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Insurers: Duke Energy knew of coal ash risks but did nothing

Duke Energy’s headquarters tower in uptown Charlotte
Duke Energy’s headquarters tower in uptown Charlotte jsiner@charlotteobserver.com

Dozens of insurers say they aren’t obligated to cover Duke Energy’s coal ash cleanup costs, because the Charlotte-based utility long knew about the pollutant’s risks but failed to address the threat.

The argument comes in response to a civil lawsuit Duke filed in March against 30 insurers over payments Duke is seeking to cover costs for coal ash cleanup across North and South Carolina. Duke, which filed suit in state court in Mecklenburg County, has said the claims could total hundreds of millions of dollars.

But in court documents this month, the insurance companies said Duke knew coal ash was toxic and stored it anyway in ponds built without safeguards to prevent contaminants from getting into groundwater. Some of the ponds placed ash in direct contact with groundwater, the insurers said.

“Duke continued to dispose of (ash) in unlined ash ponds long after it knew it had environmental problems,” the insurers said. They said that if Duke had taken “appropriate measures” the utility could have avoided costs associated with closing the ponds, which gained widespread attention following a 2014 ash spill into the Dan River near Virginia.

“The costs Duke seeks are Duke’s cost of doing business and are not an insurable risk,” the insurers said.

The suit has been winding through North Carolina Business Court, which handles complex business cases. A proposed schedule included in court documents shows a trial could begin in August 2019.

In its suit, Duke claimed the insurance policies, issued from 1971 to 1986, cover the utility’s property damage costs connected to coal ash. Insurers named include AIG Property Casualty, Allstate and Berkshire Hathaway Direct Insurance. Duke says it sued after the insurers denied its requests to provide coverage under the 57 policies.

“We are not surprised by their efforts to mischaracterize our claims for costs that are fully within the coverage sold to the company,” Paige Sheehan said in a statement to the Observer.

“We intend to ensure that North Carolinians get the benefit of the insurance policies that we’ve purchased for just these kinds of costs,” she said.

Figures Duke released in February place cleanup costs in the Carolinas at nearly $5.2 billion over several years, a tally 50 percent higher than earlier estimates. Duke is expected to seek rate hikes this year to pass cleanup costs to its North Carolina customers.

Deon Roberts: 704-358-5248, @DeonERoberts

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