U.S. wanted hydro plant closed
GREENSBORO — A pint-sized hydroelectric plant that claims losses of up to $1 million from the Randleman Reservoir barely escaped shutdown by federal authorities who were convinced its owner was “incorrigible” and unfit to run such a potentially hazardous facility.
Enforcement officers for the Federal Energy Regulatory Commission urged their leaders in Washington to padlock Ramseur resident Bruce Cox’s project in Randolph County — the Cox Lake Hydroelectric Plant on the Deep River — after a lengthy dispute involving the plant’s hazard rating.
“The enforcement staff points to this history as proof positive that Mr. Cox is incorrigible, repeatedly flouting agency directives,” administrative judge Raymond Zimmet said in his February 2000 ruling. “However, before reaching such a conclusion and casting Mr. Cox as Public Enemy No. 1, there may be another explanation: He may have lacked the financial resources to comply all of these years, which returns to the question of whether Mr. Cox (is) fit to operate the hydroelectric project.”
In his ruling, Zimmet suggested Cox was not a fit plant operator and urged the regulatory commission to screen people more carefully before letting them take control of hydroelectric projects.
Now, Cox is among the owners of seven plants along the Deep River suing the Piedmont Triad Regional Water Authority amid claims that the publicly owned reservoir could cost them more than $5.4 million over the next 50 years. The water-powered plants sit downstream from the reservoir, near smaller dams or falls, and use the Deep to run their turbines.
Cox said he did nothing wrong in the dispute with federal officials, who he claims behaved unprofessionally.
“It was just an overbearing group of regional office people that done that deal,” Cox said in a recent interview about his problems with the Federal Energy Regulatory Commission.
Testifying earlier in the local lawsuit, Cox said he got into trouble with the commission because he couldn’t afford the required safety study.
In their lawsuit against the water authority, Cox and the other plant owners say the reservoir will hurt them by diverting drinking water they could use to make electricity.
The authority created Randleman Reservoir by building a large dam across the Deep near the project’s namesake community. It filled the lake several years ago and now is building a treatment plant to purify the water for human consumption.
Wanted: Emergency plan
The lawsuit by plant owners is important to residents of Greensboro, High Point, Jamestown, Archdale, the city of Randleman and Randolph County — the local governments that formed the authority in the mid-1980s. Any payment to the plants would come from their residents and businesses.
During his decade-long dispute with federal regulators , Cox racked up more than $80,000 in fines. The dispute ended when he agreed to pay $10,000 of the total penalty, complete a study of Cox Lake’s safety and prepare an emergency plan in case the 24-foot-high, 280-foot-long dam failed.
The case went all the way to a hearing before four commissioners of the Federal Energy Regulatory Commission in Washington, where the national board accepted the settlement as recommended by Zimmet, the administrative judge.
The federal commission supervises the safe operation of hydroelectric projects nationwide. It also oversees other energy matters, including the interstate transmission of electricity, oil and natural gas.
In his final report, Zimmet placed Cox among the group of people who “have insufficient financial resources, yet try with heavily borrowed funds to operate hydroelectric projects,” only to learn “the resulting costs are far greater than they might reasonably have anticipated.”
50 years’ lost revenue
Cox ultimately proved to the commission’s satisfaction that his plant and nearby dam were safe. He’s had no further difficulties with the federal agency, he said.
“I’m operating the way I’m supposed to,” he said. “I was operating my project (back then) the way I’m supposed to.”
Cox has an interest in three of the seven hydro plants in the local lawsuit. His plants, two of which are not in working order, account for $2.6 million of the group’s total alleged losses during the suit’s 50-year scope.
All seven plants are small by the standards of more mainstream projects powered by coal or natural gas, which are routinely 500 to 1,000 times larger. Many of the Deep’s hydro plants sit near the remains of riverside mills they once powered.
Other plaintiffs in the case include regional hydro pioneer Bill Lee of Randolph County, who owns two plants; Dean Brooks of Chatham County, who owns one plant on his own and co-owns a second with Cox; and Hydrodyne Industries, a partnership that includes Steve Cook of Greensboro and Chip, David and John Hagan.
Chip Hagan, a lawyer, is the former chairman of the Greensboro Chamber of Commerce and is the husband of U.S. Sen. Kay Hagan. Chip Hagan’s law firm represents Hydrodyne and other plant owners in the suit.
The water authority says the plants’ claims are overblown, partly because they operate intermittently and can go long periods without producing power, reservoir or no.
Year of low earnings
Indeed, Cox sent the federal commission a report seven years ago that seems at odds with the lawsuit’s suggestion that his Cox Lake plant will lose an average of $19,814 per year because of Randleman Reservoir — about $1 million over 50 years.
Cox’s federal report in February 2002 showed his plant earned only $3,678 during 2001, before the new Randleman Reservoir could have played a role. In fact, his Cox Lake plant produced no electricity for four months that year, August through November, according to the report.
But his plant’s poor showing in 2001 is not a true gauge of its earning potential, Cox said in the recent telephone interview. The region was caught in a “dry spell” that year, which meant there was less water available in the Deep to use in making electricity, he said.
In addition, he didn’t have a solid contract with Progress Energy, so he was paid a low rate for the electricity he produced, Cox said.
“That was a deal between contracts. That was a deal where one contract ran out,” he said, adding that he then had to negotiate a new agreement to improve his earnings.
Cox did not say what more typical, annual earnings would be for his plant. But he indicated that the lawsuit’s outcome is likely to be significantly smaller than the millions of dollars suggested by some documents in the case.
“It’s not going to be a big-money payout like you all make it out to be,” he said. “We’re not asking for money to fix up our plants. We just want them to pay us for the water they’re taking away from us.”
Switching sides
Meanwhile, in an unusual twist, one of the regulators Cox disobeyed during his lengthy dispute with the federal agency now has a new job: He’s a private consultant working for Cox and the other plaintiffs in their lawsuit.
Ronald A. Corso, retired head of the commission’s national dam-safety and inspections office, did a study this year estimating that Randleman Reservoir would cost the seven plants a total of $106,480 yearly in revenue losses — more than $5.4 million over 50 years.
Corso’s study said Cox’s three plants would suffer $51,000 of those alleged annual damages.
But in November 1995, Corso wrote to Cox from Washington as the federal commission’s national director of dam safety and inspections. His letter gave details for doing the required safety analysis of the dam at Cox Lake and set an April 1996 deadline for its completion.
Federal enforcement officers later cited Corso’s letter among those Cox ignored despite repeated inquiries and warnings from the agency.
Efforts to reach Corso for comment were unsuccessful.
Cox said he and the other plant owners are not “the bad guys,” only small business people trying to make a profit in green technology. “We’ve got a good thing going here as far as a clean, renewable energy that we’re producing,” he said.
The authority simply has changed the Deep River more profoundly than he and the other plant owners can tolerate, he said.
“They’ve changed the flow of the river so much, we can’t use the water.”
Contact Taft Wireback at 373-7100 or taft.wireback@news-record.com
Accompanying Photos
Photo Caption: Construction of the $60 million water treatment plant.
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