Dive Brief:
- North Carolina Attorney General Josh Stein has announced his office will appeal portions of a decision last week that allows Duke Energy to recover hundreds of millions spent to clean up coal ash waste.
- Duke had requested $700 million in additional annual revenue, but the North Carolina Utilities Commission instead ordered the utility to lower rates. The decision included a $70 million management penalty for mismanaging coal ash, but regulators allowed Duke to recover about $475 million for cleanup activities.
- While the AG will challenge regulators' decision to have customers pick up most of the coal ash tab, Duke is mulling an appeal of its own but has informed shareholders the decision will be costly.
Dive Insight:
As a result of the North Carolina Utilities Commission's (NCUC) decision, Duke will take an estimated $150 million pre-tax impairment charge in the second quarter, the utility told the U.S. Securities and Exchange Commission in an 8-K filed June 25.
The charge primarily relates to the denial of a return on the Lee Nuclear Project and the coal ash management penalty. But the news wasn't all bad for investors: the utility's ratebase will rise to approximate $14.1 billion, an increase of about $300 million following the decision.
In a statement, Duke said it is currently "seeking clarification from the NCUC on certain issues in order to determine the associated revenue and customer rate changes."
Based on those clarifications, Duke said it will "evaluate next steps, keeping in mind that it is critical to balance the needs of our customers with smart investments that keep costs as low as possible and keep North Carolina competitive for the long term."
Along with a potential challenge from Duke, the Charlotte Business Journal reported that Attorney General Stein intends to ask regulators to reconsider putting coal ash costs on customers. There may be other parts of the order challenged as well, but he told the Journal, "the coal ash issue is far and away the most important part of the ruling and we will appeal."
Regulators' decision set aside a settlement reached earlier this month between Duke and stakeholders that would have allowed for additional revenue. It also rejected Duke's Power/Forward Carolinas grid modernization initiative.
In addition to the $70 million penalty, in the form of a rate reduction, for mishandling coal ash cleanup in the state, Duke must refund $60 million annually for four years as a result of excess deferred state income taxes stemming from the new tax law passed by Congress last December.
