Rising cost of coal

Editorial by Greensboro News-Record, March 12, 2014.

The price of coal may be going up for Duke Energy customers.

The reason why can be seen at the failed coal ash pond at Duke’s Dan River plant in Eden.

While Duke said it will clean up the Dan River without passing costs to its users, last month’s spill prompted state officials to take a new look at waste storage at all 14 Duke sites where it maintains such ponds. Gov. Pat McCrory said he hopes Duke will relocate them all away from water sources and has requested a plan this week.

Duke CEO Lynn Good, meanwhile, said last week that customers will pay for whatever long-term remedies the utility implements: “Because that ash was created over decades for the generation of electricity, we do believe that ash pond disposal costs are ultimately a part of our cost structure.”

Responsible disposal should have been part of Duke’s cost structure for all those decades. Its neglect helped build profits. It should be a tough sell to the N.C. Utilities Commission for Duke to get permission to pass overdue expenditures to customers.

Duke chose cheap disposal of waste products of a cheap fuel source. Customers, including large industrial users, benefited from low rates for power. Everyone — Duke, its customers and government — seemed happy with the arrangement.

Now, this convenient neglect may finally exact a higher price. And what some analysts have said for years — that the costs of coal are far greater than they appear — may prove to be true.

“We estimate that the life cycle effects of coal and the waste stream generated are costing the U.S. public a third to over one-half of a trillion dollars annually,” a 2011 study by Paul R. Epstein of Harvard Medical School and others published by the New York Academy of Sciences said. “Accounting for the damages conservatively doubles to triples the price of electricity from coal per kWh generated.”

The United States is blessed with the most abundant recoverable coal deposits in the world — enough to last more than 200 years at current production levels, the U.S. Energy Information Agency says. Coal accounts for nearly 40 percent of the country’s electricity generation, and a large share of Duke’s. “The continued use of coal is fundamental to Duke Energy as we plan for new power plants to economically and reliably meet our customers’ growing need for electricity,” the company says on its website.

At the same time, Duke is investing in renewable energy development. These are expensive initiatives, but the once-hidden costs of coal narrow that gap or clearly favor renewable energy in the long run.

That means customers get a better deal by paying for the development of cleaner future energy than by paying for cleaning up past mistakes. The Utilities Commission should take a very critical look at any Duke proposals to pass the costs of responsible coal ash disposal to present and future customers.

Perhaps past customers should have paid more for better management, but Duke profited all along from its decisions. So Duke should draw primarily from its reserves and current earnings to pay for safer storage of coal ash. Or else it may have to pay for more accidents to come.

http://www.news-record.com/opinion/n_and_r_editorials/article_aa86ed0c-a95a-11e3-8cbb-0017a43b2370.html