August 10, 2009 (FinancialWire) — North Carolina lower legislative house has voted to reject a government takeover of Alcoa’s (NYSE: AA) hydroelectric business, which operates along the Yadkin River in the central part of the state.

Legislators rejected a bill that would have established a state trust with the authority to seize the Yadkin Hydroelectric Project, which Alcoa has had in operation since 1915.

Opponents of a state takeover, including lakefront homeowners, property rights advocates and local officials, expressed concerns about the proposed takeover this week. Their concerns included a potential cost to North Carolina taxpayers of $500 million or more. This was the value Alcoa had placed on the property.

The Federal Energy Regulatory Commission, the federal agency that regulates hydroelectric projects in the United States, is expected to issue a new long-term license for the Yadkin Project. FERC staff has already recommended issuing a new license to Alcoa.

Under the terms of the relicensing agreement, Alcoa will work to improve water quality in the Yadkin River, allow for increased water withdrawals by local municipalities, better protect the water supply when drought conditions are present and set aside thousands of acres for long-term land protection, among other measures.

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