Originally in The Charlotte Observer

April 26, 2019

North Carolina Attorney General Josh Stein on Friday filed formal appeals to the N.C. Supreme Court seeking to overturn a state regulator’s decision allowing Duke Energy to bill customers in Charlotte and elsewhere for its coal ash cleanup costs.

Last year, the North Carolina Utilities Commission authorized the Charlotte-based company to charge state customers to recover hundreds of millions of dollars Duke has spent on closing ash-storage sites around the state.

In his appeal, Stein, a Democrat, argued that Duke continued to store the ash in unlined pits across the state even after learning the practice would pollute groundwater. Some of those sites are in the Charlotte area, such as the Allen Steam Station on Lake Wylie and the Marshall Steam Station on Lake Norman.

“Those actions by Duke have caused massive pollution — pollution that is still being cleaned up today,” Friday’s filing said. “These appeals ask whether consumers should be compelled to pay to clean up Duke’s mismanagement of its coal ash.”

In a statement, Duke spokesman Jeff Brooks said the commission’s decision was the result of a transparent and thorough process that included input from the public and other interested groups.

“We believe the commission’s decision was fair and gives customers the full benefits of cleaner and more reliable power, while keeping rates as low as possible,” Brooks said.

In its decisions, the commission ruled that a Duke subsidiary whose territory roughly covers the eastern side of the state could recoup about $232.3 million in costs from customers. In a separate action, the commission permitted a different subsidiary to recover about $546 million in costs from customers in the Charlotte region and other parts of the state.

Patrick Buffkin, staff attorney for the commission, said the regulator usually doesn’t comment on pending appeals.

COAL ASH PENALTIES

Duke has incurred the costs since lawmakers ordered it to shutter the sites following a 2014 ash spill into the Dan River. The ash is a byproduct of burning coal to produce electricity.

In its ruling affecting Charlotte, the commission hit Duke with a $70 million penalty, saying it mismanaged coal ash. That reduced the amount Duke has been permitted to recoup from customers to $476 million.

The penalty was warranted because Duke’s handling of ash “placed its consumers at risk of inadequate or unreasonably expensive service,” the commission said at the time.

The commission also issued a similar $30 million penalty in its ruling affecting the other Duke subsidiary.

Both penalties were to be paid by Duke, not customers, the commission said.

The decision by the commission to allow Duke to recover cleanup costs came after the utility sought an increase in customers bills across the state. In addition to coal ash costs, Duke had argued that the higher bills were needed to recoup expenses it incurred to generate cleaner electricity.

STEIN: DECISION UNFAIR

Stein, in his appeals, said the commission was also wrong to order Duke’s consumers to pay the company a return on the cleanup costs. That move allows Duke to profit from cleaning up the pollution that it caused, Friday’s filing said.

Those returns also render the penalties issued by the commission “illusory,” the filing said.

“Those penalties simply reduced a return that Duke never should have received in the first place,” the filing said.

In a statement, Stein called the commission’s decision unfair and unacceptable.

“Duke Energy knew for many years that the way it handled coal ash was risky and could pollute groundwater, but it failed to act prudently when it should have,” Stein said.

According to Stein’s office, Duke has 120 days to file its response to the appeals.

Brooks, the Duke spokesman, said the commission determined that ash cleanup is part of the normal operations of an energy company, “and those costs are appropriate to include in customer bills.” Duke has to clean up the sites to comply with North Carolina and federal rule, he said.

“Managing waste and safely closing ash basins is also part of the work of supplying customers with reliable electricity to meet their energy needs.”