Stakeholders Reach Agreement in Principle on the Future of the Yadkin Project

-- Federal and State Agencies, Local Governments, Catawba Indian Nation, Environmental Organizations and Homeowner Groups Support Agreement That Will Protect More Than 6,000 Acres, Expand Recreation Opportunities and Improve Water Quality

After more than a year of negotiations, stakeholders have reachedan Agreement in Principle (AIP) regarding the future operation of theYadkin Hydropower Project managed by Alcoa Power Generating Inc.(Alcoa-Yadkin). The agreement will provide more stable water levels inHigh Rock Lake, significant recreational enhancements and importantenvironmental protections, including the protection of more than 6,000acres of Alcoa-Yadkin owned property.

"We worked hard to reach an agreement that satisfies the interestsof our stakeholders, and we're extremely pleased with the level ofsupport the agreement has received," said Gene Ellis, licensing andproperty manager at Alcoa-Yadkin. "This agreement reflects theinvolvement, input and influence of many different organizations."

Alcoa-Yadkin has agreed to make more than 40% of its land holdingsavailable for purchase by the state of North Carolina or privategroups for the purpose of recreation, game lands or conservation. Theland includes 2,500 acres along High Rock Lake, 2,400 acres alongTuckertown, and 1,400 acres for the future expansion of MorrowMountain State Park. In addition, it is anticipated that Alcoa willdonate 275 acres for the expansion of Uwharrie National Forest and 80acres for Eagle Point Nature Preserve in Rowan County.

"This agreement represents one of the largest and most importantconservation opportunities we have seen in the Southern Piedmont in ageneration. We may never see another conservation opportunity of thisscale again," said Jason Walser, executive director of the Land Trustof Central North Carolina. "What's truly significant is the quality ofthe land being offered by Alcoa. The waterfront land possessesincredible ecological value, and nearly all of the proposed land willbe available to the public for recreation or hunting."

Other environmental protections include measures to improve waterquality within and below the Yadkin Project and continued efforts toprotect Bald Eagles and other rare, threatened and endangered speciesthrough responsible management and monitoring. Alcoa-Yadkin willinvest millions at Yadkin Project developments to increase dissolvedoxygen levels and improve water quality.

"I believe this agreement in principle is a positive step forwardin the relicensing process with Alcoa, although some issues remain tobe worked out," said Bill Ross, secretary of the N.C. Department ofEnvironment and Natural Resources. "DENR looks favorably upon thepotential acquisition of conservation lands, which will complement thewater quality, environmental, fish and wildlife, recreational andother benefits to be gained through a final agreement."

Other highlights of the agreement include an extended recreationseason that will keep more water in High Rock Lake; a droughtmanagement plan that will better protect water levels during droughtconditions; a more consistent downstream flow regime; and a number ofnew recreation opportunities, including a new public recreation areain Rowan County, new fishing piers at High Rock Lake and Tuckertown,10 new dispersed, hardened campsites and funding to improve the YadkinPee-Dee River Trail. These enhancements are expected to providepositive economic impacts to the region.

Keeping More Water in High Rock Lake

High Rock water levels have been a key interest throughout therelicensing process, largely as a result of a severe drought in 2002that affected reservoirs across central North Carolina. From April 1to October 31, it is anticipated that water levels at High Rock willaverage about 3 feet below full, over the long term. Alcoa-Yadkin willsignificantly decrease generation if water levels drop below 4 feet.

During the shorter winter drawdown period (December 1 to February28), water levels are anticipated to average approximately 8 feetbelow full pool, over the long term, with a decrease in generation ifthe water level goes below 10 feet.

As part of the plan to keep water levels higher, the agreementincludes a drought management plan (known as a "low inflow protocol")that will require Alcoa-Yadkin to send less water downstream andgenerate less energy when drought conditions are present. The planrequires other large storage reservoirs to share the responsibilityfor sending water downstream to prevent High Rock Lake from beingunfairly impacted by drought conditions.

"This represents a significant improvement in the operation ofHigh Rock Lake, and we are excited about the multiple benefits ofrelatively stable water levels in High Rock as compared to historicfluctuations. In times of drought, water to satisfy downstream needswill be supplied proportionally by High Rock, Badin, and Tillery,insuring High Rock should never again experience the extreme drawdownthat happened in 2002," said Larry Jones, president of High Rock LakeAssociation. "We are pleased that Alcoa recognized the need forsignificant changes to the Shoreline Management Plan. We've workedhard for the past couple of years to obtain these changes, and ourboard believes we need to stay engaged in the process."

Community Enhancements

The agreement in principle includes several items designed toassist local governments. Alcoa-Yadkin will donate land around theBadin Public Recreation Area to the Town of Badin and make additionalproperty available for purchase. Also, the current charges forwithdrawing water from Tuckertown and Badin Lakes will be nearlyeliminated for the city of Albemarle.

Alcoa-Yadkin has pledged to continue working with City ofSalisbury officials in an attempt to find cost-effective ways tominimize the challenges for its water utility posed by sedimentationand flooding.

Next Steps

The agreement in principle represents an important milestone inthe relicensing process. Those organizations who signed the agreementin principle will begin work this week to develop a formal RelicensingSettlement Agreement that will be submitted to the Federal EnergyRegulatory Commission later this year.

"The AIP represents a fundamental agreement about how we willoperate the Yadkin Project for the next 50 years. Now, we'll begin theprocess of fleshing out the details and fine-tuning the language,"Ellis said.
Organizations Which Signed the Agreement in Principle

Alcoa-Yadkin
American Rivers
Badin Lake Association
Badin Museum
Catawba Indian Nation
City of Albemarle, NC
High Rock Business Owners Group
High Rock Lake Association
Land Trust for Central North Carolina
Montgomery County, NC
The Nature Conservancy (S.C. Chapter)
North Carolina Division of Water Quality
North Carolina Division of Water Resources
North Carolina Wildlife Resources Commission
Pee Dee River Coalition
Piedmont Boat Club
Progress Energy
Rowan County
Salisbury/Rowan Association of Realtors
South Carolina Coastal Conservation League
South Carolina Department of Health & Environmental Control
South Carolina Department of Natural Resources
Town of Badin, NC
U.S. Environmental Protection Agency (Southeast Regional Office)
U.S. Forest Service
Uwharrie Point Community Association
Yadkin Pee Dee Lakes Project

About Alcoa-Yadkin

For nearly a century, Alcoa-Yadkin has operated four hydroelectricdams and reservoirs along a 38-mile stretch of the Yadkin River as asource of economic, environmentally-friendly power. The projectincludes four reservoirs -- High Rock, Tuckertown, Narrows (BadinLake) and Falls -- that offer a variety of recreation opportunitiesand provide important habitat for plants, fish and wildlife.