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Judge hears NC challenge to Alcoa’s rights to dams

RALEIGH (AP) — Alcoa Inc. sold less electricity generated on North Carolina’s second-largest river but enjoyed a bigger payday from selling the power that formerly drove a factory, according to a regulatory filing by the world’s largest aluminum company.

Alcoa reported to federal regulators last week that its four hydropower dams on the Yadkin River generated 875,555 megawatt hours of electricity in the year ending in September.

Based on an average wholesale price of $38.89 per megawatt hour provided by energy information company Platts, that would have generated revenues of about $34 million over the 12-month period. Those electricity sales might be more valuable depending on how much was sold during peak Monday-through-Friday hours at a price of $44 per megawatt hour.

The power production was down 9 percent compared to the previous year, but because the average electricity price was 25 percent higher, Alcoa saw revenues rise over the estimated $30 million in revenues the previous year. Electricity sales have dropped from $47 million in 2005 to about $19 million in 2012 before bouncing back to about $30 million last year.

Alcoa declined to discuss the operating costs for its dams in the year through September or how much the company banked as profit from selling the electricity generated to commercial customers, spokesman Robert Brown said.

Production dropped during the recent 12-month period because lower rainfall meant less water in the river than the prior year to turn the turbines that generate electricity, said Ray Barham, the Alcoa executive responsible for securing the federal license.

“The fundamental issues,” Brown said, “remain the same: operating the dams remains a complex and expensive business.”

The dams previously powered an aluminum smelter the Pittsburgh-based company closed in 2007. Alcoa is seeking a new federal license that would allow it or a future buyer to continue operating the dams for up to 50 years.

North Carolina officials have fought the relicensing bid for years, with some arguing that with the smelter closed and the jobs gone, the public would be better served without the limitations on the river placed by federal power regulators as Alcoa continues to sell electricity.

Gov. Pat McCrory’s administration is currently challenging the company in federal court, arguing Alcoa lacks ownership rights of the Yadkin riverbed on which the dams are built.

“The state and Gov. McCrory remain diligent in protecting the best interests of North Carolina,” McCrory spokesman Ryan Tronovitch wrote in an email, adding that the ongoing case precluded further comment.

Alcoa released financial statements in 2011 showing the dams generated profits of between $8 million and $7.3 million in 2008, 2009 and 2010 on revenue that averaged about $30 million a year.

The company has said the dams need about $180 million in upgrades, but it needs the license in hand to know it will be able to recoup the costs.

Alcoa projected 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.

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