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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Earlier this year, Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina) told investors it planned to invest $37 billion in electric and gas capital projects over the next five years. That number might go higher, driven by coal-ash cleanup costs.
Fully one-third of the $37 billion in planned outlays are slated to go to Duke's regulated electric-distribution utilities, mainly in North Carolina, South Carolina and Florida. Duke's regulated electric-generation business is scheduled to receive about $7.5 billion over the 2019-2023 period--roughly 20% of overall capital spending. But capital expenditures (capex) spending on environmental measures pencils out to only about $3.33 billion, roughly 9% of capital spending, the company said January 8, in its full-year 2018 financial results.
Click on the image at right to view a breakdown of Duke's five-year capex plan.
On April 1, nearly three months after Duke unveiled its five-year capital spending plan, the North Carolina Department of Environmental Quality (DEQ) (Raleigh, North Carolina) ordered the company to excavate coal ash from at nine facilities at six sites in North Carolina in 2019. The sites include the Allen, Belews Creek, Cliffside/Rogers, Marshall, Mayo and Roxboro. In each case, the DEQ said it "determined that excavation of coal ash is more environmentally protective than leaving the material in the impoundment."
After what it called a "rigorous scientific review" of Duke's coal-ash plans for the six facilities, and public hearings in affected communities, the DEQ said excavation of all six sites "is the only closure option that meets the requirements of Coal Ash Management Act to best protect public health. The coal ash must be disposed of in a lined landfill."
"Excavation is the only way to protect public health and the environment," DEQ Secretary Michael S. Regan said in a statement issued April 1. The agency's action "sends another clear message that protecting public health and natural resources is a top priority of the [Governor Roy] Cooper Administration."
The DEQ ordered Duke to file its final excavation closure plans with the DEQ by August 1, 2019. In those plans, Duke must propose where excavated coal ash will reside and estimate how long that process will take. By law, the DEQ must reject any plan that does not protect public health and the environment, the agency's statement continued.
The cost of excavating all six facilities could be as high as $4 billion to $5 billion, Duke said, based on current estimates and closure timeframes. That amount would be added to the current estimate of $5.6 billion in coal-ash costs for the Carolinas. Any outlays made pursuant to the DEQ order would be in addition to the company's planned $37 billion of capex over the 2019-2023 period, a spokeswoman told Industrial Info.
On April 1, in response to the DEQ decision, Duke issued a statement that read, in part, "We are making strong progress to permanently close every ash basin in North Carolina in ways that fully protect people and the environment, while keeping costs down as much as possible for our customers."
"With respect to the final six sites--which NCDEQ has ruled are low-risk--science and engineering support a variety of closure methods, including capping in place and hybrid cap-in-place as appropriate solutions that all protect public health and the environment," the statement continued. "These closure options are also consistent with how hundreds of other basins around the country are expected to be closed."
Coal ash excavation can be a costly and lengthy process, in some cases lasting decades, the utility commented.
"We will carefully review today's announcement and will continue to support solutions that protect our customers and the environment," said Duke's statement.
On April 11, Duke said it would appeal the DEQ's decision to the North Carolina Office of Administrative Hearings, the first stop in contesting a decision by a state administrative agency.
Five years ago, a breach at a coal-ash pond at the Dan River Steam Station near Eden, North Carolina, put an estimated 39,000 tons of coal ash and about 27 million gallons of contaminated water into the Dan River. That event led to the passage of North Carolina's Coal Management Act, which, among other things, ordered Duke to safely close all of its storage ponds within the next 10 years and directed the DEQ to evaluate Duke's ash-pond closure plans. Other coal-burning utilities, including the Tennessee Valley Authority (TVA) (Knoxville, Tennessee), also have experienced breaches of coal-ash ponds.
Duke Energy already won regulatory approval to close eight of its 14 sites using the excavation and landfill approach to disposal. But it was unable to persuade the DEQ that "cap in place" technology could work just as effectively at the other six facilities.
The issue became even more politically charged a few days after the DEQ decision when Democrats in the North Carolina legislature filed a bill, H.B. 567, that would prohibit Duke from recovering the costs of the DEQ-mandated remediation work from its customers. But the Republican-controlled House said the bill will never pass.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Fully one-third of the $37 billion in planned outlays are slated to go to Duke's regulated electric-distribution utilities, mainly in North Carolina, South Carolina and Florida. Duke's regulated electric-generation business is scheduled to receive about $7.5 billion over the 2019-2023 period--roughly 20% of overall capital spending. But capital expenditures (capex) spending on environmental measures pencils out to only about $3.33 billion, roughly 9% of capital spending, the company said January 8, in its full-year 2018 financial results.
Click on the image at right to view a breakdown of Duke's five-year capex plan.On April 1, nearly three months after Duke unveiled its five-year capital spending plan, the North Carolina Department of Environmental Quality (DEQ) (Raleigh, North Carolina) ordered the company to excavate coal ash from at nine facilities at six sites in North Carolina in 2019. The sites include the Allen, Belews Creek, Cliffside/Rogers, Marshall, Mayo and Roxboro. In each case, the DEQ said it "determined that excavation of coal ash is more environmentally protective than leaving the material in the impoundment."
After what it called a "rigorous scientific review" of Duke's coal-ash plans for the six facilities, and public hearings in affected communities, the DEQ said excavation of all six sites "is the only closure option that meets the requirements of Coal Ash Management Act to best protect public health. The coal ash must be disposed of in a lined landfill."
"Excavation is the only way to protect public health and the environment," DEQ Secretary Michael S. Regan said in a statement issued April 1. The agency's action "sends another clear message that protecting public health and natural resources is a top priority of the [Governor Roy] Cooper Administration."
The DEQ ordered Duke to file its final excavation closure plans with the DEQ by August 1, 2019. In those plans, Duke must propose where excavated coal ash will reside and estimate how long that process will take. By law, the DEQ must reject any plan that does not protect public health and the environment, the agency's statement continued.
The cost of excavating all six facilities could be as high as $4 billion to $5 billion, Duke said, based on current estimates and closure timeframes. That amount would be added to the current estimate of $5.6 billion in coal-ash costs for the Carolinas. Any outlays made pursuant to the DEQ order would be in addition to the company's planned $37 billion of capex over the 2019-2023 period, a spokeswoman told Industrial Info.
On April 1, in response to the DEQ decision, Duke issued a statement that read, in part, "We are making strong progress to permanently close every ash basin in North Carolina in ways that fully protect people and the environment, while keeping costs down as much as possible for our customers."
"With respect to the final six sites--which NCDEQ has ruled are low-risk--science and engineering support a variety of closure methods, including capping in place and hybrid cap-in-place as appropriate solutions that all protect public health and the environment," the statement continued. "These closure options are also consistent with how hundreds of other basins around the country are expected to be closed."
Coal ash excavation can be a costly and lengthy process, in some cases lasting decades, the utility commented.
"We will carefully review today's announcement and will continue to support solutions that protect our customers and the environment," said Duke's statement.
On April 11, Duke said it would appeal the DEQ's decision to the North Carolina Office of Administrative Hearings, the first stop in contesting a decision by a state administrative agency.
Five years ago, a breach at a coal-ash pond at the Dan River Steam Station near Eden, North Carolina, put an estimated 39,000 tons of coal ash and about 27 million gallons of contaminated water into the Dan River. That event led to the passage of North Carolina's Coal Management Act, which, among other things, ordered Duke to safely close all of its storage ponds within the next 10 years and directed the DEQ to evaluate Duke's ash-pond closure plans. Other coal-burning utilities, including the Tennessee Valley Authority (TVA) (Knoxville, Tennessee), also have experienced breaches of coal-ash ponds.
Duke Energy already won regulatory approval to close eight of its 14 sites using the excavation and landfill approach to disposal. But it was unable to persuade the DEQ that "cap in place" technology could work just as effectively at the other six facilities.
The issue became even more politically charged a few days after the DEQ decision when Democrats in the North Carolina legislature filed a bill, H.B. 567, that would prohibit Duke from recovering the costs of the DEQ-mandated remediation work from its customers. But the Republican-controlled House said the bill will never pass.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
