8-KMaterial AgreementsExhibits & Filings

Duke Energy CORP 8-K Report, Material Agreement (Jan 2, 2020)

Filed January 2, 2020For Securities:DUKDUKBDUK-PA

Summary

Duke Energy (DUK) has entered into a Settlement Agreement with the North Carolina Department of Environmental Quality (DEQ) and environmental advocacy groups regarding the closure of coal ash basins. This agreement resolves litigation and mandates the excavation of seven of the nine remaining coal ash basins in North Carolina, with the ash being moved to lined landfills. For the two remaining basins at Marshall Steam Station and Roxboro Plant, uncapped ash will be moved to lined landfills, while previously capped portions will be closed under separate regulations. This settlement is significant for investors as it lowers the estimated total undiscounted cost for closing these nine basins by approximately $1.5 billion, bringing the overall projected cost for closing all ash basins in North Carolina and South Carolina to an estimated $8 to $9 billion. The majority of this remaining expenditure is expected over the next 15-20 years. Duke Energy intends to seek recovery of these costs through the ratemaking process, which is a key consideration for future utility rates and profitability.

Key Highlights

  • 1Duke Energy's North Carolina subsidiaries (DEC and DEP) reached a Settlement Agreement with the NC DEQ and SELC on December 31, 2019.
  • 2The agreement mandates the excavation of seven of nine remaining coal ash basins in North Carolina, with ash moved to on-site lined landfills.
  • 3Two basins at Marshall Steam Station and Roxboro Plant will have uncapped ash excavated; capped portions will be closed under different regulations.
  • 4The Settlement reduces the estimated total undiscounted cost for these nine basins by approximately $1.5 billion.
  • 5The revised estimated total cost for closing all ash basins in North Carolina and South Carolina is now $8 to $9 billion.
  • 6Approximately $2.4 billion had been spent on ash basin closures through 2019.
  • 7The majority of the remaining costs are expected over the next 15-20 years, with Duke Energy planning to seek recovery through the ratemaking process.

Frequently Asked Questions

The settlement lowers the estimated total undiscounted cost to close the nine remaining coal ash basins by approximately $1.5 billion. The overall estimated cost for closing all ash basins in North Carolina and South Carolina is now projected to be between $8 billion and $9 billion, down from a previous estimate of $9.5 billion to $10.5 billion.

Duke Energy intends to seek recovery of all associated costs through the ratemaking process. This means they will likely ask state regulators to allow them to pass these expenses onto customers through their utility bills.

The majority of the remaining spend for these closures is expected to occur over the next 15 to 20 years.

Yes, pursuant to the Settlement, the parties agreed to settle and dismiss all related litigation, including appeals before the North Carolina Office of Administrative Hearings, state enforcement actions, and federal citizen suits concerning Clean Water Act violations.