Duke Energy Sues Insurers Over Coal Ash Cleanup Costs

CHARLOTTE, N.C. (CN) – Duke Energy, the largest electric company in the United States, is suing its insurance companies to force them to cover some of the multibillion-dollar costs to clean up the toxic coal residues throughout the Carolinas.

The pollution is the result of decades of the utility burning coal at 14 power plants in North Carolina and one in South Carolina to generate electricity for its customers.

In a complaint filed in the Mecklenburg County Superior Court, the Charlotte-based utility says more than two dozen insurers it has done business with over the past 40 years have refused to pay claims that could total hundreds of millions of dollars.

The 31-page complaint says it purchased excess-level third party liability insurance from the defendants starting as early as 1971, and that while those policies varied in wording, all obligated the insurers to indemnify Duke Energy and its subsidiaries when they are obligated to pay for property damaged caused by emissions from their power plants.

The main cause of that damage is 108 million tons of coal ash the utility has held in coal ash basins.

“It is alleged, without regard to historical awareness of harm, that coal ash constituents from coal ash basins and other areas have been infiltrating into groundwater over a long period of time,” the complaint says. “State environmental regulators have alleged that there have been environmental impacts or potential impacts to groundwater beneath each of Duke’s North Carolina and South Carolina coal-fired power plants that are part of this claim.”

Dukes says it liability has evolved over time and continues to evolve, and that it faces ongoing liability under both the North Carolina Coal Ash Management Act and U.S. Environmental Protection Agency rules.

The utility delivers electricity to about 7.4 million customers in the Carolinas, Indiana, Ohio, Kentucky and Florida.

Duke Energy is seeking damages on a claim of breach of contract by each of the defendant companies, and declaratory relief setting out the defendants’ responsibilities under the policies they issues.

The utility is represented by Frank Emory Jr. of Hunton & Williams in Charlotte, N.C., and Mark Plumer, of Pillsbury Winthrop Shaw Pittman LLP, of Washington, D.C.
Representatives of the defendants could not immediately be reached for comment.

In a statement posted on its website, Duke Energy said it takes its commitment to manage its coal ash “very seriously.”

“We’re also working hard to manage cost, including pursuing claims under insurance policies that we believe may cover some of the expenses being incurred in North Carolina and South Carolina,” the utility said. “Net proceeds of any insurance monies we collect will benefit customers in the Carolinas, offsetting the total price tag of this important work.”

Duke Energy added: “These insurance policies were purchased to help protect our customers from new costs imposed in a situation like this, so the prudent and appropriate thing to do is request payment on their behalf.”

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