Coal Ash Clean-up: Duke’s Bill Exceeds $5 Billion

A truck embarks upon coal ash clean-up at a Duke Energy.

A truck embarks upon coal ash clean-up at a Duke Energy. Photo credit: Charlotte Observer.

Cleaning up coal ash in North Carolina will cost Duke Energy $5.2 billion, 50% more than previously estimated, and the electric utility has indicated it will seek rate hikes beginning next year to recoup its costs.

Duke has spent $770 million so far on the clean-up, which entails recycling and landfilling more than half its coal ash ponds, and the utility wants to charge the cost to North Carolina rate payers, reports the Charlotte Observer. Clean-up in the Carolinas could total $2.5 billion by 2021, and would continue accumulating beyond that.

Duke’s move is sure to be watched here in Virginia, where Dominion Virginia Power is under heavy pressure from environmental groups and elected officials with coal ash ponds in their districts. Citing the example of utilities in North Carolina, South Carolina and Georgia, foes of Dominion’s cap-in-place approach have argued that the utility should instead recycle coal ash where possible and bury the rest in state-of-the-art landfills.

Dominion has argued that cap-in-place is both safe and significantly less expensive. Pursuing the recycling-landfilling approach at all four power stations would increase costs from a few hundred million dollars to $3 billion.

Bacon’s bottom line: If there was ever any question that recycling/landfilling is an order of magnitude more expensive than closure-in-place, the Duke numbers should settle the matter.

A higher cost doesn’t rule out pursuing the option, but it does give pause. Dominion’s closure-in-place plan does entail a higher risk of groundwater contamination, although the company’s containment basins will be monitored for 30 years and the utility will be required to ameliorate any damage. On the other hand, the costs will be highly localized and modest in magnitude compared to the alternative..

The cost of contamination isn’t modest to the homeowners living near the Possum Point Power Station, however, as evidenced by a large turnout and heated testimony at a public hearing last night in Prince William County. The main concern expressed was contamination of well water, although some citizens worry about the effect on aquatic wildlife as well.

Here in Virginia, we have yet to quantify the risks and potential costs to the public and environment of different coal ash clean-up strategies.

If, to pick numbers out of a hat, it would cost $10 million to compensate Dominion’s Possum Point neighbors for contaminated well water by hooking them up to municipal water, would that not make more sense than spending $750 million to remove the coal to a landfill? Of course, those numbers aren’t real. We need to get better numbers. But you get the principle: We need to weigh costs and benefits. Otherwise, we’re shooting blunderbusses in the dark.

Complicating the picture even more… According to the Charlotte Observer, Duke is treating coal ash clean-up costs as an operating expense. In Virginia, operating expenses are included in the “base” electric rate. And base rates are frozen through 2022 under a legislative deal worked out in 2015.

Dominion has said publicly that it has already eaten nearly $300 million in coal ash-related expenses. So, maybe the full $3 billion cost of the recycling/ landfilling approach wouldn’t get passed on to ratepayers after all. If that’s the case, Dominion would take the hit, not rate payers, although the exact amount of damage would depend on what costs the company could defer until after the freeze ends. If Duke is any guide, half the expense could be pushed out beyond 2022.

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14 responses to “Coal Ash Clean-up: Duke’s Bill Exceeds $5 Billion

  1. I am a little late to this discussion. I have been spending a good deal of time trying to avoid current errors in utility policy rather than keeping up with errors of the past.

    In a previous post, a Dominion spokesman stated the “Dominion has been forward thinking on coal ash”. I beg to differ. Over thirty years ago, it was common practice for utilities in the northeast to dispose of coal ash in lined ponds with appropriate effluent treatment before discharge to waterways. Because each new ash disposal area required this technology, it was paid for at the time and required no extra handling of the material. A little bit more expensive then, but a whole lot cheaper now.

    I don’t lay this entirely in Dominion’s lap because where were the regulators all of this time? This is a common issue that is dealt with using State Pollution Discharge Elimination System (SPDES) permits. The Virginia DEQ had this remedy at its disposal just as other states did decades ago. A cozy relationship with a company it regulates has put the public health of the citizens of Virginia at risk for past decades and perhaps for centuries more in the future.

    Using only a cap is clearly the cheaper alternative. But why spend millions or billions and still not fix the problem? As long as the potential exists for contact with groundwater (an open bottom) no one really knows how much toxic material might leach out into the groundwater and affect aquatic life and drinking water sources. We can make all of the projections we want about groundwater levels, etc. This ash, laden with heavy metals and other toxins, will be there for generations. Who knows what changes will occur in that time? We are all too willing to pass our problems on to future generations because it’s too uncomfortable to deal with our failures today.

    Dealing only with contaminated wells adjacent to the ponds does remedy the near-site issue. But once toxins are in the groundwater, there is no telling where they might go and who they might affect. Monitoring and amelioration seem like a comforting solution, but monitoring only tells you that you have a problem and effective amelioration does not usually exist for these types of problems.

    Duke seems to have stepped up, but perhaps only because the ratepayers will pay for it. Why does the individual citizen always have to bear the final burden? Where are the responsible utility executives? They benefited by ignoring the issue and saving money. Where are the regulators who ignored the law and gave utilities a pass to the detriment of the physical and financial health of their customers?

    I like Acbar’s recommendation to load as much ash a possible on railcars and get it to where it can be put to use. Although, I am a bit skeptical about that solution too. Concrete eventually breaks down. It often gets dumped as loose fill in a variety of places. Will the toxins just cause a bit less damage because they become more dispersed? We do like to bury our problems so that we can ignore them, thinking that our lack of attention is a real fix for the issue – at least for us.

    • “We need to weigh costs and benefits. Otherwise, we’re shooting blunderbusses in the dark.” But that’s what responsible utility management, and then regulators, are supposed to do, and should have done up front. You’re right, TomH, the sandy soils of the eastern continental Coastal Plain were deposited where they are today millions of years ago, and the ease with which groundwater moves vertically as well as horizontally in soils like that, at least unless there’s a layer of impermeable clay down there to limit the movement, is a well-understood geologic fact. If anyone was paying attention, the risk of groundwater pollution from an unlined fly ash settling pond built on such soils was foreseeable at the time it was designed and permitted.

      I’ve heard it said that coal came from the ground and fly ash is simply leftover residue from the coal, nothing man-made added, so it must be OK to handle it or put it back in the ground. That sort of argument pretty much disappeared when regulators began ordering the cleanup of old manufactured-gas sites decades ago, but it might be an interesting exercise to learn when these unlined fly ash disposal sites were licensed.

      • The plants we were dealing with were mostly built in the 1950s and 60s. By the early 80s, the Clean Water Act had been around a decade or so and state environmental agencies were getting up to speed so that they could take over much of the federal water quality permitting and enforcement. I suppose serious environmental enforcement was more robust in the northeast than it was in the southeast. I still don’t quite understand that. With all of the beautiful land here and the many people who enjoy hunting, fishing and hiking the trails, I would think there would be a more widespread commitment to caring for the resources that Virginia is blessed with.

        Our plant sites were in the Finger Lakes region or along rivers for access to cooling water. The fly ash captured by the electrostatic precipitators was very fine and mostly free from nasty stuff since it had been the “soot” in the flue gas. But the bottom ash, as we called it, collected as clinkers in the bottom of the boiler and was often ground finer to reduce the volume needed for disposal.

        I was doing research on cadmium and other heavy metals as an undergrad. Their toxicity was well established by the early 80s. Any environmental officer for a utility would have known about it. The coal tar residue from old “town gas” plants was also a topic of discussion. Around the turn of the century, many populated areas made gas from coal to replace more expensive kerosene. They dumped the coal tar into unlined ponds and it would migrate through the subsoil until it hit an impermeable layer and then would work its way out to a nearby river or lake. Sounds like Rockefeller pouring gasoline into the rivers because he didn’t yet have a market for it.

        Perhaps the “gentlemen” in the good old boy network didn’t want to interfere in one another’s business. But that choice affected the health of their fellow citizens for decades. And now it is time to fix it and pay the tab.

        I don’t know how realistic those estimates are from Dominion. In the conceptual stages of evaluating alternatives, I have seen utilities pick the extreme high end of the cost range for options they don’t want to be involved with. Regulators, especially now with constrained budgets, have little recourse but to rely on the utility’s estimates. Perhaps the DEQ should do an RFP for engineering estimates for a study that is paid for by Dominion, so perhaps they could get a more objective identification of the options and their costs.

  2. This issue is not new to BR. I went back and re-read an old post, concerning Duke’s original study that brought about that decision to commit to a $5 billion cleanup bill. That’s a lot of money! http://baconsrebellion.com/duke-study-documents-coal-ash-leakage-into-groundwater/

    What strikes me is the fact that Duke, like DOM, was not aware of the risk of heavy-metal pollution from these fly ash ponds until fairly recently. Were regulators? Were geologists? What about other utilities nationally? Why is this suddenly a hot-ticket item after so many years of benign neglect? Surely, to be continued.

  3. I’d like to know how much the per month, per customer cost is spread out over a number of years.

    But I also reject Dominion’s current behavior which is along the lines of they’re not going to really look into the real longer-term threats nor are they going to look into the real cost-benefits – to back up their current “we want to do this our way” attitude.

    It’s pretty bad.. when the folks who have been receiving Dominion money for a number of years in the GA, INCLUDING Conservatives who are not exactly wild-eyed enviros – are proposing legislation to REQUIRE Dominion to do an honest and credible approach.

  4. I would be willing to bet that most Virginian’s if surveyed would accept their share of responsibility for the coal ash that was the result of all of us benefiting from electricity and heat in our homes over the years and would be accepting of a modest payment in our monthly bill towards cleanup.

    I would imagine if the cost was fairly estimated and a proposal to pay was made – it would get support and I just not understand Dominion taking that approach as a starting point.

    If the true facts about the potential long term danger of leaving it in place were provided – most people would want a resolution that was not going to come back later to bite us.

    I see about 3.5 million households in Virginia. If you divide that int 5 billion you get about $1500. if you spread that out over 25 years you get about $50 a year. There are back of envelope but $4 a month is not unreasonable although I’m sure debatable.

    But this debate should not be about what Dominion wants to do … it should be about what all of us want to do.

    • Larry, I think if you look at the timeline of events, you will find that Dominion decided to act aggressively on the new EPA regs before there had been a public focus on the leaching of metals from coal ash impoundments into groundwater. That higher consciousness came later as the SELC and riverkeeper groups raised the bar. I’m not saying the environmentalists are right or wrong — they were doing what environmentalists do — only that they raised the bar after Dominion had committed to its approach. Dominion was blind-sided.

      • I just don’t think it is or should be portrayed as a Dominion against the enviros.. issue as many Virginians, including Conservatives find themselves more aligned with the enviros than Dominion and the continuing “us against them” mindset is just not constructive and actually works to harden positions and increase divisions.

        Dominion is coming across as “it’s our way or the highway” and oh by the way DEQ is with us… and that’s just wrong.

        Dominion COULD point out that the responsibility and cost belongs to ALL OF US not just them… and if they did that – they might well get agreement from others including perhaps the enviros.

        we’ve just turned this into something that does not need to be… there are constructive solutions and compromises available.

      • Jim,

        I haven’t had time to follow this issue very closely, but I am amazed by the comments that the leaching of heavy metals from coal ash into groundwater was a surprise to utilities or regulators. This issue has been around for decades. Why is it new in Virginia? Was it because of the large spills from the coal ash ponds? Is that what it took to get this issue onto the regulator’s and the public’s radar?

        I would think anyone attending national utility conferences would have encountered this issue many times. Maybe because it was old news no one was talking about it anymore. As I understand it, the new EPA regs just applied to the closing of the open ash storage ponds. The EPA has regulated discharges from these ponds for a long time.

        I can understand the utility’s position that they were just doing what the regulator required. Reducing the inflow and hydrostatic pressure with a top cap does substantially reduce the leaching. But it doesn’t solve the problem. An open bottom over porous soil near a waterway is vulnerable to numerous unknown events that could result in groundwater contamination.

        I can also understand Dominion feeling surprised by requests for more stringent solutions. I think this was the result of an adversarial process. We found that the best results were achieved with a collaborative approach with the regulators and other interested parties. Issues were clarified, pros, cons, and costs were identified for various options. As a result, we reached consensus on an effective solution that often had a lower cost than expected. I would recommend this process for Virginia. It is the best way to protect the health and financial interests of the people of Virginia.

        • I agree. The idea that we “don’t know” what the risks are is just ludicrous and flies in the face of decades of clear evidence from other piles of tailings that even when covered still migrate and we know this from putting liners in landfills with caps – because of accompanying leechate collection systems that amply demonstrate that “caps” said to be “impermeable” are not… like anything else we build – over time – wear and tear opens up fissures that do take in rain… and the thing is – you do not know this has happened and to what degree UNLESS you DO HAVE a liner and a leechate collection system – and Dominion knows this and just insults people’s intelligence when they pretend otherwise – and DEQ KNOW THIS ALSO because the very same DEQ – REQUIRES Municipal waste landfills to have liners, caps and leechate collection and monitoring .. and yet they too pretend that coal ash doesn’t have similar dynamics and risks.

          They’re treating coal ash like it’s a unique and unknowable issue – AND they Don’t want to know about it.. they’re content with “cap in place”.

          just totally disingenuous and ludicrous.

          Many people want to do the right thing – they understand that we all own this problem and need to share the responsibility for dealing with it – responsibly and yet we continue this inane Kabuki theater of a process.

          there is no such safe way to “cap in place”. It’s an evasion of basic responsibility to do what needs to be done to protect future generations from having to go back and deal with it again.

          why do we insist on this foolishness?

  5. I agree Larry, the governor could make this a state health issue. He could mobilize leading engineers around the state, including some from our best universities to come up with lower cost, more innovative solutions. Perhaps we could develop a concrete block operation onsite and create lower cost concrete blocks for use by affordable housing projects around the state. There are usually many attractive options once you open your mind and begin to look.

    Dominion is stuck because they thought they had such a sweet deal by freezing the rates and gaining an extra $1 billion in profits by 2022. Any extra expenses between now and 2022 could not be passed on to ratepayers.

    I am also concerned with an arrangement like the one with Duke. If they spend $5 billion, they are entitled to earn $512 million in profit as a result (10.2 % rate of return in NC). This seems unfair to ask ratepayers to pay an extra half a billion dollars for the shared failure of utility executives and regulators. Perhaps no profit or a severely restricted one would be more appropriate for these expenses. Utilities should not be rewarded for being irresponsible stewards of our state.

  6. I can’t speak for what Dominion knew or didn’t know back in 2015. All I can say is that EPA approved the closure-in-place alternative. EPA wrote the rules, Larry, not Dominion or DEQ. Closure-in-place met the EPA’s criteria for public health and safety. I talked to Richard Kinch, a former EPA official who was intimately familiar with the program, and he expressed no reservations about it.

    Now people are trying to shut down that alternative by raising the bar. That’s fine, if that’s what they want to do. There may be legitimate reasons to do so — maybe the EPA rule should be stricter. But I don’t think it’s fair to condemn Dominion for pursuing an option that EPA said was entirely legal and legitimate.

    Maybe there was more going on behind the scenes than I was aware of, and I am happy to stand corrected. But that’s the way I see it now.

    • Nope… this is disingenuous – The utilities fought against tougher EPA rules – the same utilities that are now saying they “tried” to conform to EPA rules.. the same rules they worked to weaken.

      here is the final rule:

      How does the final rule protect groundwater from contamination?

      Improperly constructed or managed coal ash disposal units have been linked in cases to harm to groundwater, and this final rule addresses the risks identified in these cases — leaking of contaminants into groundwater — by adding new requirements for coal ash surface impoundments and landfills including:

      Groundwater monitoring around surface impoundments and landfills;
      Liner requirements for new surface impoundments and landfills to protect groundwater;
      Groundwater cleanup from coal ash contamination;
      The closure of unlined surface impoundments that are polluting groundwater;
      The closure of surface impoundments that fail to meet engineering and structural standards or are located too close to a drinking water source;
      Restrictions on the location of new surface impoundments and landfills so that they cannot be built in sensitive areas such as wetlands and earthquake zones; and
      Proper closure of all surface impoundments and landfills that will no longer receive CCRs.

      https://www.epa.gov/coalash/frequent-questions-about-coal-ash-disposal-rule#8

      so the question is – is Dominion working diligently to conform to the LATEST rules and BMPs or are they claiming they are conforming to earlier rules?

      are they TRULY working for common-sense requirements that deal with known evidence of contamination risks – or are they working to some legalistic limits of rules they and other industry players worked hard to minimize and weaken?

      this is not rocket science. If you close in place – without a leechate monitoring system – how will you know when and if there is future spread of contamination and what is your plan if that contamination does spread?

      what exactly is Dominion supporting NOW so that it WILL KNOW in the future if contamination is spreading for cap in place?

      there is no excuse for this level of irresponsibility. No one is trying to shut anything down. They’re asking simple and important questions about how we will know if cap-in-place does not work and what the plan is – if it does not.

  7. I don’t have a “big evil corporate polluter” mindset here. I think Dominion and other utilities did what they thought was best at the time they were dealing with the issue. There was no evil intent -then or now.

    But they cross the line when they want to leave it in place without any real way to monitor it nor a plan to re-mediate if it does spread and instead try to run away from the longer term responsibility for the consequences .. that’s wrong and a disservice to taxpayers, ratepayers and Dominion itself.

    Dominion is simply refusing to support the development of information and analysis that would lead to an informed judgement about how to proceed – to include risk management as well as what happens if things go sideways in the future. All of that – rightly belongs to them and instead they are acting like some fly-by-night outfit trying to get out of dodge as fast and cheaply as they can. It’s a poor reflection of their worse instincts.

    I continue to insist that many Virginians don’t want to create Superfund-type ticking time bombs and prefer to do what needs to be done – now – It’s the very essence of fiscal conservative philosophy.

    Look at the Chesapeake Energy Center and at Dominion’s current position with regard to it . It’s shameful. It’s already well into the water table in an area where we expect water levels to rise… and what is their current position?

    Jim – why don’t you do a post on the Chesapeake Energy Center issue?

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