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article imageCustomers will pay for ash pond cleanup, Duke Energy CEO says

By Kelly Fetty     Mar 12, 2014 in Business
Charlotte - Duke Energy expects its customers to pay for the cleanup and removal of hazardous coal ash ponds in North Carolina, CEO Lynn Good said last Friday.
Good made the remark in a brief interview after she accepted the BusinessWoman of the Year award at Queens University of Charlotte on March 7.
"We've had plans to close ash ponds," Good told Bruce Henderson of the Charlotte Observer. "And because that ash was created over decades from generation of electricity we do believe that ash pond disposal costs are ultimately a part of our cost structure."
Duke spokeswoman Paige Sheehan confirmed Good's remarks on Friday evening, WRAL reports.
If North Carolina forces Duke Energy to close and relocate its ash ponds, customers — not shareholders — will pay the cost in the form of higher rates.
Charging customers higher rates would protect Duke Energy's profits and shareholder earnings.
Hazardous Waste and Vulnerable Waterways
Coal ash is a byproduct of burning coal to produce electricity. Some utility companies dispose of the ash by mixing it with water and storing the resulting slurry in man-made ponds.
Coal ash contains a variety of toxic metals including lead, mercury and arsenic, the Caswell Messenger reports.
Most of Duke Energy's coal-burning plants in North Carolina have been closed, but more than 30 ash ponds remain. Many are located near reservoirs, rivers and other waterways. Activists charge that at least 10 of the ponds have been designated "high hazard" by the U.S. Environmental Protection Agency, Indyweek reports.
On February 2 a broken pipe beneath a Duke Energy ash pond dumped 39,000 tons of coal ash into the Dan River. Seventy miles of the river were contaminated, with up to five feet of ash settling on the river bed.
Drinking water from the river was treated and declared safe, but residents were warned not to swim in the Dan river or eat fish caught from it.
A federal grand jury is investigating the spill.
Duke spokeswoman Paige Sheehan told WRAL the company will pay for the Dan River cleanup, but customers will pay for moving and closing the ash ponds.
North Carolina Governor Pat McCrory is asking Duke Energy to move its ash ponds away from waterways, according to a report in the Charlotte Business Journal. At the end of February the Governor sent a letter to CEO Good demanding “any options, priorities, alternatives, preliminary designs, cost estimates or any other pertinent information” related to securing the ash ponds.
He asked Duke Energy to respond by March 15.
The Role of the North Carolina Utilities Commission
The North Carolina Utilities Commission will decide if Duke Energy can raise consumer rates to pay for the ash pond cleanup.
The Utilities Commission is a seven-member board. Three of its current members were appointed by former Democratic Governors Mike Easley and Bev Perdue. Three were appointed by Republican Governor Pat McCrory.
Utilities Commission chairman Ed Finley was originally appointed by former Governor Easley. He was reappointed by Governor McCrory.
The Utilities Commission has allowed Duke Energy to raise customer rates to recover costs in the past. When Duke Energy and Progress Energy paid $2.8 million to comply with the 2002 Clean Smokestacks Act, the Commission permitted both companies to recover the cost from their customers.
The two companies have since merged.
If Duke Energy's ash ponds comply with state standards, it is possible the Utilities Commission will approve a rate increase to cover the cost of closing or moving them.
But State environmental regulators have charged Duke Energy with multiple violations at five other power plants in addition to the Dan River plant.
North Carolina's Environmental Review Commission is also developing legislation on ash ponds, and the new regulations could affect the Utilities Commission's ruling.
Christopher Ayers is the executive director of the commission’s Public Staff. He told the Charlotte Observer it is too soon for the commission to make a statement.
“It depends on what Duke is going to present as its cleanup plan and what it is required to do in terms of cleaning up ash ponds,” he said. “We can’t comment or speculate as to what would be recoverable, and not be, until we see the specifics of a plan and what is required by state regulators.”
High Profits, Low Taxes
Duke Energy is the largest electric power holding company in the United States. Its territory covers six states; it has 3.2 million customers in North Carolina alone.
According to a WRAL report, Duke Energy earned $2.7 billion in the last fiscal year, while shareholder earnings increased 25 per cent.
Duke's 2012 merger with Progress Energy generated most of the earnings increase. The controversial merger gave Duke Energy a near-monopoly on wholesale electricity in North Carolina.
Yet despite its massive footprint and soaring profits, Duke Energy paid no federal income taxes between 2008 and 2012, the Carolina Mercury reports.
A February report released by Citizens for Tax Justice and the Institute on Taxation and Economic Policy cited Duke Energy as one of 26 corporations that paid a negative tax rate between 2008 and 2012.
Although Duke Energy paid $3 million in federal taxes, the company received $300 million in tax rebates during that period, according to the report.
As a result, Duke Energy's effective income tax rate was -3.3 per cent.
Residents Complain
On Monday residents of Mountain Island Lake met with state lawmakers in Charlotte.
The Catawba Riverkeeper Foundation is suing Duke Energy over alleged coal ash pollution to the lake.
"It is frustrating when you're an individual and you live in this community and you live with it in your back yard. And you have a company that's so big and so powerful that they have been able to call the shots," Sarah Behnke told WSOCTV.
Mecklenburg County Representative Rodney Moore sympathized.
"I really don't think that it's fair for average taxpayers and ratepayers to pay for a disaster or accident that was not of their doing," he said.
State Attorney General Roy Cooper agreed.
"Duke Energy should clean up the coal ash at its own expense, and we will fight for consumers if the company tries to charge them," Cooper said in a statement.
More about Duke energy, NC Governor Pat McCrory, Coal Ash Ponds, Dan River coal ash spill, Duke Energy CEO Lynn Good
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