Insurers Say They Don’t Owe Because Duke Energy Knew Coal Ash Risk

Dozens of insurance companies say they’re not obligated to help pay for Duke Energy Corp.’s multi-billion dollar coal ash cleanup because the nation’s largest electric company long knew about but did nothing to reduce the threat of potentially toxic pollutants.

The claim is in a filing by lawyers for nearly 30 international and domestic insurance companies that were sued by Duke Energy in March to force them to cover part of the utility’s coal ash cleanup costs in the Carolinas.

The 57 policies generally promise to help Duke pay what it’s legally obligated to pay for property damage “caused by an occurrence,” even if liability for an incident doesn’t become known until decades later, the Charlotte-based company said in the same filing last week in the state court that hears complex business cases. Both sides filed the document in describing a litigation timeline that would lead to trial in mid-2019.

The insurers counter they’re not on the hook to pay. They say that because Duke Energy stored its coal ash in unlined pits as part of its normal practices, any property damage “was caused intentionally, by or at Duke’s direction” and there weren’t any distinct pollution events that triggered coverage.

They note that Duke was well aware that burning coal to generate electricity leaves byproducts containing toxic substances that can contaminate groundwater. They say Duke’s ash ponds were built without safeguards to prevent groundwater pollution, and some ash ponds placed the ash in direct contact with groundwater.

“Duke continued to dispose of (coal ash) in unlined ash ponds long after it knew it had environmental problems. By the 1990s Duke submitted insurance claims to some of the defendants and other insurers for the same ash ponds that are now at issue in this action. Although Duke was aware of these issues, it continued to operate its unlined ash ponds for decades,” the companies’ lawyers said.

Duke Energy has estimated its liability for cleanup and storage efforts at $5.1 billion for 14 North Carolina coal ash sites and one in South Carolina. The utility had spent more than $725 million through November. Money recovered from insurers would reduce the price tag for consumers, the company has said.

The utility earlier this month asked North Carolina regulators for rate increases starting next year that include passing along to customers about $977 million over five years. South Carolina’s utilities commission allowed Duke Energy Progress to start recouping coal ash cleanup costs as part of a $56 million rate increase approved in December.

Coal ash contains arsenic, lead, mercury and other elements that may be hazardous in sufficient concentrations. Environmentalists and state regulators have alleged those heavy metals have been draining through the unlined bottoms of pits where liquefied coal ash has been stored for decades.

A pit at a Duke Energy plant in North Carolina ruptured in 2014, coating miles of the Dan River in gray sludge.

Duke Energy said it stored coal ash in line with industry practices and regulations that were in place over preceding decades.

Duke Energy delivers electricity to about 7.4 million customers in the Carolinas, Indiana, Ohio, Kentucky and Florida.