Alcoa Announces Plan to Get New Power Units Built at Rockdale Smelter

Sept. 27, 2004

Alcoa Announces Plan to Get New Power Units Built at Rockdale Smelter

Citizens Groups Skeptical, Say Plan May Be Ploy to Keep Old Units Running Longer

Austin – Alcoa’s announcement Monday that it will pursue the construction of two new power plants at its Rockdale smelter may be just a delay tactic by the company to keep its three old, dirty power units running longer, said representatives of citizens groups battling Alcoa’s air pollution and strip-mining.

Alcoa said Monday it plans for two new 216-megawatt, lignite-fueled power plants to be built at its Rockdale smelter. The company also announced it is negotiating with a third party to build those two new plants.

“We’re very skeptical that Alcoa really intends to get new power units built at Rockdale,” said Martha Boethel, president of Neighbors for Neighbors.  “Alcoa’s announcement reads like nothing more than a ploy to extend the deadline for shutting down its old power plants.”

Under terms of the settlement of a federal lawsuit filed against Alcoa over its air pollution, the company was required to announce by today whether it intended to build new power units, retrofit the existing units with pollution control equipment, or simply shut the old units down.

The suit was filed by Neighbors for Neighbors, a Central Texas citizens group, and two national groups, Public Citizen and Environmental Defense.

The suit settlement requires Alcoa to shut down its three old power units by the end of 2006 if it chooses not to build new units or retrofit the existing ones.  The settlement gives Alcoa until the end of 2007 to shut down the old plants if it builds new units.

“We’re guessing the company may be trying to buy a little more time to keep the old plants open a little longer,” Boethel said.

Boethel said two factors suggest building new power units is an unlikely scenario. One is the trend in Texas away from the use of lignite as a fuel source for electric power. 

“Power companies that burn coal, such as TXU, are turning away from lignite and using more coal imported from Wyoming and other states,” Boethel said. “Lignite is just too dirty and inefficient.”  

Another factor, Boethel said, is Alcoa’s continuing push to move its industrial operations overseas.

“Alcoa’s massive new smelter in Iceland is just one example of the company’s shift from the United States,” she said.  “But the Iceland smelter won’t be up and running for another couple of years.  That’s why we think Alcoa needs to buy some time for Rockdale.”

Under the terms of the suit settlement, Alcoa has until April 25, 2005, to begin construction of the new power units.

Travis Brown of Public Citizen’s Texas office said Alcoa has been negotiating with a partnership that includes a Dallas-based company, Genova Power Company, to build the two new power units.

“We’re skeptical of Genova Power’s ability to get the financial backing to build these new power plants,” Brown said.  “If building new power units at Rockdale is such a good deal, we wonder why TXU hasn’t expressed any interest in doing so, especially since it already has one power unit at Rockdale.”

Brown said that instead of definitely choosing one of the three options as required in the suit settlement, the company appears to be hedging in hopes of a deal being made with Genova Power.

“In effect, Alcoa is not really announcing a decision at all right now,” Brown said.  “The company is just saying it might get new power units, when the evidence suggests that isn’t likely to happen and the company will simply end up shutting the old units down. The real question now is when that will happen.” 

The lawsuit against Alcoa alleged that the company’s Rockdale facility – one of the largest industrial air polluters in the country – had been violating the federal Clean Air Act for more than 15 years and had illegally emitted more than one million tons of air pollution from its power units at the smelter.

“The two new plants would be far cleaner than the existing units,” said Jim Marston, director of Environmental Defense’s Texas office. “However, by choosing to use electricity from dirty lignite plants rather than readily available cleaner alternatives, Alcoa will still produce significant amounts of air pollution that will adversely affect air quality not only in the Austin area, but also in Dallas/Fort Worth.”

The new power units also will generate huge amounts of coal ash, which often contains high levels of mercury and other heavy metals and has caused water contamination problems throughout the U.S. 

“Any pollutants that no longer go out the smokestack will come out as waste that has to be disposed of,” Brown said.

Even if new power units are built, that doesn’t assure the future of Alcoa’s smelting and strip-mining operations in Central Texas, Brown said.

“Our understanding is that all the power from the two proposed new units would be sold to the retail electricity market and not to Alcoa,” Brown said.

Once the two old power are shut down, Alcoa’s smelter will have to rely on power from a fourth newer power unit at the Rockdale facility that is owned by TXU.  Alcoa obtains about half of the power for its smelter from the TXU unit.

Brown said the company most likely will have to reduce its Rockdale smelter operations, and that could affect the long term future of both the smelter and Alcoa’s strip-mining operations. Alcoa is currently constructing a new strip-mine five miles northeast of Elgin.

“Our position has long been that Alcoa can well afford to keep jobs in Central Texas and operate in a manner that doesn’t destroy our area’s natural resources and adversely impact the health of area residents,” Brown said.

The lawsuit against Alcoa was filed in 2001 after members of Neighbors for Neighbors discovered documents in state agency files that showed the company had illegally made modifications at its Rockdale power units that increased air pollution.  Under the Clean Air Act, Alcoa should also have installed new air pollution control equipment, the suit alleged.

Under terms of a settlement reached in 2003, Alcoa was required to make immediate reductions in air pollution from its Rockdale. The suit settlement also required Alcoa to pay a $1.5 million fine to the U.S. Treasury and to spend $2.5 million on two environmental mitigation projects in Central Texas: a land purchase project and a project to reduce air emissions from school buses. 

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