Duke Energy will seek rate hikes this year that will begin its efforts to pass $5 billion in coal ash cleanup costs to its 3.3 million North Carolina customers.
New figures Duke released Thursday place cleanup costs in the Carolinas at nearly $5.2 billion over several years, a figure 50 percent higher than earlier estimates.
What that means to customer bills is still unclear.
Duke argues that closing its ash basins are part of operating expenses that are typically paid by customers. The North Carolina Utilities Commission would have to agree in order to pass them to customers.
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South Carolina’s utilities commission allowed Duke to recover $750,000 in ash cleanup costs – the first it has passed to customers – in a rate hike approved in December.
A 2014 spill of ash into the Dan River triggered legislation that ordered Duke to close all 32 of its North Carolina ash basins. Ash contains heavy metals that, in high concentrations, can be toxic in water. The basins hold 111 million tons of ash.
How they are closed will be a key factor in cleanup costs. The 2014 legislation was modified last year and Duke already has work underway, allowing a clearer view of eventual costs.
Duke has submitted plans to state regulators to keep two-thirds of its North Carolina coal ash in the ground instead of requiring the much more expensive option of excavating it. The state is reviewing the plans and will take public comment until April 5.
The $770 million Duke has spent so far on the cleanups would be part of North Carolina rate hikes the company said it will seek in the second half of this year.
Duke would also seek to recover other expenses, including a $700 million power plant under construction in South Carolina and repairs of Hurricane Matthew’s damage last October.
Duke has asked North Carolina regulators to defer the ash costs until they can be included in its next rate case. The utilities commission is taking comments on the request but has not ruled.
“An order from regulatory authorities disallowing recovery of costs related to closure of ash impoundments could have an adverse impact on Duke Energy Carolinas' financial position, results of operations and cash flows,” Duke noted in a regulatory filing in November.
Duke hasn’t said how the hikes it will seek later this year would affect customer rates. Chairman and CEO Lynn Good said Thursday the mix of costs is too variable to parse what impact ash cleanup alone would have on rates.
Company documents Duke released with its year-end earnings report Thursday say “multiple” North Carolina rate hikes are likely by 2021. Those would cover the costs of a $1.1 billion power plant Duke is building in Asheville and $10 billion in grid upgrades planned over the next five years.
Duke estimates ash cleanup costs in the Carolinas to total $2.5 billion by 2021.
Rate cases in South Carolina could start in 2018, the company said.