Alcoa Offers NC Officials Jobs-For-License Deal
RALEIGH, N.C. (AP) — Aluminum maker and energy company Alcoa Inc. said Thursday that it is making a $50 million promise to create hundreds of jobs for residents along the Yadkin River valley in a few years — but only if officials stop fighting a 50-year federal license to keep operating a series of dams that could generate billions of dollars in electricity sales.
The pledge came after state and local officials recently refused to give up a battle they believe could result in thousands of jobs in coming decades, as well as the freedom to use the river's water as supplies tighten for the state's 9.5 million residents.
This summer, Alcoa Inc. and a newly formed start-up company, Clean Tech Silicon and Bar LLC, announced the company would hire 250 workers near the site where Alcoa once ran a smelting plant that employed about 1,000.
But there were doubts that Clean Tech, incorporated in Delaware in August and led by former Nucor Corp. CEO John Correnti, could make good on the promise.
Stanly County commissioners and Gov. Beverly Perdue's administration have refused to end regulatory challenges blocking Alcoa from securing a dam-operating license for as much as 50 years from the Federal Energy Regulatory Commission (FERC).
Alcoa vice president Kevin Anton told The Associated Press Thursday that to clear the path to its license the company is willing to sign a contract paying Stanley County if within four years it fails to recruit hundreds of jobs with a total payroll of $30 million a year, or about 750 jobs each paying $40,000. The promised penalty of up to $50 million would be spread over the course of the operating license, Anton said, meaning about $1 million per year to Stanley County if the license lasted 50 years and the jobs never come.
But first, the company must have its license, Anton said.
"We can't proceed with this without having our FERC license. So that is absolutely a condition," he said.
Pittsburgh-based Alcoa now sells the electricity generated by its four Yadkin River dams to commercial customers. The company estimated in 2006 that the dams generated almost $44 million a year in revenues. Over 50 years, that could mean revenues of more than $2 billion, an amount that could multiply if demand for clean power booms.
The country's largest aluminum maker generated about $18.7 million in sales from its Yadkin River dams in the year ending in September, down from its average of about $30 million in the previous three, recession-scarred years due to reduced rainfall spinning the power turbines.
Perdue and local officials said Alcoa's settlement offer sounds good until people look at the fine print.
"The governor has told Alcoa that she won't support the company's request for a federal license to use North Carolina's resources unless Alcoa first makes a long-term commitment to maintain jobs in the region," Perdue spokesman Mark Johnson said.
Alcoa would put its promise to pay a penalty for failing to deliver jobs and investments in a contract, but would not post a bond guaranteeing the money, Anton said.
That means local officials might have to fight the multi-national corporation in court to force it to live up to the deal, Stanly County Manager Andy Lucas said.
"That water that they're using, it belongs to the people. There has to be fair and reasonable compensation and public benefit for the free use of that water to generate electricity, which we know over the next 20 years is going to rise in value substantially," Lucas said. "Those jobs and investment have to be guaranteed. They're (Alcoa) getting a guaranteed revenue stream as long as that water is running to the ocean."
Perdue will not pressure the state Department of Environment and Natural Resources to issue a crucial water quality certification, or 401 permit, that Alcoa needs before it can press its renewal case with FERC, Johnson said.
The state agency "will make the decision on the 401 permit based on the science and the law," the governor's spokesman said.
The state agency initially approved Alcoa's permit on the condition that it include a $240 million bond guaranteeing that Alcoa will make improvements to its system.
State officials revoked the certification in December, citing internal company e-mails that suggest officials withheld information that downstream waters may not meet state standards.
But Alcoa sees the renewable energy generated by dams on the Yadkin, the North Carolina-Tennessee border, Quebec, Brazil, and Suriname as central to its future, Anton said.
"Alcoa is bullish on energy over the long term," Anton said. "We are an energy company in addition to an aluminum company."
Emery Dalesio can be reached at http://twitter.com/emerydalesio
Copyright 2011 The Associated Press.