Who pays for Duke Energy's coal ash cleanup? NC Supreme Court weighs in - sort of

High court sends key issue back before state regulators, leaving some on both sides of a long-running dispute to claim victory.

Posted Updated

Travis Fain
, WRAL statehouse reporter
RALEIGH, N.C. — North Carolina regulators will take a fresh look at Duke Energy electricity rates after a state Supreme Court decision Friday that could shift coal ash cleanup costs from customers to company shareholders.
Even so, Duke said it was pleased with the decision. So did Attorney General Josh Stein, despite being on the other side of the case.

Environmental groups, which partnered with Stein on the issue, said they were disappointed and that the ruling's finer points may mean higher costs for customers.

"We think this likely leads to a place where customers are going to be paying millions of dollars, potentially billions of dollars, for Duke's coal ash cleanup," said Dave Rogers, southeast deputy regional director for the Sierra Club's Beyond Coal campaign.

The court also signed off on a 2018 increase in Duke Energy Carolina's base electricity rates – what residential customers pay before they use any electricity. That will stay at $14 month, a blow for advocacy groups who fought the rate on behalf of low-income customers.

Just what the complex, lengthy ruling means for customer bills beyond this remains to be seen – likely for months to come. The North Carolina Utilities Commission sets rates, but it's a lengthy process, and the commission has already moved on to newer Duke rate requests, with decisions pending now.
The commission has also changed significantly since the original decision, with three new members on a seven-person board.

In a statement, Stein called the Supreme Court's decision "a major win for electricity consumers on coal ash cleanup costs."

"The court reversed a Utilities Commission order that required North Carolinians to pay nearly all of the cost of cleaning up Duke Energy’s coal ash pollution," Stein said. "The court sent the case back to the commission to consider a proposal to require Duke and its shareholders to bear more of those costs."

But reconsideration doesn't guarantee an outcome, and the court decision says Duke can recover those costs. The company said in its own statement that the ruling represents "a positive step forward by affirming that our coal ash management practices are a prudent part of supplying customers with reliable electricity."

"We are pleased that the court affirmed the North Carolina Utilities Commission’s decision that it is appropriate to recover these costs," the company said.

The high court also said in its ruling that the company could earn a profit on the money it spends cleaning up coal ash ponds. Those cleanup costs are expected to run into the billions as Duke excavates ash ponds near coal-fired plants as required by lawsuits and by state and federal laws that changed following the company's 2014 ash spill into the Dan River.
Stein and other environmental advocates had argued that Duke shareholders, not customers, should bear those costs. The company said it was reasonable to pass them along as part of regular electricity charges, and the Utilities Commission largely agreed, saying in 2018 that the company could charge customers for cleanup costs already incurred, but it couldn't charge them up front for future costs.

The commission also charged the company a $100 million mismanagement fee as it approved passing nearly $780 million in pass-along charges for customers.

Stein's office was one of several entities that appealed the Utilities Commission's decision to the Supreme Court, and the attorney general said Friday that he looks forward to "continuing to fight at the commission to keep you from having to bear an unfair share of Duke’s coal ash costs.”

Justice Samuel Ervin IV wrote the 123-page decision for the majority. Justices Paul Newby and Anita Earls agreed with the majority in part and dissented in part, and each filed their own explanation in the case.

Newby is likely the court's next chief justice, having won a close race against Chief Justice Cheri Beasley, assuming his victory holds up in an ongoing recount. He said in his dissent that he would have left the Utility Commission's decision to pass along coal ash costs in place, saying the commission "considered all the evidence and chose not to assess further penalties, other than the $100,000,000 that it had already imposed."


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