Tarheel Coal Ash Data Could Inform Virginia Debate

Coal ash at the Chesterfield Power Station. Photo credit: Richmond Times-Dispatch

Last week I argued that Virginians need more information about the disposal costs and health risks associated with coal ash ponds before the General Assembly rushes ahead with a law requiring Virginia’s electric utilities to recycle and/or landfill their coal ash. Some of that data could come from the experience of Duke Energy in North Carolina as well as utilities in South Carolina, which are farther along in the process than Dominion Energy Virginia.

Travis Fain, a former Daily Press reporter who has moved on to WRAL.com, reported yesterday how Duke Energy has blasted its opponents in a regulatory filing, asserting that they leaned on “simplistic crutches,” false analysis, and a Pollyanna hindsight to argue against the company’s bid to raise electricity rates sufficient to cover its coal as clean-up costs. Duke Energy’s foes have some not-so-nice things to say about the utility, too. The bottom line for Virginia is that political and regulatory facets of the coal-ash controversy are further along in North Carolina than they are in the Old Dominion. Many of the same issues are likely to surface here, and economic data from the Tarheel State could illuminate our debate.

Writes Fain:

The company complied with existing laws and industry standards when it left wet ash in unlined pits for decades, they said. At one point “the lack of a liner was considered a feature, rather than a flaw” because soil would filter out contaminants, the company said. Impact on groundwater wasn’t initially a concern “because the ash basins were built more than a decade before the adoption of any federal or state regulation related to groundwater corrective action,” attorneys argued.

That same commission will decide now whether Duke Energy Progress shareholders or its customers will cover the majority of costs for a cleanup that has since been ordered by changes in state and federal law. Between Duke Energy Progress and its sister company, Duke Energy Carolinas, parent Duke Energy has asked for more than $1 billion a year in increases. …

“They fault the Company for not doing something that no one was doing, but at the same time washing their hands of any responsibility of paying for that which they – in 20/20 hindsight – wish the Company had done,” the utility’s brief states. …

The Attorney General’s Office referenced to a number safety reports, including an inspector who found “open cracks” and other problems in safety features at the H.F. Lee Plant in Goldsboro in 1999. That inspector returned in 2004 to note that “those same problems had not been repaired and still existed,” the Attorney General’s Office said.

If Duke had been proactive, cleanup costs “would have been far less than the costs are now and will be in the future,” the Attorney General’s Office said. …

The Public Staff also proposed that Duke Energy Progress split coal ash cleanup costs 50-50 with customers, something the company rejected.

Coal ash cleanup costs alone would add nearly $183 million a year to customer bills under Duke Energy Progress’ proposal.

Dominion has said it would cost roughly $4.5 billion to landfill all the coal ash at its Bremo, Possum Point, and Chesterfield plants. Dominion foes have charged that its estimates are inflated because the utility could reduce its costs by recycling coal ash into cement, bricks and pavers. Basically, we have a he-said, she-said situation. Although both Dominion and the Southern Environmental Law Center have hired consulting engineers, no non-aligned third party has weighed in with a judgment.

One obvious step, it seems to me, would be to compare Dominion’s situation to Duke Energy’s. Duke Energy says the cleanup will cost $183 million a year. It’s not clear how many years we’re talking about — likely 15 at least, maybe longer. If so, that implies a total cost of  between $3 billion to $4 billion. As I recall, Duke Energy has to remove more tonnage than Dominion, so its removal costs per ton are likely lower than Dominion’s estimates.

However, it is dangerous to make simplistic comparisons. Costs vary widely power station by power station, depending upon a number of factors, and direct comparisons may or may not be appropriate. Furthermore, the properties of coal ash vary, and Duke Energy’s material could be more, or less, suitable for recycling. Finally, Duke Energy has first-mover advantage in recycling its coal ash. Its coal ash will flood the Mid-Atlantic market, arguably depressing prices and making the recycling option less attractive to Dominion.

The article hardly answers all the questions one might have, but it seems clear that we are talking about disposal costs in the billions of dollars. Whether recycling/landfilling is an economical option in Virginia remains to be seen. Hopefully, the General Assembly won’t pass law in the absence of authoritative information.

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5 responses to “Tarheel Coal Ash Data Could Inform Virginia Debate

  1. 183 million sounds like a LOT but if you do the math – it amounts to about $4 a month on the average bill…

    Everyone should pay their fair share of that cost since we all used electricity that generated the ash.

    Blaming the utility for “creating” the ash – as if they should have done something else like “Clean Coal” is dumb. They were using the best available technology at least after the EPA got after them.

    But what I’d like to hear is how much the “move the ash to lined pits” option will cost ratepayers per month. My bet is that it’s $5 or less. It’s not chump change.. it’s a significant amount but it’s more than manageable for most folks – who – truth be known – more than likely spent more for cable TV and their smart phones than electricity…

    In terms of actual dollars, this is a tempest in a teapot.. that for some reason Dominion wants to make a big deal about.

    Get on with the cleanup.. put a line item in people’s electric bills for “coal ash cleanup” and my bet is that many, many people will react positively than negatively.

  2. Yet another example of the danger we face in Virginia because Dominion has – successfully – undermined the authority, independence and credibility of the State Corporation Commission. It looks like many of the key decisions are going to be made in North Carolina by the independent commission, including the crucial decision on cost allocation. Here in Virginia the General Assembly wants to put its collective neck on the line – which I hereby predict they will deeply regret very quickly.

    Larry is right that $183 million per year with the cost split somehow between the ratepayers, the shareholders and the general public – since we all benefit from a clean up – would not break anybody’s bank. My point is I want that decision made in an open courtroom, not behind the closed door of some legislator’s office. But keep watching this space….

    • This post didn’t get the attention it deserves, coming as one of a crowded field after a holiday weekend. But I want to express strong agreement with, “Here in Virginia the General Assembly wants to put its collective neck on the line – which I hereby predict they will deeply regret very quickly.” One of the reasons to have the SCC is to protect the GA from culpability, to create the opportunity for plausible deniability when things go wrong in the opinion of one or another interest group; it is counterproductive for the legislature to be the regulator. Dominion has a similar relationship with the SCC, of course; there too, it is counterproductive for the regulator to be a manager.

  3. The way the Dominion profit and coal ash issue is playing out .. seems to be headed in different directions (or perhaps Steve knows more than I)

    There’s a perception that the GA does not see the excess profits issue in the same way that the SCC and advocates for ratepayers see it.

    But then.. on the other hand.. there seems to be a fear that the very same Dominion-friendly GA is going to “overreact” to the coal ash issue and make Dominion do very expensive things that are not necessary.

    so there’s a bit of a dichotomy there…. from my view.

    I would expect the GA that is friendly to Dominion on it’s profits would ALSO be friendly to Dominion on the coal ash issue…

    I still think the coal ash issue is a manufactured controversy because even the worst cost projections .. when you break down to individual ratepayers over several years.. it’s not much worse than the local and state taxes we already pay on cell phones and internet or for that matter on gasoline , a part of which goes to a fund to remediate storage tanks of abandoned or closed service stations..

    I just don’t see Dominions dog in the coal ash hunt.. Most folks understand that it was a standard industry practice that we later on decided WAS a shortsighted bad practice and we all need to pay our share to fix it. People don’t want to continue to underestimate impacts , to continue to gamble that we’ve done “enough” then later on, YET again, find out we were wrong and should have done the a complete cleanup to start with and had we done that the costs would have been far less to all of us and not be coming back to bite us in the butt decades later.

    The even bigger irony is that we’d not have the coal ash to begin with had we not put scrubbers on smokestacks to reduce pollution so instead of preventing pollution – we just shifted it from the air to the ground – where it would have ended up anyhow but spread all over creation…….

    • Well, I believe it’s true that scrubbing creates extra waste. but coal has a lot of plain ash. We’d need to ask Dominion for details, but my understanding is what is in the pond waste was a slurry made up of fly ash+bottom ash+scrubber waste+possibly plus water.

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