Insurance companies push back against Duke over coal ash cleanup costs

Dive Brief:

  • More than two dozen insurance companies who previously insured Duke Energy's coal ash disposal operations say they are not on the hook for cleanup costs because any property damage was "caused intentionally, by or at Duke’s direction.”
  • The 30 insurance companies say they have no liability in the matter because Duke stored most of the waste in unlined pits and left it there "long after it knew it had environmental problems." 
  • Duke has been self-insured since 1986, but its previous policies covered damage that might not be discovered for decades, according to The Republic. In March, Duke sued for assistance in paying for the cleanup of coal ash ponds in North Carolina and South Carolina.

Dive Insight:

It's been three decades or more since Duke used outside companies to insure its coal ash storage operations, but now that the utility is on the hook for billions in cleanup costs, it wants a court to compel those companies to help pay.

If the utility is successful, Duke's claims against the insurance companies would be payable under the North Carolina Coal Ash Management Act, which was initially passed three years ago. Recovered monies would only go to cover groundwater contamination charge, and would not go towards any federal or state fines, or to pay for cleanup of the 2014 Dan River Spill.

Duke has more than a dozen coal ash sites to clean up in North Carolina, and one in South Carolina. Last year, the utility developed a proposal to excavate 34 basins and cap another 18 basins in place as part of its efforts to protect drinking water from the waste.

But the cost to clean it all up has been rising. January, Duke said it wanted to defer recovery of more than $700 million in cleanup costs until it filed a new rate case later this year.  Duke is also expected to seek a rate increase to pay for cleanup costs that could exceed $5 billion over the next several years.

The trial between Duke and the insurers is expected to run into 2019.

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