Removing coal ash from all 14 Duke Energy sites could cost $10 billion

jmurawski@newsobserver.comApril 22, 2014 

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Coal ash is shown in settling ponds at Duke Energy’s Riverbend power plant on Mountain Island Lake.

JEFF WILLHELM — jwillhelm@charlotteobserver.com

Duke Energy’s top North Carolina executive told state lawmakers Tuesday that digging up coal ash from disposal sites across the state and trucking the industrial waste to modern landfills, as critics are demanding, could cost as much as $10 billion.

A cheaper option, which leaves the coal ash in place at most sites, would cost at least $2 billion.

Duke officials are keeping a low profile about who will pay that cost, but a state regulator estimated the higher price tag cited Tuesday could cost North Carolina households more than $20 a month.

The Charlotte electric utility provided the financial estimate to the N.C. Environmental Review Commission at a public hearing to explore remediation options for its ash pits in the wake of a spill of 39,000 tons of coal ash sludge at Duke’s Dan River power plant in February.

The financial disclosure ends months of speculation about the cost of shutting down the open-air pits dispersed at 14 locations statewide, all of which are percolating contaminants into underground drinking water. It sets the stage for a legal showdown over who will pay for the extensive remediation that could take several decades to complete.

Duke CEO Lynn Good, who did not attend Tuesday’s hearing, has said in the past that Duke intends to pass on the cost to its 3.2 million North Carolina customers, angering critics, including some lawmakers, who insist the Fortune 500 company should bear the full expense.

The massive cleanup operation could increase household power bills by as much as 20 percent, warned James McLawhorn, director of the electric division of the Public Staff, the agency that represents the public in utility rate cases.

“We’re talking about a substantial dollars-per-month increase,” McLawhorn said after the legislative hearing. “It scared me when I heard it, I know that.”

Paul Newton, Duke’s North Carolina state president, said the company has already spent $15 million through March cleaning up the Dan River spill. Company officials have said Duke will pay for that cleanup and have repeatedly apologized for the environmental accident. The company is in discussions with its insurer over the cost.

Newton told lawmakers the status of the 14 coal ash disposal sites is under review. Duke has not decided if it will remove all the coal ash or leave some in place at the disposal sites. Duke has already placed four of the sites on a priority list for likely excavation and closure, with ash removal to dry, lined landfills or for reuse as construction fill.

But those four sites represent less than 10 percent of the coal ash accumulating at Duke’s disposal sites. The fate of the remaining 10 sites is still undergoing engineering analysis and will be determined this year, Newton told lawmakers.

If Duke opts for the cheaper option, the coal ash would be air-dried, left in place and covered with a tarpaulin or membrane. This alternative would contain cleanup costs to between $2 billion and $2.5 billion, he said.

Excavating all 14 locations, which include 33 ash pits, ponds or lagoons, would take three decades and cost between $7 billion and $10 billion. Duke’s critics say Duke should be forced to shut down all its sites and move the ash elsewhere.

But Public Staff Executive Director Chris Ayers noted that a North Carolina utility’s environmental compliance costs are typically included in customers’ rates. He said it was too early to tell if the Public Staff would challenge Duke’s proposed costs, which the company would have to demonstrate are prudent and reasonable.

Ayers told lawmakers that Duke could not be held to an environmental standard that did not exist when the pits were constructed a half-century ago.

Under state law, Duke’s coal ash remediation plan will require approval from the N.C. Department of Environment and Natural Resources. But the cost of that plan is in the hands of the N.C. Utilities Commission, which would review Duke’s expenses after the company spent the money.

Duke’s coal ash sites are leaking heavy metals and other contaminants and have required Duke Energy Progress, the Duke subsidiary formerly known as Progress Energy, to supply alternative drinking water to residents near Asheville whose drinking wells have been polluted. Duke has also agreed to pay $1.8 million for a new water pipe in Wilmington where elevated levels of boron indicate a risk of future contamination.

The history of problems at the ash disposal sites has prompted critics to argue that the company should have known of the risks involved and is at fault for resisting pressure in recent years to stop the contamination.

“The shareholders should pick up the cost of this because it’s been decades of irresponsible coal ash disposal,” said Rep. Pricey Harrison, a Democrat from Guilford, after the hearing. “Ideally we don’t want the ash staying in open pits.”

Murawski: 919-829-8932

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