Massive coal ash spill to cost N.C. company $100 million
RALEIGH, N.C. — Duke Energy said Wednesday it expects to pay $100 million to settle an ongoing federal criminal investigation that began after a massive coal ash spill at a North Carolina plant.
The details are contained in an earnings report filed with the Securities and Exchange Commission. The U.S. attorney's office in Raleigh began the investigation after a February 2014 spill at Duke's Eden plant coated more than 70 miles of the Dan River in toxic sludge.
In a conference call discussing the earnings report, executives at the nation's largest electricity company said the proposed settlement could be filed in court within days. Any settlement would still need to be approved by a federal judge.
“We believe we are close to an agreement,” Duke CEO Lynn Good said.
The company reported profits of $1.88 billion for 2014, or $2.66 per share. Revenue was reported at about $23.9 billion.
U.S. Attorney Thomas Walker declined to comment Wednesday. But the extent of records sought by subpoenas in the case suggests that prosecutors are not only looking at the spill, but also at the relationship between Duke and state regulators going back for many years.
After the Dan River spill, Duke signed agreements with the Environmental Protection Agency and the N.C. Department of Environment and Natural Resources to pay any costs associated with the emergency response and the costs of the agencies overseeing cleanup and environmental monitoring efforts.
In a statement, North Carolina's environmental agency said it was not involved in the settlement negotiations between Duke and the U.S. Justice Department. The federal agreement would not resolve the ongoing civil cases between Duke and the state over multiple violations involving both the Dan River spill and the ongoing groundwater contamination from ash dumps at 13 other sites.
In 2013, state regulators had proposed an agreement that would have allowed the Fortune 500 company to pay $99,000 to settle environmental violations for groundwater contamination leeching from unlined coal ash dumps at two power plants. The agreement, which environmentalists had derided as a sweetheart deal, was scuttled after the spill.
A new state law passed in August requires Duke to either clean up or permanently cap all of its coal ash dumps in North Carolina by 2029. The waste from coal burned to generate electricity - the ash - contains toxic arsenic, selenium, chromium and mercury.
Frank Holleman, senior attorney with the Southern Environmental Law Center, said his group didn't know any details of the deal, but would be looking at it closely.
“This is a situation where the company can't pay its way out of the problem,” Holleman said. “This payment may resolve a grand jury investigation but it doesn't clean up the coal ash.”
At 39,000 tons of ash estimated to have leaked, the Dan River disaster ranks as the third worse spill of its kind in the nation's history.
In 2009, an earthen dam at a Tennessee Valley Authority ash dump in Kingston, Tenn., collapsed in 2008, sending an estimated 5.4 million cubic yards of coal ash over 300 acres, destroying 40 homes and devastating the Emory River.
The cleanup cost nearly $1.2 billion so far, and Tennessee regulators also fined the TVA $11.5 million for violating the state's water quality and waste disposal laws.
In the second worst spill, 850,000 cubic yards of ash spilled across 10 acres and into the Delaware River from a PPL power plant in Pennsylvania in 2005. The company spent $37 million for cleanup and was fined $1.5 million by the state.
In its earnings statement, Duke reported an 86 percent drop in its fourth-quarter net income, mainly due to a drought in Brazil that hurt its international energy business. The Charlotte-based company said it completed a strategic review of its international energy business and decided to continue to own and operate it.
With the cost of the anticipated settlement, Duke reported net income of $97 million, or 14 cents per share, in the three months ending Dec. 31. That is compared with $688 million, or 97 cents per share, in the same quarter a year ago.
Shares of Duke Energy Corp. rose 2 cents to $79.41 in morning trading Wednesday.
