Duke Energy, U.S. government agree to end Clean Air Act litigation

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Sep 10, 2015, 11:36 ET

CHARLOTTE, N.C., Sept. 10, 2015 /PRNewswire/ -- Duke Energy and the U.S. government have agreed to end a 15-year-old legal case against the company for alleged violations of the federal Clean Air Act at some of the company's coal-fired power plants in North Carolina.

Duke Energy denies the alleged violations, maintains it complied fully with federal law, and is agreeing to settle the case solely to avoid the costs and uncertainties of continued litigation, the company says in a settlement agreement filed today with the U.S. District Court for the Middle District of North Carolina, in Greensboro.

Duke Energy estimates the costs of continued litigation would exceed the costs of the settlement agreement.

The agreement is subject to court approval.

Case background

The agreement would end the remaining component of a civil lawsuit (USA v. Duke Energy), filed against Duke Energy in 2000 by the U.S. Justice Department on behalf of the U.S. Environmental Protection Agency.

The government's original lawsuit focused on 25 Duke Energy coal-fired power plant units.

The government subsequently dismissed claims against 12 of those units – leaving 13 units as part of the lawsuit, 11 of which Duke Energy has since closed.

The government asserted that certain maintenance and repair projects at the power plants were "major modifications," as defined by the Clean Air Act, and that Duke Energy failed to obtain permits for the projects and install the "best available emission controls," as required.

Duke Energy asserted that the company did not violate the law because the projects were "routine," as defined by the Clean Air Act, or did not result in a net increase in emissions – and thus did not require permits and additional emission controls.

Since 2000, the government has filed similar complaints – most of them resolved by settlement agreements – against more than 30 electric utilities nationwide.

Agreement details

Under Duke Energy's agreement with the government, the company would close, by Dec. 31, 2024, two units at its five-unit, 1,140-megawatt Allen power plant in Belmont, N.C. – the two still-operating units that remain part of the litigation.

The company also would comply with new, lower emissions limits at those two units prior to closure.

In addition, Duke Energy would close, by Dec. 31, 2024, a third unit at the Allen plant that is not part of the case.

The Dec. 31, 2024 closure date for the three units – which opened between 1957 and 1959 – would be 42 months earlier than the three units' June 30, 2028 closure date forecasted in the company's latest "integrated resource plan."

The Allen plant's total electricity production capacity would decrease by about 50 percent (585 megawatts) after the three units' closures.

The plant's two remaining units, with a combined total electricity production capacity of 555 megawatts, would continue operating.

There would be no layoffs or impacts to the Allen plant's current 110-person workforce as a result of the agreement.

Also under the agreement, Duke Energy would spend $4.4 million on environmental projects and donations, allocated as follows:

Up to $600,000 for clean energy and energy efficiency projects in economically distressed counties in North Carolina and South Carolina.
At least $500,000 to replace wood-burning stoves with lower-emission residential heating appliances in North Carolina mountain counties and large cities.
$175,000 donated to the U.S. Forest Service.
$175,000 donated to the National Park Service.
All remaining funds to undertake one, or both, of the following North Carolina projects by 2020: installation of multiple electric vehicle charging stations (number and locations to be determined); and/or installation of electrical infrastructure at highway rest areas and truck stops (locations to be determined) to power parked trucks' cabs and cargo areas, allowing drivers to turn off engines and eliminate emissions.

Additionally under the agreement, Duke Energy would pay a $975,000 civil penalty to the government, separate from the environmental projects and donations expenditures.

About Duke Energy

Duke Energy is the largest electric power holding company in the United States. Its regulated utility operations serve approximately 7.3 million electric customers located in six states in the Southeast and Midwest. Its commercial power and international energy business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States.

Headquartered in Charlotte, N.C., Duke Energy is a Fortune 250 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available at duke-energy.com.

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Contact: Dave Scanzoni
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SOURCE Duke Energy