Duke’s coal ash deal with the feds now up for approval in court

Duke Energy (NYSE: DUK) said Feb. 20 that it has reached a proposed agreement with the federal government that, if approved, would close a federal investigation of its subsidiaries – Duke Energy Carolinas, Duke Energy Progress and Duke Energy Business Services – related to the Dan River coal ash spill and ash basin operations at other North Carolina coal plants.

The agreement is now subject to review and approval by the U.S. District Court for the Eastern District of North Carolina.

On Feb. 2, 2014, a storm water pipe under a coal ash basin at the retired Dan River Steam Station broke, releasing ash into the Dan River in Rockingham County, N.C. Some pollutants also flowed downriver into neighboring Virginia. The company said that it took effective action to stop the leak, care for the river and reform operations to help prevent similar events.

“We are accountable for what happened at Dan River and have learned from this event,” said Lynn Good, president and CEO. “We are setting a new standard for coal ash management and implementing smart, sustainable solutions for all of our ash basins. Our highest priorities are safe operations and the well-being of the people and communities we serve.”

The agreement identifies nine misdemeanor violations of the Clean Water Act in connection with the spill and unauthorized discharges at Dan River Steam Station; maintenance issues at Cape Fear Steam Electric Plant; and unauthorized discharges at Riverbend Steam Station, H.F. Lee Steam Electric Plant and the Asheville Steam Electric Generating Plant. The company is addressing each of the issues through facility improvements or new permitting.

The agreement would also require Duke Energy Carolinas and Duke Energy Progress to pay a total of $68.2m in fines and restitution and $34m for community service and mitigation. These payments will be borne by shareholders, not customers. The agreement includes a five-year probationary period with a court-appointed monitor to ensure compliance with all provisions.

Duke Energy would be required to submit environmental compliance plans to the court, including additional training, audits, reporting and other measures related to ash basins. The company also would create an evaluation and claims process to help towns modernize their water treatment systems if they have been impacted by increased bromides from environmental equipment installed at certain coal plants.

Parent Duke Energy would guarantee the payment of the penalties and the performance of the environmental compliance plans. The full agreement will be made public if it is accepted by the court. If approved, the agreement would end the grand jury investigation of the company’s practices at its North Carolina coal ash basins.

The company’s actions include:

  • Revamping the organization to strengthen coal ash management, creating new teams exclusively devoted to this important work. Today, there is a higher level of expertise and accountability, and direct reporting to the company’s most senior managers. These changes include adding dedicated environmental services support for coal ash work.
  • Comprehensive engineering reviews by outside experts, including video inspections of pipes at each basin, to ensure the system continues to operate safely.
  • A more robust monitoring and reporting process for water seeps at ash basins, sharing detailed data with state regulators so they can make informed permitting decisions. Closing ash basins will reduce or eliminate seeps all together.
  • Developing industry-leading solutions to safely close ash basins with guidance from some of the nation’s top experts in ash management, engineering and the environment. This work also includes collaboration with local communities to include their perspective in planning.
  • Moving to close all of the company’s coal ash basins, including the 32 basins in North Carolina. The company is complying with strict new state policy and government mandates for the management of coal ash and is ready to begin work at several plants as soon as states issue permits and other approvals.
  • Recycling nearly half of the coal ash produced today and aggressively looking for innovative new options to safely reuse even more of the material.
  • Beyond coal ash management, the company is redoubling efforts to focus on operational excellence in all aspects of the business to help ensure electricity is produced and delivered to customers in a safe manner.

Ongoing activities to care for the Dan River include:

  • Learning from independent research, which demonstrates the Dan River ecosystem is thriving, safe for recreation and agriculture, according to state and university scientists.
  • Long-term monitoring of the river, including sediment, fish tissue and other biological sampling. The company has also commissioned several studies to examine any long-term impacts of the spill on agriculture and aquatic life, and to better evaluate how sediment is transported in the river.
  • Removing ash deposits below the Dan River plant and continuing to take direction from the U.S. Environmental Protection Agency regarding any future ash removal needs.
  • Identifying and funding restoration projects to help the Dan River communities recover from any impacts of the coal ash spill. The company is working cooperatively with regulators from North Carolina, Virginia and the U.S. Fish and Wildlife Service on the comprehensive Natural Resource Damage Assessment and Restoration.
  • Creating a $10m Water Resources Fund to support projects that benefit waterways in the Carolinas and rivers and lakes downstream of the company’s Carolinas operations that flow into Virginia, Tennessee and Georgia. The fund includes a $1.5m designation for projects in the Dan River Basin that benefit waterways and help develop the economic and community vitality of the region.

Duke Energy said Feb. 18 that it was in settlement discussions with the U.S. government and that its reported results for the fourth quarter of 2014 include a charge of approximately $100m related to the company’s assessment of probable financial exposure related to any agreement.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.