin River Trust?
We wonder why the author felt a need to include an Article that spelled out “public officers and public bodies of the State” and other entities, such as “Banking Associations” could invest in the debt of the Authority “properly and legally”? see SB967 §77-125.(o)
It’s also interesting that § 77-131 absolves any Director or Officer of the Trust of any personal liability or accountability.
The NC Water Rights Committee, on its website complains:
“The State Utilities Commission cannot regualte APGI as it is able to do with other users of hydropwer. State water regulations do not apply evenly to APGI in other respects either. In fact, should Alcoa receive the 50-year license under the application it submitted, it will be allowed a larger allotment of water to use in its operations than currently permitted, while other counties south of Stanly remain under drought restrictions.”
However, §77-124(a)(3) specifically states: The Trust and its activities shall not be governed by the North Carolina Utilities Commission. So, where is the change and accountability the State claims is needed?
The proposal to establish this Authority deserves much closer scrutiny than it has received so far. Just the name “The Yadkin Trust” is designed to mislead the public. There is NOTHING to trust about this proposal.
The real reason for this proposal needs to be discovered; not just high sounding hype about the “Rights of the People”. This is not about our rights, we already have those with the way we now enjoy the water in these four wonderful lakes. The Mayor of Albemarle has it right, it’s about GREED.