Duke Energy Rate Increase Focused on Coal Ash Cleanup Cost
The country’s largest electric company heads into a fight for a rate hike with regulators in its top market now focused on setting a precedent on whether consumers should pay the full cost of cleaning up coal ash pits loaded with toxic metals.
The North Carolina Utilities Commission opens hearings today into whether Duke Energy Corp. will be allowed to charge consumers nearly $200 million a year for the cleanup.
The company and the state’s official utilities consumer advocate reached a tentative deal last week that would cut the requested rate increase of almost 15 percent. The deal involved Duke Energy slightly reducing its requested potential profit margin from 10.75 percent to 9.9 percent, speeding up consumer repayment of some deferred taxes and other moves.
“We are pleased that we were able to work together to find common ground in this request, and believe this is an important and positive step in this proceeding,” spokesman Jeff Brooks said in an email.
Still at issue is whether the Charlotte-based company will be allowed to charge consumers the full, multibillion-dollar cost of cleaning up its coal ash pits. The company plans to excavate coal ash and move it away from waterways at eight of the 14 North Carolina sites. Ash would be dried out, covered and left in place at the other waste pits.
Coal ash contains arsenic, lead, mercury and other elements that may be hazardous in sufficient concentrations. Environmentalists and state regulators say those heavy metals have been draining through the unlined bottoms of pits where liquefied coal ash has been stored for decades.
Duke Energy argues both its North Carolina subsidiaries should be allowed to pass along the full bill for coal ash cleanup to consumers as part of the routine cost tied to burning coal to deliver low-cost electricity.
But the request has prompted an outpouring of consumer opposition.
“The production process includes disposal of waste produced in the generation of power. Every other business has to calculate waste disposal in their production and it is beyond a certainty that Duke did as well. They have smart people in management and legal staff and that most assuredly did not escape their oversight,” said an email from Robin Torrence of Harrisburg, a Charlotte suburb.
“The consumer should NOT have to pay a second time for their deliberate chicanery and duplicitous actions.”
The clean-up charges to be set during this round of regulatory hearings affect about 1.3 million customers of Duke Energy’s eastern North Carolina subsidiary, called Duke Energy Progress. Starting early next year, the company’s western North Carolina subsidiary, Duke Energy Carolinas, wants a separate 17 percent increase on households that also includes coal ash costs.
In its last rate hike request in 2012, Duke Energy Progress sought an average 14 percent increase for households and 9 percent for commercial and industrial customers. The utilities commission approved and the state Supreme Court allowed an average 5 percent increase.