Duke Energy coal ash insurance dispute
In 2017 Duke Energy sued about 30 insurers over coverage for coal ash cleanup liabilities estimated at $5.1 billion. Settlements with 23 insurers brought in about $418 million by August 2021; regulators separately allowed part of the cost to be passed to customers.
Duke's liability estimate in 2017 compared with settlements received through August 2021; the two figures are from different dates.
Status As of August 2021: Duke reached 14 settlements with 23 insurers, the last in August 2021, for about $418 million; the January 2021 rate settlement keeps part of the cleanup cost with customers.
- Insurers — Paid about $418 million in settlements against a $5.1 billion liability estimate; the court did not find intentional damage proved at the Mayo plant.
- Duke Energy — Continues to earn a return on remaining cleanup costs at a lower rate than it had proposed (January 2021 settlement). Utility Dive
- Duke Energy Progress customers — Fixed monthly charge rose 25%, from $11.13 to $14, allowing recovery of $232 million (February 2018). Appalachian Voices
- Groundwater (US-wide figure, not specific to Duke sites) — 91% of US plants with ash ponds (265 of 292) contaminate groundwater (2022).
What happened
Duke Energy's coal ash ponds in North Carolina and South Carolina produced cleanup liabilities. The estimate recorded in the case was $5.1 billion, and more than $725 million had been spent by November 2016.
On 29 March 2017 Duke sued about 30 insurers in North Carolina state Business Court. The claims rested on 57 general liability policies written from the early 1970s to the mid-1980s. AEGIS, an insurer based in Bermuda, filed its own federal suit the same day, saying that Duke's predecessors had tried and failed to get it to pay on claims made in 1996 and that it was “now too late to go to court”.
The insurers gave several grounds: that the damage “was caused intentionally, by or at Duke's direction”; that Duke “continued to dispose of (coal ash) in unlined ash ponds long after it knew it had environmental problems”; that there were no distinct pollution events (an “occurrence” under the policies); and that Duke had made claims for the same ponds in the 1990s.
Chief Judge Bledsoe found on summary judgment that the insurers had not proved intentional damage at the Mayo plant, and ruled that “all sums” allocation applies to the insurers TIG and Ranger. Duke reached 14 settlements with 23 insurers, the last in August 2021, and received about $418 million. Two foreign insurers defaulted.
Separately, regulators decided how much of the cleanup cost customers would bear. In February 2018 the North Carolina Utilities Commission allowed Duke Energy Progress to recover $232 million, raising customers' fixed monthly charge from $11.13 to $14 (25%), and imposed a $30 million penalty for mismanagement. In a January 2021 settlement Duke agreed not to pass about $1.1 billion of a cleanup plan estimated at $8–9 billion on to customers, and it continues to earn a return on the remaining costs at a lower rate than it had proposed.
- 1996Claims made to AEGIS by Duke's predecessors (per AEGIS)
- 2016More than $725m spent on coal ash by November
- 2017Duke sues about 30 insurers in North Carolina Business Court; AEGIS files its own federal suit the same day (29 March)
- 2018Utilities Commission lets Duke Energy Progress recover $232m and imposes a $30m penalty (23 February)
- 2021Settlement with regulators and customers' side (January); last of 14 insurer settlements (August)
What was said
“was caused intentionally, by or at Duke's direction”
“continued to dispose of (coal ash) in unlined ash ponds long after it knew it had environmental problems”
“now too late to go to court”
Where accounts differ
Each party's account, side by side, with its source. The record does not settle these points; it shows them.
Sued about 30 insurers in March 2017 over 57 general liability policies, with a liability estimate of $5.1 billion.
Indiana Business Journal (ibj.com)The damage “was caused intentionally, by or at Duke's direction”; Duke “continued to dispose of (coal ash) in unlined ash ponds long after it knew it had environmental problems”; there were no distinct pollution events; Duke had made claims on the same ponds in the 1990s.
Indiana Business Journal (ibj.com)Insurers had not proved intentional damage at the Mayo plant on summary judgment; “all sums” allocation applies to TIG and Ranger.
Indiana Business Journal (ibj.com)How it looked
Shown
Recorded
- Duke's suit named about 30 insurers and 57 general liability policies from the early 1970s to the mid-1980s; the liability estimate was $5.1 billion and more than $725 million had been spent by November 2016.
- Insurers argued the damage was intentional, that Duke kept using unlined ponds after it knew of environmental problems, that there was no distinct pollution event, and that Duke had made claims on the same ponds in the 1990s.
- On summary judgment Chief Judge Bledsoe found the insurers had not proved intentional damage at the Mayo plant and ruled that “all sums” allocation applies to TIG and Ranger.
- 14 settlements with 23 insurers, the last in August 2021, brought in about $418 million. Two foreign insurers defaulted.
- February 2018: fixed monthly charge for Duke Energy Progress customers rose from $11.13 to $14 (25%), allowing recovery of $232 million; the commission imposed a $30 million mismanagement penalty.
- January 2021 settlement: Duke agreed not to pass about $1.1 billion of an $8–9 billion plan on to customers and continues to earn a return on the remaining costs at a lower rate than it had proposed.
Who gained
Reached nature or the ground
Gained elsewhere
Responses on record
- aegis-bermuda (2017-03-29): Filed its own federal suit the same day as Duke's, saying Duke's predecessors had tried and failed to get it to pay on 1996 claims and that it was “now too late to go to court”. · Indiana Business Journal (ibj.com)
In court and with insurers
Lawsuits and rulings
- 2017-03-29–2021-08Settled$418m about $418 million received in settlements (millions of dollars)Duke Energy v. about 30 insurers (coal ash coverage)North Carolina Business Court · Civil · Duke Energy → About 30 insurers
Claim under 57 general liability policies from the early 1970s to the mid-1980s. The insurers argued intentional damage, knowledge of environmental problems, no distinct pollution event and earlier claims on the same ponds. The court found on summary judgment that intentional damage had not been proved at the Mayo plant and that “all sums” allocation applies to TIG and Ranger. 14 settlements were reached with 23 insurers, the last in August 2021; two foreign insurers defaulted.
- 2017-03-29–Outcome not on recordAEGIS v. Duke EnergyUS federal court (court not specified in the record) · Civil · AEGIS (Bermuda) → Duke Energy
AEGIS filed its own suit the same day as Duke's, saying Duke's predecessors had tried and failed to get it to pay on claims made in 1996 and that it was “now too late to go to court”. The outcome is not given in the record. Indiana Business Journal (ibj.com)
- 2018-02-23Outcome not on recordDuke Energy Progress rate case (coal ash cost recovery)North Carolina Utilities Commission · Regulatory · Duke Energy Progress → Not stated (customer ratepayers and intervenors)
The commission raised the fixed monthly charge for Duke Energy Progress customers from $11.13 to $14 (25%), allowing recovery of $232 million spent by the company, and imposed a $30 million mismanagement penalty. The hearing included testimony from a customer. The record does not state how this compares with what Duke sought. Appalachian Voices
- 2021-01SettledJanuary 2021 coal ash cost settlementNorth Carolina (counterparties not specified in the record) · Regulatory · Not specified → Duke Energy
Duke agreed not to pass about $1.1 billion of a cleanup plan estimated at $8–9 billion on to customers. It continues to earn a return on the remaining costs, at a lower rate than it had proposed. Utility Dive
Insurers
- 2021Refused, paid after suit$418m about $418 million received in settlements (millions of dollars)About 30 insurers, including TIG and Ranger → Duke EnergyStated reason: Insurers argued the damage was intentional, that Duke kept using unlined ponds after it knew of environmental problems, that there was no distinct pollution event and that Duke had made claims on the same ponds in the 1990s.
Duke sued in March 2017. 14 settlements with 23 insurers followed, the last in August 2021; two foreign insurers defaulted. The liability estimate at filing was $5.1 billion.
- 2017In litigationAEGIS (Bermuda) → Duke EnergyStated reason: AEGIS said the claims, made by Duke's predecessors in 1996, were out of time: “now too late to go to court”.
AEGIS filed its own federal suit the same day as Duke's. The outcome is not given in the record. Indiana Business Journal (ibj.com)
What nature saw
Nature's report opens this page. Below: further outcomes measured on the ground.
What we don't know
Nature
- Not measured Harm to nature: The record holds no measurement of harm to nature.
Court
Accounts
- Disputed Were the insurers liable under the 1970s and 1980s general liability policies for the coal ash damage?
Record
- Insufficient Reported but not independently verified: that in 2017 the Utilities Commission allowed Duke to pass all coal ash cleanup costs to customers except a $100 million environmental penalty.
- Insufficient Reported but not independently verified: that the North Carolina Supreme Court partly reversed the Commission's decision in December 2020.
- Insufficient Reported but not independently verified: that under the 2021 settlement shareholders bore about three-quarters of the cost of the unlined ponds.
- None on record The outcome of the AEGIS federal suit is not given in the record.
Did the harm stop?
The insurance suits ended with settlements, the last in August 2021.
Who paid?
Insurers paid about $418 million in settlements against a $5.1 billion liability estimate. Customers were allowed to bear part of the rest through rates; under the January 2021 settlement about $1.1 billion of an $8–9 billion plan was not passed on to them.
Sources
Press and investigations
- Insurers were off the hook: Duke Energy knew coal ash riskIndiana Business Journal (ibj.com) ·
- Duke coal ash clean-up settlement shifts $1.1B in costs away from North Carolina customersUtility Dive · 2021-01-26
Communities and civil society
- N.C. regulators shift coal ash cleanup costs to ratepayersAppalachian Voices · 2018-03-07
Connected cases
- Duke Energy coal ash cleanup cost recovery (North Carolina) United States · 2017–2021 Related matter
- Duke Energy (Company) — here: Policyholder and plaintiff; coal ash owner; there: Utility cleaning up coal ash; seeks cost recovery
- North Carolina Utilities Commission (Public authority) — here: State utility regulator; set cost recovery from customers; there: Regulator; set rates and imposed a $30 million penalty (2018)
- US coal ash ponds, groundwater contamination and EPA delay United States · 2015–2026 Related matter
- Duke Energy (Company) — here: Policyholder and plaintiff; coal ash owner; there: Utility; coal ash owner, claimant against insurers
- TVA Kingston coal ash spill insurance United States · 2008–2014 Related matter