By Taft Wireback
Duke Energy shouldn’t reach any deeper into your pocket to cover the cost of solving its coal ash problems across North Carolina, according to an Ohio-based nonprofit.
The Institute for Energy Economics and Financial Analysis crunched numbers from various public and industry documents for a Tuesday report that found Duke can afford to spend up to $10 billion on the problem without raising rates for its customers.
The utility can cover cleanup costs at all 14 ash-pond sites statewide simply by managing its money more wisely, revising some priorities, delaying some construction projects and using other techniques to take advantage of its strong financial position, the group said.
“They are in a position to borrow $2 billion , maybe even more than $2 billion,” said Tom Sanzillo, author of the report and director of finance for the Cleveland-based institute.
Duke fired back Tuesday evening, saying the report is simplistic and its recommendations could endanger reliable electric service.
“The group greatly oversimplifies the requirements and complexities of operating a regulated utility,” the company said in a statement. “The group ignores the company’s legal responsibility to maintain a highly reliable electric system.”
In addition, the institute’s report “fails to accurately consider the negative, long-term financial implications on electric customers of its proposed recommendations,” the utility said.
In his report, Sanzillo said the utility also could spare ratepayers by delaying parts of its “aggressive,” $20 billion plan for other construction projects during the next several years, by handling its cash flow more efficiently, and by selling off such underperforming or odd properties, such as the company’s methane plant in Saudi Arabia.
Another possibility includes asking shareholders to accept something less than the $6.8 billion in dividends the company expects to issue in the next three years, said Sanzillo, former deputy comptroller for the state of New York.
“The company is capable of absorbing the costs of the ash fill cleanup,” Sanzillo’s report asserted. “Given recent rate increases, Duke Carolina and its parent company, Duke Energy, do not require additional rate relief to offset cleanup costs.”
The report noted that Duke is the nation’s largest investor-owned utility “by market capitalization,” with reported assets of $114 billion as of last year.
Coal ash issues rose to the top of Duke’s to-do list in February after a huge spill at the retired Dan River Steam Station on the outskirts of Eden. Duke announced it would not ask its customers to pay anything toward cleaning up the spill.
But in a recent filing with the Federal Energy Regulatory Commission that discussed the rest of its ash burden, the utility said, “Cost recovery for these expenditures will be pursued through the normal rate-making process with state utility commissions, which permits the recovery of necessary and prudently incurred costs. …”
Duke said in the May 28 federal report that it would cost $2 billion to $2.5 billion to “close in place” ponds at 10 coal-fired plants, excavate pond contents at Dan River and two other plants with the most immediate ash problems, and take other measures at the 14th problem plant, in Asheville.
The ash emerges as waste from plants that make electricity using coal as their primary fuel. A common way to dispose of some coal ash by submerging it in ponds became particularly controversial after the massive spill five years ago in Kingston, Tennessee.
Many environmentalists want Duke to dig up the content of all its 33 storage ponds at the company’s 14 current and former coal-fired plants, then dispose of it in lined landfills. They see that as the best way to keep ash contaminants from leaking into the ground water and nearby streams and lakes.
Duke estimated in its recent federal report that this requirement, if imposed, would tack on another $4 billion to $5.5 billion in costs. The utility would prefer, where possible, to leave the coal ash where it is, but put protective covers over top to keep water from seeping in and draining out as contaminated leakage.
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