8-KRegulation FD

Duke Energy CORP 8-K Report, Regulation FD Disclosure (May 22, 2014)

Filed May 22, 2014For Securities:DUKDUKBDUK-PA

Summary

Duke Energy Carolinas, LLC, a subsidiary of Duke Energy Corporation, has entered into an Administrative Settlement Agreement and Order on Consent for Removal Action with the U.S. Environmental Protection Agency (EPA) regarding the February 2, 2014, coal ash release at its Dan River Steam Station. This agreement outlines the company's responsibilities for the removal of coal ash from the Dan River, including ongoing monitoring, ash removal to a specific dam, water treatment, and subsequent site assessments. The company will also dispose of all removed ash off-site and develop spill prevention and safety plans. While the total cost of compliance with this agreement is currently unestimable, the company notes that EPA's direct reimbursement costs to date are less than $1 million. Duke Energy anticipates that the costs directly associated with complying with this specific removal agreement will not be material to the company. However, other significant costs related to the Dan River incident, such as natural resource damages, pending litigation, future claims, and long-term environmental impacts, are not yet quantifiable.

Key Highlights

  • 1Duke Energy Carolinas, LLC has settled with the EPA regarding the February 2, 2014 Dan River coal ash release.
  • 2The settlement mandates the removal of coal ash from the Dan River to the Schoolfield Dam.
  • 3Ongoing monitoring of surface water, drinking water, and sediment is required.
  • 4All removed coal ash will be disposed of off-site.
  • 5Duke Energy will pay EPA's past and future direct/indirect costs related to the settlement.
  • 6Penalties for non-compliance range from $1,000 to $8,000 per day, or up to $500,000 if the EPA performs the work.
  • 7The company estimates the costs for this specific removal agreement are not material, but other related costs remain unestimable.

Frequently Asked Questions

The agreement's main purpose is to formally outline Duke Energy Carolinas' responsibilities and actions for the cleanup and removal of coal ash from the Dan River following the February 2, 2014 release at the Dan River Steam Station, in coordination with the EPA.

While the total cost to the company of compliance with this specific agreement cannot be estimated, the EPA's requested reimbursement costs to date are less than $1 million. Duke Energy does not expect the costs related to this removal action to be material to the company. However, other costs associated with the Dan River incident, such as litigation and long-term environmental impacts, are not yet estimable.

The agreement mandates the continuation of water and sediment assessments and monitoring, the physical removal of remaining coal ash from the release site to the Schoolfield Dam, treatment of water generated during removal, development of a site assessment to determine residual contamination, off-site disposal of removed ash, and the creation of spill prevention and public safety plans.

Yes, Duke Energy faces penalties ranging from $1,000 to $8,000 per day for each violation of the agreement. In the event the EPA has to perform the work themselves, Duke Energy could face penalties up to $500,000.