Our Take: House Bill 374 = Another Duke Energy Bailout

By Vincent Gauthier, Stanback Intern
NC League of Conservation Voters

Once again Duke Energy tries to sneak itself into a bill in order to evade its corporate responsibility to protect North Carolina’s people and environment.

What is coal ash and why is it a problem?

Coal ash (or fly ash) is the product that remains after burning coal in a power plant. Essentially it is like the ash in your fireplace, except it comes from coal. Coal ash is considered a hazardous waste that contains many chemicals that are dangerous for the body. However, coal ash can be treated in order to be used as an ingredient in cement. Beneficiation projects, as they are called, recycle the coal ash and provide an important input for the cement industry.

Currently, coal ash is stored in coal ash “ponds.” These ponds are pits that contain wet coal ash. During severe storms and flooding, there is a risk that coal ash in these ponds could spread into nearby rivers and other bodies of water. The 2014 pipe rupture, where more than 39,000 tons of coal ash spewed into the Dan River, and the pond overflow during Hurricane Matthew demonstrate that keeping coal ash in the ground can lead to environmental disasters. Duke Energy, North Carolina’s biggest energy provider, plans to cap some of its ponds that are not used in the recycling process. However, the capped ash can create other environmental issues by migrating into the surrounding soil. One way or another, unrecycled fly ash poses environmental threats.

How we got where we are

Under the 2014 Coal Ash Management Act, Duke Energy identified two coal ash beneficiation projects before January 1, 2017 and are scheduled to identify another by July 1, 2017. As noted above, these beneficiation projects are sites that convert coal ash from its original form to a product that can be used in making cement. Therefore, these beneficiation projects are ways in which the “fly ash” can be recycled, reducing the amount of ash at impoundment sites.

Since April, a non-controversial bill, House Bill 374, has been sitting on the docket of the Senate Committee on Rules and Operations. The bill addressed technical changes to labor laws and was supposed to pass smoothly through the Chamber.

After being referred to the Senate Commerce and Insurance Committee, the non-controversial bill was replaced with a Proposed Committee Substitute (PCS) called the “Business Freedom Act.” Among other things, the PCS added a section that would roll back the coal ash regulations placed on Duke Energy in 2014.

How this bill helps to bail out Duke Energy

The proposed bill would require the first beneficiation project only if the unmet demand for fly ash is between 300,000 and 600,000 tons. The second project would only be required if the unmet demand is between 600,000 and 900,000 tons. The third project is eliminated altogether. The new bill has also added that Duke would not be obligated to meet these regulations if the projects are not economically feasible (the revenues don’t outweigh the costs).

Table featuring the various amounts of coal ash demand from NC's concrete industry

Table 1: The estimated annual ash demand in concrete products. The first row estimates come from fly ash trend data with an 18-20% replacement rate. The second row estimates come from used Portland cement output given a 35% replacement rate

Table 1 shows that the projected unmet demand requirements used to structure this bill come from a study that Duke Energy had to perform under the 2014 Coal Ash Management Act. Under the projections found in its study, the demand for coal ash would be approximately 600,000 tons per year between 2015 and 2019, and 800,000 tons per year between 2020 and 2030. The data that Duke Energy used in its study was the supply of coal ash that it provided for the concrete industry, not the actual demand that the concrete industry was asking for. Bottom line: the data used in the study do not match the unmet demand requested by the concrete makers. A study performed by Dr. Leming at N.C. State shows that the unmet demand this year is approximately 959,000 tons and future demand could increase to 1.5 million tons by 2020. Therefore, the requirements set forth by H374 would not fulfill the unmet demand for coal the state.

The bottom line

If passed, the “Business Freedom Act” would allow Duke Energy to renege on its commitment to provide an alternative use to its environmentally hazardous coal byproduct. Furthermore, Duke Energy is contradicting themselves by asking for the changes in H374. In May 2017, Duke released a video that promoted the coal ash recycling process. The video states that the recycling process benefits communities across the state and saves ratepayers money. Duke Energy also put out a press release in December 2016 that applauded the benefits of recycling its coal ash. The press release even declares the environmental benefits of the recycling process by saying: “For every ton of coal ash used as a replacement for Portland cement in concrete, approximately 1 ton of greenhouse gas emissions are avoided.”

The lack of scientific vigor found in Duke Energy’s study leads to a bill that would limit its responsibilities as a company whose operations/activities contribute to real health and environmental risks. Duke Energy continues to damage our air and water through its coal production, and our legislature seems to continue bailing out the corporate polluter.

It is unacceptable for a company such as Duke Energy, who has already created public and environmental harm, to not be held accountable for its actions. The legislature is going against the public interest of keeping the citizens of North Carolina safe by supporting these changes.