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Duke Says Disposal of Coal-Ash May Cost Up to $10 Billion

Duke Energy Corp. said the total tab for cleaning up its North Carolina coal-ash dumps may reach $10 billion amid a call for national rules to regulate the disposal of the fossil-fuel byproduct.

Duke plans to spend $2 billion to $2.5 billion to handle coal ash at its Riverbend and Dan River, the Charlotte, North Carolina-based company said in a statement yesterday.

The largest U.S. utility owner told a North Carolina legislative commission that if it were required to excavate and relocate all its ash in the state and convert to an all-dry handling system, costs would reach $7 billion to $10 billion and take as long as three decades.

“Duke Energy is committed to working with policy makers and regulators to implement both short- and long-term solutions to coal-ash management in North Carolina,” Paul Newton, Duke Energy’s North Carolina president, said during a presentation to the North Carolina Joint Environmental Review Commission.

The commission met yesterday to discuss the company’s response to a Feb. 2 spill of about 39,000 tons of coal ash into the Dan River. Environmental groups have called on Duke to remove all of its coal-ash dumps after the spill, which has triggered investigations and subpoenas.

Duke should move all its coal ash into lined, dry pits and stop disposing of it in ponds, said Frank Holleman, an attorney with the Southern Environmental Law Center. Unlined ponds invariably contaminate ground water, and their dams can fail, he said.

Cleanup Costs

The North Carolina Utilities Commission will decide who pays for the cleanup, Holleman said. “Our position is that law-abiding citizens should not pay,” he said. Duke shareholders are liable for the cost because its ash ponds violate pollution laws, Holleman said.

Some analysts disagree with that position.

“The costs of cleaning up the waste from fuel from coal should be a ratepayer cost and not a shareholder cost,” said Kit Konolige, an analyst with BGC Partners LP in New York. “The traditional regulatory compact, the cost of fuel and cost of cleanup of fuel, should be passed through ratepayers. It really shouldn’t come out of shareholders pockets except to the extent that the company has done something wrong.”

There is no federal regulation of coal ash. The U.S. Environmental Protection Agency, in a January court settlement, agreed to “final action” on proposed coal ash regulations by Dec. 19.

Regulators’ Decision

The state utilities commission will determine who pays to clean up ash unless lawmakers decide to change some laws, Tom Williams, a spokesman for Duke, said in a telephone interview. The company has not submitted a proposal to regulators regarding the expenses.

A federal grand jury is probing the state’s oversight of the company’s 33 coal-ash ponds in North Carolina. State officials’ “primary desire” is removal of coal ash ponds from the banks of rivers and streams, Pat McCrory, the state’s Republican governor, said in a Feb. 25 letter to Duke Chief Executive Officer Lynn Good.

McCrory announced a revised plan on April 16. The Southern Environmental Law Center said the plan set no deadlines and is weaker than a court settlement with the state last year.

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