Duke funding not guaranteed forever
While the Pigeon River Trust Fund isn’t threatened in the short term, the lucrative water quality funding stream isn’t a sure bet forever.
The annual payment of $290,000 ponied up by Progress Energy — and soon by Duke post merger — will eventually run out.
The funding is only guaranteed through 2034. That’s when the permit from the Federal Energy Regulatory Commission for the Pigeon River hydropower station comes up for renewal.
At that point, a new permit will have to be brokered. It, too, would have to include some form of mitigation to offset the environmental impacts of the dam, but whether that mitigation will come in the form of the Pigeon River Trust Fund is anyone’s guess.
“I really can’t predict what might happen 20 years from now,” said Mike Hughes, a former spokesperson for Progress and now for Duke.
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Haywood Waterways Association gets up to 80 percent of its funding from grants, and much of it from the Pigeon River Fund. Even though the tap isn’t being shut off tomorrow, “With those statistics, it’s hard not to be concerned,” said Eric Romaniszyn, director of Haywood Waterways.
Romaniszyn hopes the trust fund would be rolled over as part of a new permit and thus avoid a 2034 doomsday scenario for the organization, but whether Duke will adopt the mitigation model used by Progress is obviously unknown.
When Duke Energy recently had to seek new licenses for a series of dams on the Tuckasegee, Jackson County leaders lobbied hard to get a trust fund similar to the Pigeon River Fund for their county. The heated debate even included a flurry of lawsuits filed between the county and Duke.
But, Duke ultimately would not agree to the trust fund, favoring other forms of environmental mitigation instead.
Haywood Waterways
Knowing the trust fund’s days could be limited — albeit another 22 years from now — Haywood Waterways has been actively building up its own reserves and has established an endowment fundraising campaign with a $2 million goal.
The Pigeon River Fund also has been slowly building up a nest egg. It’s reached $1.6 million. There’s no particular amount the board sets aside each year, but it does try to set aside some.
“We don’t intentionally hold any money back, but we don’t want to spend every dollar we get,” said Tim Richards, a program administrator with the Community Fund for Western North Carolina, which manages the trust fund.
There’s no grand plan for how the reserves would be used should the annual funding stream dry up. The trust fund could make grants only from the interest it earns — thus keeping a principle balance intact. Another option would be to keep awarding grants at the same pace even though it would erode the principle until it ran out.
“There are 101 questions,” Richards said of how it could play out. “It is too far away to worry about.”
Richards, nor any of the current board members, will be the ones in charge then.
The important thing is the spigot won’t suddenly cease.
“The hope was that the corpus would be built up so it could go on a few more years, and it wouldn’t be a quick cut off,” Richards said. “Whenever it stops, for whatever reason, those funds are here for water quality improvements in those three counties.”
Technically, the trust fund payments could stop at any time before then. Since the payments are mitigation for taking water from the Pigeon River for hydropower, if Duke stops taking water, it likewise can stop making the payments.
Theoretically, Duke could decide its profits off the dam aren’t worth the $290,000 it has to pony up each year.
But that’s not likely, Hughes said.
“It is a very important part of our ability to meet load in that part of the state,” Hughes said.
The Pigeon River hydropower operation can produce 112 megawatts, which is small potatoes in the scheme of Duke’s energy portfolio. But, the overhead of a hydropower plant is minimal, requiring only a few salaries and regular maintenance in exchange for the power it makes.
“The benefit of a hydroelectric power plant is you don’t have fuel costs,” Hughes said. “They are cheaper to operate than many other kinds of generation.”
Unlike coal, natural gas or nuclear plants, there’s no raw materials to buy.
