John Locke Foundation Questions Duke Rate Hikes for Coal Ash Cleanup

Jon Sanders, Director of Regulatory Studies

John Locke Foundation

John Locke Foundation Questions Duke Rate Hikes for Coal Ash Cleanup

Jon Sanders, Director of Regulatory Studies at the John Locke Foundation posted an article earlier this month questioning Governor Roy Cooper's position on protecting consumers from coal ash cleanup costs. In 2014, then Attorney General Roy Cooper urged legislators to prohibit Duke Energy from passing cleanup costs to retail electricity customers. In a letter to Senator Tom Apodaca on June 18, 2014, the Attorney General expressed concern that a proposed Senate Bill 729, which eventually became law as the Coal Ash Management Act of 2014, would allow Duke Energy to unfairly charge customers for the cost of cleanup . He encouraged the legislature to prohibit the Utilities Commission from authorizing utility rate increases related to these costs. He further expressed a view that granting rate increases to recover coal ash cleanup costs would not be reasonable. The term "reasonable" refers to a condition for rate increases that is required by state law.

The John Locke article goes on to observe that no such consumer protection exists in the December 31, 2019 settlement agreement between the North Carolina Department of Environmental Quality (DEQ), Duke Energy, and groups represented by the Southern Environmental Law Center (SELU).  The settlement agreement requires more extensive and costly excavation of coal ash basins and stipulates that "nothing in the Agreement shall be taken as an endorsement or opposition by DEQ or the Community Groups of recovery through rates of the costs incurred by Duke Energy implementing the terms of this Agreement or related Consent Order."

The cost of cleanup is estimated to be approximately $8 to $9 billion over the next 15 to 20 years. In his article, Jon Sanders wonders when did Governor Cooper change his mind about who should bear the burden of cleanup costs and why. He asks, how can the cost of cleanup be unreasonable and unfair to recover from ratepayers in 2014, but not so in 2020 after the Cooper Administration adds on extra cleanup costs?



John Locke Update • Research Brief 
Jon Sanders | Rate Hikes Loom For Duke Customers, Thanks to Coal Ash Clean-Up Agreement | January 9, 2020

Final Settlement Agreement
Agreement Signed and Effective December 31, 2019

Roy Cooper Letter to Senator Apodaca
June 18, 2014 | From Attorney General Roy Cooper to Hon. Tom Apodaca

Coal Ash Management Act of 2014
Referenced in Article as Senate Bill 729