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Duke Energy defends coal ash recovery as environmentalists plan new suit

Shortly before Duke Energy Progress LLC filed for its $477.5 million rate hike in North Carolina, which includes nearly $200 million a year in cost recovery tied to closing coal ash ponds, the Southern Environmental Law Center, or SELC, launched a new attack on the utility's ash management.

The SELC on May 31 filed a notice of intent to sue Duke Energy Progress, or DEP, for violating the U.S. Environmental Protection Agency's 2015 rule tied to the disposal of coal combustion residuals by electric utilities and the Resource Conservation and Recovery Act. The SELC, acting on behalf of the Roanoke River Basin Association, alleges that DEP plans to leave coal ash at its Roxboro site in the groundwater near a popular recreational lake.

"At its Roxboro facility, Duke Energy stores 19 million tons of coal ash in two leaking, unlined pits on the banks of Hyco Lake and Sargents River within the Dan River and Roanoke River Basins," SELC said in a news release. "These pits leak and pollute groundwater, Sargents River, and Hyco Lake, which is popular for fishing and boating, and surrounded by homes."

Duke Energy Corp. revealed plans in November 2016 to excavate the majority of ash ponds across its fleet, but it will leave ash in place at the Roxboro impoundments and more than a dozen other basins.

"Under the CCR rule, Duke Energy's Roxboro closure plan must not leave coal ash in groundwater or leave wet ash and water impounded in the basin — yet it does all these things," SELC wrote in its notice. "Similarly, the Act prohibits Duke Energy from leaving a coal ash basin and partial impoundment in the 100-year floodplain, yet that is what the cap in place closure plan does."

DEP has sought to block a similar suit brought by the SELC tied to violations of the Clean Water Act at the 2,462-MW Roxboro plant and has accused SELC of launching "unnecessary and wasteful" legal fights.

Shared responsibility

DEP tied nearly $195 million of its 14.9% overall rate increase proposal to coal ash pond closure costs, which includes annual charges of $66.5 million for previously incurred expenses and $129.1 million for ongoing expenses. The company proposes to recover the previously incurred expenses, which total $332.5 million, over a five-year period to mitigate the rate impact on customers.

Duke Energy maintains that by recovering ongoing coal ash costs, it will reduce the impact in future years. "Including this revenue requirement will provide a measure of predictability to customers of future coal ash expense rate drivers and we do not expect rate changes in the future related to coal ash to be as significant as we propose in this case," David Fountain, Duke Energy's North Carolina president, wrote in testimony submitted to the North Carolina Utilities Commission.

Fountain defended the cost recovery for expenses the company has incurred to close its basins in order to comply with the EPA's final coal ash rule and state-imposed mandates.

"It's Duke Energy's job to take care of the waste, and we will do so responsibly. But the cost of that service is a responsibility all customers share as consumers of electricity, so that the public and the environment are protected now and in the future," Fountain said. "Think of when you get the tires changed on your car. ... You don't have to do the work. That's what the experts are for. But when you pay your bill, there is a charge for the safe disposal of those tires."

"The same thing happens at a power company. We don't ask customers to dispose of the coal ash generated from the power they consume. That's our responsibility. But there is a cost for that service. It's a cost we are all required to pay to protect the environment and responsibly manage that waste," he added.

Duke Energy said that no fines, penalties or costs associated with the February 2014 pipe break and coal ash cleanup at the Dan River site are included in its cost recovery request. (NCUC docket E-2 Sub 1142)