Duke Energy to pay $975K penalty, do environmental work to settle case over coal-fired plants

Duke Energy and the Obama Administration are settling a 15-year-old lawsuit over claims that the largest U.S. electric company violated federal clean air laws by modifying coal-fired power generators without required air pollution control equipment, company and administration officials said Thursday.

The Charlotte-based energy company would pay a civil penalty of $975,000, shut down one coal-burning unit not previously included in the lawsuit and spend $4.4 million on environmental mitigation projects, under the proposed settlement with the U.S. Environmental Protection Agency and the Justice Department.

Duke Energy has already shut down 11 of the 13 North Carolina units at five power plants, and the shutdowns become permanent as part of the deal. Duke Energy must continuously operate pollution controls and meet interim emission limits at two coal-burning units at its Allen power plant in Belmont before permanently closing them by the end of 2024.

The monetary penalty is dwarfed by company earnings and by a fine it paid in another recent North Carolina environmental case.

Duke Energy last month reported second-quarter profits of $543 million and earned $1.88 billion in 2014. In May, the power giant agreed to plead guilty to nine criminal violations of the federal Clean Water Act and pay more than $102 million in fines and restitution for failing to contain water contaminated by coal residues at five North Carolina coal-burning plants. Coal ash is the waste left after coal is burned to generate electricity and contains toxic heavy metals including arsenic and mercury.

However, Thursday's smokestacks settlement was applauded by environmentalists, who focused on the reduced emissions rather than the size of Duke Energy's penalty.

"The thing that we're excited about is seeing more coal come off line," said Kelly Martin, a senior representative for the Sierra Club's Beyond Coal Campaign said. "That's good news for air quality, and water quality and climate change."

The two Allen units and a third not previously contested in the lawsuit, all of which date from the late 1950s, will be shuttered more than three years earlier than their planned retirement, the company said.

The smokestack equipment controls the release of sulfur dioxide and nitrogen oxide, which contribute to acid rain and smog and become converted to air particulates that can harm human respiratory and cardiovascular systems, the EPA said.

EPA officials estimated the settlement will reduce pollutants from the Allen site by about 2,300 tons per year before they're shut down, down from more than 51,000 tons in 2000 when the lawsuit was filed.

"After many years, we've secured a strong resolution, one that will help reduce asthma attacks and other serious illnesses for the people of North Carolina," said Cynthia Giles, assistant EPA administrator for enforcement.

The deal also requires Duke Energy to spend at least $4.4 million to restore native fish and plants on National Park Service and Forest Service lands in the North Carolina mountains, a program to help mountain residents replace wood stoves and fireplaces with cleaner-burning alternatives and an option to increase installation of electric vehicle charging stations.

Duke Energy denies it violated federal clean air laws, but agreed to settle the case to avoid the costs and uncertainties of litigation. Similar complaints against dozens of electric utilities across the country have also ended with settlement agreements, the company said.

The government's initial 2000 lawsuit was set for a trial beginning next month after legal maneuvering that prompted a 2007 U.S. Supreme Court decision. The high court agreed with EPA's interpretation of Clean Air Act regulations that apply when power plant modifications increase the amount of air pollution discharged.

The proposed settlement is subject to approval by a federal judge in Greensboro after a 30-day public comment period.

Duke Energy has 7.3 million electric customers located in the Carolinas, Florida, Kentucky, Ohio and Indiana. It also generates electricity it sells on the U.S. wholesale market and owns power plants in Latin America.

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Emery Dalesio can be reached at http://twitter.com/emerydalesio