Duke Energy Corp.DUK has reached a settlement with the North Carolina Department of Environmental Quality or NCDEQ that holds the company guilty of groundwater contamination at all of its 14 coal ash facilities.
"This agreement holds Duke Energy accountable for past groundwater contamination and mandates that Duke Energy expeditiously clean up polluted groundwater near its coal ash sites," the agency's director, Donald R. van der Vaart, said in a news release.
Duke Energy agreed to an all-encompassing fine of $7 million to resolve all groundwater contamination issues at the shuttered Sutton Plant outside Wilmington as well as 13 other coal plants.
The company was levied a fine of $25.1 million by the NCDEQ for groundwater issues at the Sutton Plant in Wilmington. The fine was the state's largest ever issued for environmental damage. Duke Energy went on to appeal the fine citing evidence that the regulator did not comply with all laws and procedures before issuing notices of violation and fines.
The current settlement not only resolves the Wilmington plant case but any other allegation related to groundwater contamination at Duke Energy's coal ash basins around the state. Duke Energy is also required to provide accelerated cleanup action at the retired Wilmington plant and three other plants − Asheville Plant, H.F. Lee Plant in Goldsboro and at the Belews Creek Steam Station − that showed signs of offsite groundwater contamination during recent assessments. The cleanups are estimated to cost between $10 million and $15 million.
The settlement requirements are in addition to Duke Energy's obligation under the Coal Ash Management Act of 2014 to close all of its coal ash ponds by 2029.
Profitability depends largely upon rate relief at regular intervals in its different service areas. Duke Energy continues to bear huge expenses related to the Dan River coal ash spill. As of Dec 31, 2014, Duke Energy Carolinas spent about $24 million on repairs and expenses related to the incident. Any more charge and unwarranted expenses are likely to negatively impact the company's results.
Duke Energy currently holds a Zacks Rank #3 (Hold). Some better-ranked companies in the utility sector include Brookfield Infrastructure Partners L.P. BIP , Dynegy Inc. DYN and Talen Energy Corporation TLN , all sporting a Zacks Rank #1 (Strong Buy).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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