Coal Ash Management and CCEC
New Coal Ash Management Requirements: What They Mean for Co-op Members
As a not-for-profit business, CCEC operates within tight margins based on precise projections, to keep our costs as low as possible. But once in a while, outside factors impact our cost of doing business in unexpected ways. Rises in electricity costs due to new regulations for coal ash management are one such factor affecting us now.
You may recall that in February 2014, coal ash from a Duke Energy power plant spilled into Rockingham County’s Dan River. Following that incident, North Carolina enacted the nation’s first state law to regulate disposal of the substance. Coal ash, a by-product of the process used to generate electricity at coal-fired power plants, has historically been disposed of in lined basins, but North Carolina’s Coal Ash Management Act of 2014 introduced more stringent disposal and storage requirements. These requirements apply to Duke Energy, which has 33 coal ash basins in the state.
Complying with those requirements is a cost Duke Energy will pass on to all individuals and wholesale customers who buy power from the utility. Additionally, ratepayers across the nation will soon feel an impact, as this incident — as well as a 2008 spill in Tennessee — have prompted federal regulations. It’s important to note that the increase in costs is NOT related to the coal ash cleanup; only the cost of compliance with new regulations.
Although Carteret-Craven Electric Co-op does not own any coal-fired power plants, we have been engaged in the coal ash management discussion from the start because a portion of the electricity we supply to you comes from wholesale power agreements that our power provider, North Carolina Electric Membership Corporation (NCEMC), has with Duke Energy. Costs incurred by Duke Energy to comply with the regulations will be integrated into the wholesale rates we pay for power. As an at-cost provider of electricity, that means they will ultimately make up a part of the costs you, our members, pay for electricity.
So, what do these costs cover?
Expenses related to bringing existing coal ash basins into compliance with new standards by either capping in place or excavating the basins. In both scenarios, water will be removed from the basins in a way that protects water quality of nearby lakes or rivers, and closure plans are customized for each basin to ensure effectiveness. The costs from cleaning up the Dan River spill, however, have not and will not be passed on. Duke Energy shareholders are responsible for cleanup fees, and our responsibilities are only linked to complying with new regulations.
We will continue to do whatever we can to mitigate any cost increases, because we know any increase can have an impact on your family budget. Should industry factors affect rates, we will let you know well ahead of time, and we will continue to pursue new ways to fulfill our mission of providing you with safe, reliable, environmentally responsible and affordable electricity.