A growing coalition of local elected leaders are questioning whether Duke Power is adequately compensating the region in exchange for using the public’s rivers to generate hydropower.

Jackson County leaders were the first to make demands of Duke. Macon and the town of Franklin followed suit. Now, Swain County might be next. Swain County commissioners were scheduled to vote Tuesday night (April 19) on whether to formally join the negotiations with Duke, a process mediated by the Federal Energy Regulatory Commission.

“This will just give us a seat at the table,” Swain County Commission Chairman Glenn Jones said of the anticipated vote. The Smoky Mountain News went to press before the vote occurred Tuesday night.

Duke’s permits to operate its 11 dams on five rivers in the region are expiring. To get new permits, Duke must provide mitigation in exchange for manipulating the public’s rivers for a profitable hydropower operation. Duke spent three years negotiating with various stakeholders in the region — from kayakers and fishermen to lake homeowners and local governments — to hammer out a mitigation package.

Swain County’s elected leaders failed to get in on the process at the time, however. When the negotiations started, three of the five commissioners worked for Duke Power. So Swain County’s Economic Development Director was appointed to represent the county in the negotiations instead.

“It’s different than having elected officials,” Jones said. Jones said the current board of commissioners has inherited the situation, namely the dilemma of whether to start negotiating now or just forget it.

When asked about Swain’s potential vote to join the negotiations, albeit belatedly, Duke spokesperson Fred Alexander replied via email, “We appreciate being able to discuss relicensing with the board.”

Swain’s end of the stick

Clay County commissioners are currently discussing the Duke Power situation and could be weighing in soon as well, according to Clay County Manager Paul Leek. Duke operates the Hiwasee Dam in Clay County.

John Boaze, an environmental consultant with Fish and Wildlife Associates based in Whittier, said the potential growing coalition of governments is sending a message to the Federal Energy Regulatory Commission that people here aren’t happy with what Duke has proposed and want more.

“It would be one more political subdivision on board opposing the settlement,” Boaze said, referring to Duke’s proposed mitigation package. Boaze has been hired by Jackson and Macon counties as an environmental consultant to help in the negotiations with Duke.

Jones said the only direct benefit Swain gets under Duke’s current proposal is $40,000 spread out over the next 30 to 40 years to address sediment issues.

“We feel like that would not be sufficient,” Jones said.

Especially since Swain County could be the recipient of 100,000 cubic yards of sediment if and when the Dillsboro dam is removed. Duke wants to tear down the small, aging Dillsboro dam. The removal is the centerpiece of Duke’s mitigation package — restoring a section of free-flowing river in exchange for use of 10 other dams spanning five rivers.

The Dillsboro dam would be removed piecemeal and the sediment would wash downstream. Duke says it would cost $2.5 million to remove the sediment prior to dam removal. Duke’s strategy to remove the dam does not include sediment dredging first.

“It is not right to bring that much sediment down on the headwaters of Fontana Lake,” said David Monteith, Swain County commissioner and president of the Fontana Lake Users Association.

Monteith said the sediment would hurt fish species like walleyes and crappies that spawn upstream.

“It will destroy the eggs by burying them and the fingerling fish because they can’t breathe with that sediment clogging up their gills,” Monteith said. “That is not right.”

If Duke is going to remove the dam, Monteith and other commissioners want Duke to dredge the sediment first, a proposal the Lake Users Association backs as well.

Who pays?

During a presentation to Swain County commissioners two weeks ago, Alexander said electric rates would go up if the existing plan to tear down the Dillsboro dam was altered or other mitigation was required. The threat of rate hikes has been a standard defense used by Duke during negotiations over mitigation the past three years.

Raising rates to cover Duke’s mitigation costs is easier said than done, however.

According to the North Carolina Utility Commission, Duke Power netted a 13.65-percent profit for the 12 months ending Dec. 31. This amount exceeds the legal profit margin. As a regulated monopoly, Duke’s profit is capped at 12.5 percent, a number Duke generally exceeds every quarter.

Duke has to seek permission from the N.C. Utility Commission to raise rates. Whether the Utility Commission would approve a rate hike when Duke is exceeding its allowed profit margin is not clear.

Duke Power said it could adjust the rates for only customers in the Nantahala hydropower area without going to state for an overall utility rate hike. Customers in the Nantahala area get electricity for one-fifth of a cent cheaper than residents in the rest of state because hydropower generated here is less expensive.

But any level of tinkering with the rates would subject Duke to potential scrutiny from the Utility Commission, which could make Duke return their excess profits to customers through rate discounts, as was done two years ago in South Carolina by the Utility Commission there.