Yadkin Hydroelectric Project

 Final Study Plan

July 23, 2003




Alcoa Power Generating Inc. (APGI) is the licensee for the Yadkin Hydroelectric Project.  The Yadkin Project is currently licensed by the Federal Energy Regulatory Commission (FERC) as Project No. 2197.  This license expires in 2008 and APGI must file a new license application with FERC on or before April 30, 2006 to continue operation of the Project.  

The Yadkin Project consists of four reservoirs, dams, and powerhouses (High Rock, Tuckertown, Narrows , and Falls) located on a 38-mile stretch of the Yadkin River in central North Carolina .  The Project generates electricity to support the power needs of Alcoa’s Badin Works, to support its other aluminum operations, or is sold on the open market.  

As part of the relicensing process, APGI prepared and distributed, in September 2002, an Initial Consultation Document (ICD), which provides a general overview of the Project.  Agencies, municipalities, non-governmental organizations and members of the public were given an opportunity to review the ICD and identify information and studies that are needed to address relicensing issues.  To further assist in the identification of issues and data/study needs, APGI has formed several Issue Advisory Groups (IAGs) to advise APGI on resource issues throughout the relicensing process.  IAGs will also have the opportunity to review and comment on Draft Study Plans.  This Draft Study Plan has been developed in response to comments on the ICD and through discussions with the Recreation, Aesthetics, and Shoreline Management IAG, to provide additional necessary information for consideration in the relicensing process.  

1.0      Study Objectives  

The purpose of this study is to quantify the economic contribution of recreational use at the Yadkin Project to the five county region surrounding the Project (Davidson, Davie , Montgomery , Rowan, Stanly).  The study will estimate both direct economic impacts as well as indirect and induced effects (i.e., multiplier effects) of Project-related recreational spending that occurs within the five county region. The study will use the U.S. Forest Service’s IMpact analysis for PLANning (IMPLAN) model to estimate the economic effects of recreational use at the Yadkin Project.  IMPLAN uses the latest national input-output tables from the Bureau of Economic Analysis, secondary economic data at the county level from a variety of public sources, and proprietary procedures to develop an input-output model for the study areas.


2.0     Technical Approach


This study will evaluate the economic effect on the five county, Yadkin Project region associated with recreational use of the Project under both existing Project operations and alternative Project operations. 

2.1    Existing Project Operations and Current Recreational Use  

This analysis will use the information collected in the Recreation Use Assessment Study to estimate total existing recreational use and recreational spending patterns. Development of direct impact estimates will involve allocating expenditures across the 528 industrial sectors within the IMPLAN model using the Bureau of Economic Analysis’ Commodity Composition of Personal Consumption Expenditures published in the Survey of Current Business.  Only within region spending will be considered.  As the expenditures are allocated to IMPLAN industries, local purchase coefficients will be used to estimate portions of those expenditures that immediately leak from the economy.  

Indirect and induced impacts represent the so-called multiplier effects of the recreational spending that occur across the regional economy when they are set in motion by the direct spending.  These indirect and induced impacts typically are calculated using input-output multipliers.  The latest IMPLAN data will be used to develop these estimates.  Impacts will be measured in terms of total industry output, personal and total income, value added, and employment. 


The economic effects associated with recreational use of the Project would be disaggregated into a resident component and a visitor component.


2.2          Future Project Operations and Recreational Use  

This analysis requires two major inputs:  

·        Description of the future continued and alternative Project operations to be studied

·        Estimate of the effects of these alternative Project operations on recreational use  

Description of Future Continued and Alternative Project Operations  

This description will be provided to ERM by APGI based on consultation with the Recreation, Aesthetics, and Shoreline Management IAG.  ERM assumes that this will include at least continued Project operations and two alternative Project operations scenarios. Potential future operational scenarios that could be considered in the analysis include extending the recreation level of High Rock Reservoir into the spring and fall shoulder seasons, operating High Rock Reservoir with a reduced winter drawdown, and additional utilization of available storage at Narrows Reservoir.

  Effects of Alternative Project Operations on Recreational Use  

This analysis will use as a baseline the future recreational use estimates from the Recreational Use Assessment Study.  These estimates reflect a continuation of existing Project operations.  These estimates must be adjusted to reflect the effects alternative Project operations may have on recreational use.  ERM proposes to apply “adjustment factors” to the baseline future use estimates to reflect the effects of alternative Project operations on recreational use.  These “adjustment factors” will be developed based on recreational use patterns at “surrogate” reservoirs.  These surrogate reservoirs will be identified using the following screening criteria:  

·        Proximity to the study area (preferably all the reservoirs would at least be located in the Piedmont region of the southeast)

·        Similar to the Project reservoirs in terms of surrounding land use (e.g., significant waterfront residential population)

·        Similar operations to the proposed alternative Project operations at Yadkin

·        Reasonably accurate and current recreational use data are available  

The proposed surrogate reservoirs will be reviewed with the Recreation, Aesthetics, and Shoreline Management IAG.  Once a surrogate reservoir has been selected for each alternative Project operating scenario, ERM will compare monthly recreational use levels to develop monthly adjustment factors for the Yadkin Project.  These adjustment factors will be applied to the baseline future recreational use estimates for each alternative scenario.   

Future Project Operations Economic Effects  

Estimates of future economic effects from recreation at the Yadkin Project will be developed for each scenario, including:

·        Continuation of existing Project operations and reservoir fluctuations

·        Altered operations and reservoir fluctuations  

These estimates will be developed using IMPLAN as described above.  The only modifications to the model will be changes in the level of recreational use and associated changes in recreational spending.  The continuation of existing Project operations scenario will use the estimate of future recreational use and the recreational spending per recreation day estimate developed from the Recreation Use Assessment Study.  The alternative Project operations scenarios will use the adjusted future recreational use (as described above) and the recreational spending per recreation day estimate developed from the Recreation Use Assessment Study.  Each of these scenarios will also include a breakdown of the residential and visitor contributions to overall regional economics.  

As part of this analysis, EMR will also consider information contained in the following two studies in evaluating the economic impact associated with recreational use of the Yadkin Project on the surrounding region:  

·        North Carolina’s Central Park: The Economic Impact of an Alternative Economic Development Strategy on the Central Park Region of North Carolina (UNC Charlotte – December 1999)

·        North Carolina’s Central Park: Assessing Tourism and Outdoor Recreation in the Uwharrie Lakes Region (Appalachian State University – September 1999)  

3.0     Reporting  

3.1 Draft Study Report and IAG Meetings  

ERM will prepare a Draft Study Report.  The Draft Study Report will be provided to APGI and the IAG for review and comment.  ERM will attend up to 4 meetings with the IAG to review the study plan, discuss results, and comment on the draft report.  

3.2 Final Study Report

ERM will address the comments received on the Draft Study Report and prepare a Final Study Report.  

4.0       Proposed Project Schedule  

This study should take approximately 6 months (after the data from the Recreation Use Assessment Study is available) to complete the draft report.