On coal ash cleanup, a compromise is the best path forward

Duke Energy wants its customers to pay for the cleanup and disposal of millions of tons of toxic coal ash. The editorial board has long said that given Duke’s mishandling of coal ash, that cost should be paid by shareholders. More recently, N.C. Attorney General Josh Stein filed a formal appeal to the N.C. Supreme Court asking it to overturn a state regulators decision that allows Duke to pass hundreds of millions in costs to customers.

Now, the price tag for disposing of that coal ash has gone up. Way up. Should that change the calculation the N.C. Utilities Commission must make in deciding who foots the bill?

In an agreement with the state Department of Environmental Quality last month, Duke agreed to dig up nearly 80 million tons of coal ash at six sites in North Carolina. DEQ said the excavation would be the largest coal-ash clean up in U.S. history, and it comes with a significant sticker price: $8-9 billion.

Duke officials say, as they have all along, that it followed industry standards and was operating under strict state supervision with coal ash management. Duke also believes that it has acted “reasonably and prudently” based on historic norms, Alex Glenn, Duke’s senior vice president for state and federal for state and federal regulatory legal support, told the editorial board Thursday.

But as the attorney general detailed in his filing, Duke knew for years that its handling of coal ash presented a potential hazard, and the utility also violated state environmental laws. Instead of doing what officials agreed to this month, the utility has long chosen the less expensive, not most responsible, path on coal ash. The breaches and spills that followed have endangered waterways and, according to one report, resulted in the some of the worst ash-contaminated groundwater in the U.S. near Duke’s Allen plant on Lake Wylie.

Still, $8-9 billion is about three times Duke’s 2018 profit, according to a Charlotte Observer report. While it’s tempting to want the utility to face the burden and feel the sting of its mistakes, it’s more realistic to find a seam between what Duke should pay and what it reasonably can pay without compromising the service it provides to customers. It’s also true that Duke’s customers have historically benefited from below-average bills, in part thanks to cost-saving decisions on coal ash removal, and those same customers could pay more in the long run if Duke Energy’s credit rating is damaged from the burden of a multi-billion dollar bill.

Duke’s next rate hike requests, which include more than $1 billion in ash management costs the utility wants to recover, are before the Utilities Commission now, the Observer reports. The commission approved two rate hike requests in 2018, but Gov. Roy Cooper has appointed three new members since. Two members who dissented from the 2018 decisions, including former Charlotte mayor and state senator Dan Clodfelter, remain on the commission.

Back then, the commission rejected a proposal from its consumer-advocacy arm, called the Public Staff, that Duke’s customers and shareholders split the coal ash costs. The commissioner should give such an approach strong consideration this time around. As unrealistic as it might be to expect Duke shareholders to absorb billions of dollars of ash management, it’s equally unfair to fully pass that burden on to low-income customers who could see their bills rise by hundreds of dollars a year from coal ash repercussions.

Commissioners should find the fairest solution — even if it’s not the most just resolution — for this Duke rate hike request and the ones surely to come.

This story was originally published February 7, 2020 at 5:00 AM.