BADIN, N.C.- Alcoa (NYSE:AA: Federal and State Agencies, Local Governments, Catawba Indian Nation, Environmental Organizations and Homeowner Groups Support Agreement That Will Protect More Than 6,000 Acres, Expand Recreation Opportunities and Improve Water Quality

After more than a year of negotiations, stakeholders have reached an Agreement in Principle (AIP) regarding the future operation of the Yadkin Hydropower Project managed by Alcoa Power Generating Inc. (Alcoa-Yadkin). The agreement will provide more stable water levels in High Rock Lake, significant recreational enhancements and important environmental protections, including the protection of more than 6,000 acres of Alcoa-Yadkin owned property.

"We worked hard to reach an agreement that satisfies the interests of our stakeholders, and we're extremely pleased with the level of support the agreement has received," said Gene Ellis, licensing and property manager at Alcoa-Yadkin. "This agreement reflects the involvement, input and influence of many different organizations."

Alcoa-Yadkin has agreed to make more than 40% of its land holdings available for purchase by the state of North Carolina or private groups for the purpose of recreation, game lands or conservation. The land includes 2,500 acres along High Rock Lake, 2,400 acres along Tuckertown, and 1,400 acres for the future expansion of Morrow Mountain State Park. In addition, it is anticipated that Alcoa will donate 275 acres for the expansion of Uwharrie National Forest and 80 acres for Eagle Point Nature Preserve in Rowan County.

"This agreement represents one of the largest and most important conservation opportunities we have seen in the Southern Piedmont in a generation. We may never see another conservation opportunity of this scale again," said Jason Walser, executive director of the Land Trust of Central North Carolina. "What's truly significant is the quality of the land being offered by Alcoa. The waterfront land possesses incredible ecological value, and nearly all of the proposed land will be available to the public for recreation or hunting."

Other environmental protections include measures to improve water quality within and below the Yadkin Project and continued efforts to protect Bald Eagles and other rare, threatened and endangered species through responsible management and monitoring. Alcoa-Yadkin will invest millions at Yadkin Project developments to increase dissolved oxygen levels and improve water quality.

"I believe this agreement in principle is a positive step forward in the relicensing process with Alcoa, although some issues remain to be worked out," said Bill Ross, secretary of the N.C. Department of Environment and Natural Resources. "DENR looks favorably upon the potential acquisition of conservation lands, which will complement the water quality, environmental, fish and wildlife, recreational and other benefits to be gained through a final agreement."

Other highlights of the agreement include an extended recreation season that will keep more water in High Rock Lake; a drought management plan that will better protect water levels during drought conditions; a more consistent downstream flow regime; and a number of new recreation opportunities, including a new public recreation area in Rowan County, new fishing piers at High Rock Lake and Tuckertown, 10 new dispersed, hardened campsites and funding to improve the Yadkin Pee-Dee River Trail. These enhancements are expected to provide positive economic impacts to the region.

Keeping More Water in High Rock Lake

High Rock water levels have been a key interest throughout the relicensing process, largely as a result of a severe drought in 2002 that affected reservoirs across central North Carolina. From April 1 to October 31, it is anticipated that water levels at High Rock will average about 3 feet below full, over the long term. Alcoa-Yadkin will significantly decrease generation if water levels drop below 4 feet.

During the shorter winter drawdown period (December 1 to February 28), water levels are anticipated to average approximately 8 feet below full pool, over the long term, with a decrease in generation if the water level goes below 10 feet.

As part of the plan to keep water levels higher, the agreement includes a drought management plan (known as a "low inflow protocol") that will require Alcoa-Yadkin to send less water downstream and generate less energy when drought conditions are present. The plan requires other large storage reservoirs to share the responsibility for sending water downstream to prevent High Rock Lake from being unfairly impacted by drought conditions.

"This represents a significant improvement in the operation of High Rock Lake, and we are excited about the multiple benefits of relatively stable water levels in High Rock as compared to historic fluctuations. In times of drought, water to satisfy downstream needs will be supplied proportionally by High Rock, Badin, and Tillery, insuring High Rock should never again experience the extreme drawdown that happened in 2002," said Larry Jones, president of High Rock Lake Association. "We are pleased that Alcoa recognized the need for significant changes to the Shoreline Management Plan. We've worked hard for the past couple of years to obtain these changes, and our board believes we need to stay engaged in the process."

Community Enhancements

The agreement in principle includes several items designed to assist local governments. Alcoa-Yadkin will donate land around the Badin Public Recreation Area to the Town of Badin and make additional property available for purchase. Also, the current charges for withdrawing water from Tuckertown and Badin Lakes will be nearly eliminated for the city of Albemarle.

Alcoa-Yadkin has pledged to continue working with City of Salisbury officials in an attempt to find cost-effective ways to minimize the challenges for its water utility posed by sedimentation and flooding.

Next Steps

The agreement in principle represents an important milestone in the relicensing process. Those organizations who signed the agreement in principle will begin work this week to develop a formal Relicensing Settlement Agreement that will be submitted to the Federal Energy Regulatory Commission later this year.

"The AIP represents a fundamental agreement about how we will operate the Yadkin Project for the next 50 years. Now, we'll begin the process of fleshing out the details and fine-tuning the language," Ellis said.

Organizations Which Signed the Agreement in Principle

Alcoa-Yadkin
American Rivers
Badin Lake Association
Badin Museum
Catawba Indian Nation
City of Albemarle, NC
High Rock Business Owners Group
High Rock Lake Association
Land Trust for Central North Carolina
Montgomery County, NC
The Nature Conservancy (S.C. Chapter)
North Carolina Division of Water Quality
North Carolina Division of Water Resources
North Carolina Wildlife Resources Commission
Pee Dee River Coalition
Piedmont Boat Club
Progress Energy
Rowan County
Salisbury/Rowan Association of Realtors
South Carolina Coastal Conservation League
South Carolina Department of Health & Environmental Control
South Carolina Department of Natural Resources
Town of Badin, NC
U.S. Environmental Protection Agency (Southeast Regional Office)
U.S. Forest Service
Uwharrie Point Community Association
Yadkin Pee Dee Lakes Project

About Alcoa-Yadkin

For nearly a century, Alcoa-Yadkin has operated four hydroelectric dams and reservoirs along a 38-mile stretch of the Yadkin River as a source of economic, environmentally-friendly power. The project includes four reservoirs -- High Rock, Tuckertown, Narrows (Badin Lake) and Falls -- that offer a variety of recreation opportunities and provide important habitat for plants, fish and wildlife.

Alcoa Inc.

Alcoa Inc.

Alcoa (NYSE:AA) is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap® foils and plastic wraps, Alcoa® wheels, and Baco® household wraps. Among its other businesses are closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 129,000 employees in 44 countries and has been named one of the top most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. More information can be found at www.alcoa.com

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