Duke, feds announce settlement over emissions at North Carolina coal plants

Duke Energy (NYSE: DUK), the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) said Sept. 10 that they have agreed to settle long-running litigation over alleged Clean Air Act violations at five coal-fired power plants across North Carolina.

The settlement resolves long-standing claims that Duke violated the federal Clean Air Act by unlawfully modifying 13 coal-fired electricity generating units located at the Allen, Buck, Cliffside, Dan River, and Riverbend plants, without obtaining air permits and installing and operating the required air pollution control technologies.

Duke recently shut down 11 of the 13 units, and under the Sept. 10 settlement those shutdowns also become a permanent and enforceable obligation under the consent decree.

At the remaining two units, Duke must continuously operate pollution controls and meet interim emission limits before permanently retiring them. In addition, the settlement requires that Duke retire another unit at the Allen plant, spend a total of $4.4m on environmental mitigation projects, and pay a civil penalty of $975,000.

The federal government was joined in the settlement by co-plaintiffs Environmental Defense, the North Carolina Sierra Club, and Environment North Carolina.

The agreement would end the remaining component of a civil lawsuit (USA v. Duke Energy), filed against Duke in 2000 by the U.S. Justice Department on behalf of EPA.

The government’s original lawsuit focused on 25 Duke Energy coal-fired units. The government subsequently dismissed claims against 12 of those units – leaving 13 units as part of the lawsuit, 11 of which Duke Energy has since closed, Duke said in a news release.

The government asserted that certain maintenance and repair projects at the power plants were “major modifications,” as defined by the Clean Air Act, and that Duke Energy failed to obtain permits for the projects and install the “best available emission controls,” as required.

Duke Energy asserted that the company did not violate the law because the projects were “routine,” as defined by the Clean Air Act, or did not result in a net increase in emissions – and thus did not require permits and additional emission controls.

Since 2000, the government has filed similar complaints – most of them resolved by settlement agreements – against more than 30 electric utilities nationwide.

Retirement dates moved up for some coal units

Under Duke Energy’s agreement with the government, the company would close, by Dec. 31, 2024, two units at its five-unit, 1,140-MW Allen power plant in Belmont, N.C. – the two still-operating units that remain part of the litigation. The company also would comply with new, lower emissions limits at those two units prior to closure.

In addition, Duke Energy would close, by Dec. 31, 2024, a third unit at the Allen plant that is not part of the case.

The Dec. 31, 2024 closure date for the three units – which opened between 1957 and 1959 – would be 42 months earlier than the three units’ June 30, 2028 closure date forecasted in the company’s latest integrated resource plan (IRP).

The Allen plant’s total electricity production capacity would decrease by about 50% (585 MW) after the three units’ closures. The plant’s two remaining units, with a combined total electricity production capacity of 555 MW, would continue operating.

Commencing no later than 120 days after the settlement is official, and continuing until the unit is retired, Duke shall continuously run the existing flue gas desulfurization (FGD) scrubber at Allen Unit 2, according to the settlement.

Within 485 days, Duke shall achieve and maintain a 365-day rolling average SO2 emission rate of no greater than 0.120 lb/mmBTU.

There would be no layoffs or impacts to the Allen plant’s current 110-person workforce as a result of the agreement.

Also under the agreement, Duke Energy would spend $4.4m on environmental projects and donations, allocated as follows:

  • Up to $600,000 for clean energy and energy efficiency projects in economically distressed counties in North Carolina and South Carolina.
  • At least $500,000 to replace wood-burning stoves with lower-emission residential heating appliances in North Carolina mountain counties and large cities.
  • $175,000 donated to the U.S. Forest Service.
  • $175,000 donated to the National Park Service.
  • All remaining funds to undertake one, or both, of the following North Carolina projects by 2020: installation of multiple electric vehicle charging stations (number and locations to be determined); and/or installation of electrical infrastructure at highway rest areas and truck stops (locations to be determined) to power parked trucks’ cabs and cargo areas, allowing drivers to turn off engines and eliminate emissions.

Additionally under the agreement, Duke Energy would pay a $975,000 civil penalty to the government, separate from the environmental projects and donations expenditures.

Trial in the case was set to begin in October 2015 following years of pre-trial litigation, including a landmark 2007 Supreme Court decision agreeing with EPA’s interpretation of the Clean Air Act regulations covering modifications that increase the annual amount of pollution from a plant.

The 72-page settlement was lodged with the U.S. District Court for the Middle District of North Carolina and is subject to a 30-day public comment period and final court approval. The case is Civil Action No:1:00 CV 1262.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.