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Duke Energy agrees to excavate most ash basins in North Carolina

SNL Image

Coal ash is loaded onto trains at Duke Energy's Riverbend Steam Station in North Carolina.
Source: Duke Energy Corp.

Duke Energy Corp. will excavate nearly 80 million tons of coal ash in North Carolina under an agreement reached with state regulators and environmental groups.

Duke Energy on Jan. 2 announced it reached an agreement with the North Carolina Department of Environmental Quality and groups represented by the Southern Environmental Law Center on closing the company's remaining ash ponds in the state, primarily by excavation. The agreement was reached Dec. 31, 2019, according to a federal filing.

Under the agreement, seven basins will be excavated with the ash moved to lined landfills, Duke Energy said in a news release. The company will excavate impoundments at its G.G. Allen, Belews Creek, Mayo, Roxboro and James E. Rogers Energy Complex (Cliffside) power plants. At the Marshall and Roxboro plants, the uncapped ash will be excavated and moved to lined landfills while the covered ash "will not be disturbed."

"The agreement calls for expedited state permit approvals which would keep projects on a rapid timeline with excavation at the six sites completed in 10 to 15 years," Duke Energy said.

Duke Energy is already in the process of excavating coal ash from several basins in the state, bringing the total amount of ash to be excavated in North Carolina to about 124 million tons, according to the company.

The agreement also provides that "no later than 2 years and 6 months" after the retirement of the Roxboro coal units, the remaining coal ash on site will be capped in place.

The coal ash agreement follows an April 1, 2019, order by the North Carolina Department of Environmental Quality that called for full excavation of nine basins at six coal plants owned by Duke Energy Carolinas LLC and Duke Energy Progress LLC.

Duke Energy warned that excavating these "low-risk" basins "would take decades" and will add about $4 billion to $5 billion to the current $5.6 billion estimate for ash management in the Carolinas.

"A lot of work has been done to prioritize the sites, and we don't think excavating the low-priority sites provides any significant or meaningful environmental benefit beyond capping in place," Duke Energy Executive Vice President and CFO Steven Young told S&P Global Market Intelligence in a recent interview.

The company, however, has been largely unsuccessful in challenging the ruling.

The new plan is expected to reduce the total cost to close the remaining nine basins by about $1.5 billion, Duke Energy said. The company said the estimated cost to permanently close all ash basins in the Carolinas is now about $8 billion to $9 billion over the next 15 to 20 years, of which $2.4 billion has already been spent.

Duke Energy also agreed to install wells and take other measures to protect and improve groundwater at specific locations.

"The agreement completely resolves the pending disputes over ash basin closure plans being debated by the parties in various courts," Duke Energy said in the news release. "The parties will make the necessary court filings to dismiss each case."

The deadline for closure of the basins at Belews Creek is Dec. 31, 2034, with the basins at the Marshall coal plant set to be closed by Dec. 31, 2035. The Roxboro basins must be closed by Dec. 31, 2036, and Allen has a Dec. 31, 2037, deadline.