Duke's North Carolina customers will pay $232M for coal ash cleanup

Dive Brief:

The North Carolina Utilities Commission will allow Duke Energy Progress to raise customers' fixed monthly charges by 25% and granted the utility rate increase of $232 million to pay for coal ash cleanups. But the decision was a mixed bag for the utility, which had requested to hike rates more than twice that amount.
The commission also fined Duke $30 million for mismanagement of coal ash waste cleanup. Regulators have also denied Duke's request to recover the costs of ongoing coal ash remediation, which will be handled in the company's next general rate case.
Last year, Duke requested a rate increase totaling $477.5 million, driven by the costs to clean up coal waste storage locations.

Dive Insight:

The decision concludes months of wrangling over whether or not customers should be on the hook for coal ash cleanup, stemming from the Dan River spill in 2014.

The utility had asked to raise the monthly customer charge from $11.13 to $19.50 to help clean up coal ash, but the NCUC approved a $14.00 charge. The decision is a burden for lower income customers, which angered activists.

Gudrun Thompson, senior attorney at the Southern Environmental Law Center, said there are more than 1.4 million customers in Duke's territory struggling to pay their bills.

In the order, commissioners acknowledged those concerns, saying “the rate increase approved in this case . . . will be difficult for some of DEP’s customers to pay, in particular the Company’s low-income customers.” Regulators directed Duke to make a $2.5 million contribution for low-income energy assistance.

NCUC also approved a partial settlement between commission staff and Duke, which prescribes an overall rate of return of 7.09% and a rate of return on common equity of 9.9%.

Duke Carolinas spent $434 million from 2015 through November of 2016, while Duke Energy Progress spent about $292 million. Duke Carolinas said it has removed almost 3 million tons of coal ash at three facilities, including the Dan River plant.

Regulators allowed Duke to recover coal ash basin closure costs incurred from Jan. 1, 2015 through Aug. 31, 2017. Minus a $9.5 million disallowance for cleanup overpayment, Duke will recover $232 million over a five-year period. The disallowance is a result of the NCUC concluding DEP paid too much for coal ash removal at the company’s Asheville coal-burning plant and, therefore, denied recovery.