Coal Ash Wednesday: Insurance companies say "Nope" on paying for cleanup


One big reason Duke Energy is trying to make us pay:

Dozens of insurance companies say they’re not obligated to help pay for Duke Energy Corp.’s multi-billion dollar coal ash cleanup because the nation’s largest electric company long knew about but did nothing to reduce the threat of potentially toxic pollutants.

The claim is in a filing by lawyers for nearly 30 international and domestic insurance companies that were sued by Duke Energy in March to force them to cover part of the utility’s coal ash cleanup costs in the Carolinas.

In a perfect world, the NC Utilities Commission would be keeping a close eye on this civil case, and if the defendants prove their case that Duke Energy was at fault and should be responsible for shouldering the costs of cleaning up their coal ash, the NCUC would deny Duke's rate increase request on the same grounds. And if Duke Energy won against the insurance companies and they were forced to pay, then there would be no need to jack up our rates. But we don't live in that perfect world, and Duke Energy is notorious for being able to conceal the big picture when they want something. Here's more:

The insurers counter they’re not on the hook to pay. They say that because Duke Energy stored its coal ash in unlined pits as part of its normal practices, any property damage “was caused intentionally, by or at Duke’s direction” and there weren’t any distinct pollution events that triggered coverage.

They note that Duke was well aware that burning coal to generate electricity leaves byproducts containing toxic substances that can contaminate groundwater. They say Duke’s ash ponds were built without safeguards to prevent groundwater pollution, and some ash ponds placed the ash in direct contact with groundwater.

“Duke continued to dispose of (coal ash) in unlined ash ponds long after it knew it had environmental problems. By the 1990s Duke submitted insurance claims to some of the defendants and other insurers for the same ash ponds that are now at issue in this action. Although Duke was aware of these issues, it continued to operate its unlined ash ponds for decades,” the companies’ lawyers said.

Exactly. And the sheer volume of the poorly-stored ash is a testament to just how long Duke Energy has been acting irresponsibly. This is plainly obvious to anybody who has been following this issue, and a failure on the part of the NCUC to protect ratepayers will call into question (even more) the integrity of the Commission itself.

But aside from the coal ash cleanup, there is another potentially costly screwup by Duke Energy that we may find ourselves on the hook for:

Add Duke Energy Corp. to the list of U.S. utility owners affected by the bankruptcy of nuclear contractor Westinghouse Electric Co.

The North Carolina Utilities Commission ordered Duke this week to report on the financial status of Westinghouse owner Toshiba Corp. and how it may affect the two Westinghouse AP1000 reactors the power supplier has proposed to install at the planned Lee nuclear station in Cherokee County, South Carolina.

Westinghouse’s bankruptcy in March has already thrown into question the fate of four U.S. nuclear reactors -- two being built by Southern Co. in Georgia and another two by Scana Corp. in South Carolina. The companies and regulators in those states are now grappling with what to do with the projects, which were already delayed by years and billions of dollars over budget.

Among other things, North Carolina regulators ordered Duke on Monday to say whether it could use a different technology to build its reactors at Lee; whether the company had suspended investment in the project until the “Toshiba-Westinghouse situation is resolved”; and whether it would seek a return on “abandoned costs” outside of a general rate case should the project be canceled.

That's right, even if these nuke plant projects end up being canceled before the first watt is squeaked out, we may be forced to reimburse Duke Energy for what they've already spent. And once again, the free market fundamentalists are completely silent. Thanks for nothing.