More Questions from JLF about Coal Ash Settlement

More Questions from JLF about Coal Ash Settlement

Jon Sanders, Director of Regulatory Studies at the John Locke Foundation (JLF) continues to keep a spotlight on questions about the cost of coal ash cleanup in North Carolina, settlement language that would allow that cost to be passed on to consumers, and the lack of consumer voice in the process.

Earlier in the year, JLF questioned Governor Roy Cooper's position on protecting consumers from coal ash cleanup costs (see: "Rate Hikes Loom for Duke Customers Thanks to Coal Ash Cleanup Agreement" by Jon Sanders, January 9, 2020 ). As Attorney General in 2014, Roy Cooper opposed passing the cost of coal ash cleanup to retail electricity consumers. Five years later, as Governor, Roy Cooper's Department of Environmental Quality (DEQ) signed a settlement agreement on December 31, 2019 that would increase the cost of coal ash cleanup and not oppose passing the cost to consumers.

In this latest post, the JLF questions why DEQ, Duke Energy, and community groups agreed to a settlement that results in more costly excavation than Duke Energy thought necessary, but not full excavation, which DEQ and community groups determined to be the only way to protect public health and the environment. Duke Energy's closure plans submitted in November 2018 assessed options for closure in place compared to full removal based on multiple criteria including (but not limited to) surface water, groundwater, air emissions, greenfield disturbance, construction duration. The options analysis concluded that all available options (i.e. closure in place, closure by removal, hybrid closure in place/removal) had similar rankings for environmental protection and impacts.  On April 1, 2019, DEQ ordered the full excavation and removal of coal ash to a lined landfill and said that excavation is "the only closure option that meets the requirements of Coal Ash Management Act to best protect public health," and "the science points us clearly to excavation as the only way to protect public health and the environment." The settlement does not yield to Duke Energy's position that closure in place and full removal provide the same benefits for public health.

Why did DEQ and community groups agree to a settlement that does not meet the requirements of the Coal Ash Management Act or fully protect public health and the environment according to DEQ's earlier position? Why did Duke Energy agree to a settlement that would cost much more when their analysis showed no appreciable increase in protections for public health and the environment?

Duke Energy could see benefit from passing the cost to consumers.  Under the agreement, DEQ and community groups will not oppose cost recovery through rates and will not challenge or object in court or before an administrative body to the reasonableness, prudence, public interest, or legal requirement for Duke Energy to comply with the agreement. A January 7, 2020 WRAL editorial cartoon has depicted Duke Energy extracting coal ash and picking rate payer pockets at the same time leaving the impression that this was a favorable option. But that image is inconsistent with the idea that Duke Energy appealed the coal ash excavation order "to protect customers from excessive cost and disruption".

Jon Anderson concludes, "That leaves trying to figure out why DEQ and the community groups agreed to the settlement. They agreed to less protection of public health than what they had declared necessary."




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

John Locke Update • Research Brief
Jon Sanders | Coal ash settlement: Why did they all agree to it? | January 27, 2020

Duke Energy News Release re: Appeal of Excavation Order
CHARLOTTE, NC | Aril 26, 2019 | Duke Energy appeals North Carolina coal ash excavation order to protect customers from excessive cost and disruption

Final Settlement Agreement
Agreement Signed and Effective December 31, 2019