Source: http://www.greenvilleonline.com, April 28, 2014
By: Eric Connor
The cost for Duke to dispose of the toxic byproducts of burning coal in North Carolina could cost upwards of $10 billion. The figure, cited by a company executive, raises questions in SC
The cost for Duke Energy to safely dispose of the toxic byproducts of nearly 100 years of burning coal along waterways in North Carolina could cost upwards of $10 billion, the company says.
The figure, cited by a company executive this week, raises questions in South Carolina — particularly along the Saluda River where a Duke coal plant in Anderson County has been cited for violations and amid concerns that a disaster like one that happened recently along the Dan River in North Carolina could happen here.
Among the questions: Is the cost real or inflated? What does it mean for how Duke’s “coal ash” ponds in South Carolina will be put to rest? And who will ultimately pay for it: shareholders or customers?
The company is using the estimate as “a public relations ploy,” said Frank Holleman, a senior attorney for the Southern Environmental Law Center, which has sued Duke in North Carolina and been involved in legal settlements with South Carolina’s other two utilities, who unlike Duke have committed to clean their ash ponds in the Palmetto state.
“We have every reason to believe that Duke has inflated this number,” Holleman told The Greenville News. “We have no reason to accept this estimate at face value.”
The Duke executive — North Carolina company president Paul Newton — said in an appearance before the North Carolina Joint Environmental Review Commission that estimates for cleanup rise to between $7 billion to $10 billion and take up to 30 years only if the government requires the most-costly method, which is removing ash completely and moving it to dry landfills.
In South Carolina, Duke hasn’t decided how to remove ash from its 63-year-old W.S. Lee station in Anderson County along with its other station in Darlington County, spokesman Ryan Mosier said.
Next month, Mosier said, the company will begin a “comprehensive, longer-term ash basin strategy” for more than a dozen coal plants in the Carolinas “that involves intensive analysis” and will be complete by the end of the year.
“It would be premature to discuss costs before we have a closure strategy for each site,” Mosier said.
The company’s electricity customers in South Carolina could be on the hook, depending on how Duke chooses to budget the costs and whether state regulators allow them to pass the bill on to ratepayers.
“We would look at the reasonableness and prudency of the cost and whether it was reasonably necessary in order to furnish retail electric service,” said Dukes Scott, executive director of the S.C. Office of Regulatory Staff, an agency commissioned to act in the public’s interest in regulating utilities.
However, Holleman said, the examples set by South Carolina’s other two electricity producers — South Carolina Electric & Gas and Santee Cooper — should make it clear that rate hikes shouldn’t be part of the discussion.
Meanwhile, he said, the environmental group is weighing whether it should pursue legal action against Duke in South Carolina as it did against the other utilities.
Last February, a 4-foot-wide pipe beneath a dam holding back wet coal ash collapsed and left 70 miles of shoreline along the Dan River north of Greensboro polluted with coal ash sludge.
The release was the worst coal ash disaster since a 2008 event in Tennessee and has launched a criminal investigation. Duke says that tests show that water quality in the Dan River is back to acceptable standards.
The dams that hold back toxic byproducts such as arsenic and chromium have shown signs of seepage, including at the Lee station, which stores ash in two ponds along the Saluda River, according to the U.S. Environmental Protection Agency.
Following a February inspection of the Lee site, the state Department of Health and Environmental Control warned Duke that the company could face civil fines for violating coal ash storage rules.
In a 33-page response to DHEC, the company defended its practices and described one violation — a failure to submit annual inspection reports — as “inadvertent.”
The Lee ponds, like others in the Carolinas, don’t have lining underneath to protect groundwater.
Environmentalists say utilities should be obligated to remove wet storage of coal ash and dispose of it in dry landfills.
There are other options that utilities have found are more cost-effective — including recycling dried ash into concrete material that can be used in building roads or consolidating the ash at the site and encapsulating it with concrete and a synthetic barrier.
However, recycling the waste becomes less-viable depending on production and transportation capabilities, and encapsulating it has been met with public opposition.
Last fall, state-owned Santee Cooper Power, which provides electricity to areas of the Lowcountry and the Pee Dee, dropped its proposal to encapsulate 1.3 million tons of coal ash stored at the Grainger station in Conway along the Waccamaw River.
The Southern Environmental Law Center filed a lawsuit against both Santee Cooper and DHEC in 2012 regarding the Grainger station.
Santee Cooper fought the lawsuit for a year and faced widespread public opposition to the plan, but in a settlement last November, the utility announced that it would remove coal ash from two remaining sites in Georgetown and Berkeley counties.
In total, the utility has committed to removing 11 million tons from seven ponds and either recycling it or disposing of it in a dry landfill, Santee Cooper spokeswoman Mollie Gore said.
The project will cost about $250 million and take 10 to 15 years, Gore said.
The utility had been recycling dry coal ash since the 1980s but began to run out of supplies for manufacturers in the cement and concrete industry, she said.
The utility had been working with industrial customers on ways to make wet coal ash viable for recycling, Gore said, and now one vendor has invested $40 million to build a recycling facility on the site of its Georgetown coal plant.
“We have a new lined landfill under construction, and we’re hoping we don’t need it,” Gore said. “Frankly, when you look at all the options available to us, this is the most cost-effective for our customers. That doesn’t mean it would be for everybody.”
The Santee Cooper settlement came one year after Midlands power provider SCE&G settled with the Catawba Riverkeeper Foundation, which was represented by the Southern Environmental Law Center.
In 2011, SCE&G reached a “memorandum of agreement” with DHEC to clean up coal ash from its plant along the Wateree River in Richland County, company spokesman Eric Boomhower said.
However, Holleman said, the memorandum wasn’t legally binding. The settlement, he said, resulted in a binding agreement for removal of ash within eight years and requirements that contaminated soil be removed and remedial work done on its ponds.
In both the case of Santee Cooper and SCE&G, the agreements haven’t resulted in electricity rate increases.
Some of the costs of cleaning ash, Boomhower said, “are already embedded into rates” and about 90 percent of the ash produced at the Wateree plant has been recycled.
Much of the cost to clean up coal ash is part of the “depreciation rates” that customers pay as part of the inevitable retirement of the Wateree plant, said Scott of the Office of Regulatory Staff.
“The customers have been paying for the retirement of the plant and for the closing of those ash ponds since the thing started to generate electricity,” Scott said.
If the costs to clean coal ash were to balloon beyond what is embedded in current rates, Scott said his agency would have to determine if the costs were reasonable and then present the determination to the state’s Public Service Commission in case of any rate increase request.
In the years ahead, Duke will be faced with what to do with coal ash waste at 33 unlined ponds at 14 generating sites in the Carolinas — some closed, some yet to be — as new environmental regulations and cheaper alternatives have led to the decommissioning of coal plants nationwide, including the Lee station.
The total cleanup cost could be less than $10 billion if Duke isn’t required across the board to remove all of its 100 million tons of ash and transport it to dry landfills, Newton said in his comments to the North Carolina commission.
The costs could be as little as $2 billion if the company is allowed to follow previous plans to remove ash where studies show the method is more appropriate and employ a “hybrid” approach of encapsulation at 10 of its sites, Newton said.
A “one-size-fits-all approach” would be more costly, he said.
“If you dig it all up,” Newton said, “you move it all to a lined landfill, then that adds another $4 to $5.5 billion to the cost. And those steps added to a total excavate-and-remove approach would drive the price tag between $7 and $10 billion.”
Holleman said that the numbers are inflated.
“They just put a number out there, for political purposes in front of a political body” he said.
Santee Cooper has estimated $250 million to clean 11 million tons, and while each company and site is different, Holleman said, the figure shows the proportion of how much such a task more realistically costs.
Originally, Santee suggested in its written proposals that removing ash just from its Grainger site — 10 percent of its total across the utility — would cost $110 million.
The majority of Duke’s estimate to clean up its ash is related to its Marshall site on Lake Norman north of Charlotte, a water system that feeds into the Catawba that feeds Wateree, Holleman said.
The estimate assumes that Duke would have to employ the most-expensive option of trucking all ash offsite, he said, “but the fact that Duke may have large challenges with this one unusual site is no reason for Duke to avoid cleaning up the other sites, many of which are one-tenth the size of Marshall.”
The Carolina utilities “are all the same,” Holleman said, when it comes to “the basic risks, dangers and threats of unlined coal ash pits next to waterways. Their coal ash lagoons are on similar rivers, in similar geography and are the same primitive unlined pits in the ground. In some instances, they have lagoons on the same rivers and in the same watershed.”