Water war: Alcoa battles government officials over hydropower on the Yadkin River, and Badin is caught in the middle.

• Author: Martin, Edward
• Position: FEATURE

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.

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Alcoa won a battle toward relicensing in 2009, when the N.C. Department of Environ-merit 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 Bad in-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 help 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...