Duke Energy Sues Insurers Over Coal Ash Cleanup Costs

The largest U.S. electric company sued 30 international and domestic insurance companies Wednesday, saying they should cover part of the utility’s multibillion-dollar cleanup costs in the Carolinas for toxic byproducts left from decades of burning coal to generate power.

Charlotte-based Duke Energy Corp. said it filed a lawsuit in state court alleging breach of contract by insurers that have refused to pay claims that could total hundreds of millions of dollars.

Duke Energy said the companies were paid to provide general liability coverage to its operating subsidiaries in North Carolina and South Carolina, and their predecessor companies. The policies date from between the early 1970s and mid-1980s, and were purchased to protect utility customers from unexpected costs, it said.

In a separate federal lawsuit also filed Wednesday, a Bermuda-based insurer said Duke Energy’s predecessors had years ago tried and failed to get it to pay for coal ash liabilities, and it’s now too late to go to court. Associated Electric & Gas Insurance Services Limited did not describe in its lawsuit why it refused separate claims for payment in 1996 tied to coal ash costs by Duke Energy’s two predecessor companies, which merged in 2012.

Duke Energy has estimated its liability for cleanup and storage efforts at about $4.2 billion. The utility had spent more than $725 million through November.

The utility is expected to ask North Carolina regulators for rate increases this year that include cleanup costs passed along to its customers. Money recovered from insurers would reduce the price tag for consumers, the company said

Coal ash contains arsenic, lead, mercury and other elements that “may be hazardous in sufficient quantities or concentrations,” Duke Energy lawyers wrote in their lawsuit. 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.

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

“Today, we’re making great progress protecting the environment around our basins, spending millions of dollars to comply with strict new laws and requirements that we, like other utilities, could not have anticipated decades ago,” the company said in a statement.

A North Carolina law is requiring Duke Energy to dry out and cap its coal ash pits at some of its 14 plants in the state. The company will excavate coal ash and move it away from waterways at eight of the North Carolina sites and two others in South Carolina.

Environmentalists want the residue moved from the remaining six plants “to protect North Carolina from hazardous substances, groundwater pollution, and environmental damage,” Frank Holleman, an attorney for the Southern Environmental Law Center, said in an email.

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