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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