You may recall that in February 2014, coal ash from a Duke Energy power plant spilled into Rockingham County’s Dan River. Following that unfortunate incident, North Carolina enacted the nation’s first state law to regulate the disposal of the substance. Coal ash, a by-product of the process used to generate electricity at coal-fired power plants, has historically been disposed of in lined basins, but North Carolina’s Coal Ash Management Act of 2014 introduced more stringent disposal and storage requirements. These requirements apply to Duke Energy, which has 33 coal ash basins in the state.
Starting in 2018, the expenses associated with complying with these new requirements will be passed on to all Duke Energy, individual and wholesale, consumers. Ratepayers across the nation will also incur these additional costs as new federal coal ash management regulations are implemented.
Although Union Power does not own any coal-fired power plants, we have been engaged in the coal ash management discussion from the start because a portion of the electricity we supply to you comes from wholesale power agreements that our power provider, North Carolina Electric Membership Corporation (NCEMC), has with Duke Energy. Costs incurred by Duke Energy to comply with these new regulations will be integrated into the wholesale rates we pay for power. As an at-cost provider of electricity, that means they will ultimately make up a part of the costs you, our members, pay for electricity.
Our focus and success in these discussions have been to balance environmental goals while minimizing impacts on rates. We have been working very hard to minimize the impact of these costs to you both in conversations with legislators and executives at Duke Energy. As a result, state lawmakers amended coal ash legislation in 2016 to adopt a science-based approach that preserves environmental goals while cutting millions of dollars from initial projections of consumer costs.
So, what do these costs cover? Expenses related to bringing existing coal ash basins into compliance with new standards by either capping in place or excavating the basins. In both scenarios, water will be removed from the basins in a way that protects water quality of nearby lakes or rivers, and closure plans are customized for each basin to ensure effectiveness. The costs stemming from cleaning up the Dan River spill, however, have not and will not be passed on. Duke Energy shareholders are responsible for cleanup fees, and our responsibilities are only linked to complying with new regulations.
We are committed to doing what we can to mitigate rising costs because we know these costs ultimately have an impact on your budget. Union Power will continue to implement new innovative technologies and programs that bring efficiencies to your electric system, ensuring we deliver on our promise to provide safe, reliable electric power and energy services with exceptional value.