Duke Energy's board to hear shareholder concerns on coal ash spill
The coalition wrote to Duke's board in March, saying its confidence has been shaken by the Feb. 2 spill into the Dan River
CHARLOTTE, N.C. (AP) — A group of investors is planning to push Duke Energy's board of directors to launch an investigation into issues surrounding a massive coal ash spill that coated 70 miles of a North Carolina river in toxic sludge.
"Duke has an opportunity here," Bill Dempsey, senior vice president of finance at the Nathan Cummings Foundation, told The Associated Press. His foundation is among a coalition of 20 large institutional investors in the Charlotte-based company, which is holding its annual shareholders meeting Thursday.
"They can get in front of the issue. They can do the right thing for their investors. They can have an independent investigation and put to rest many of the questions that are raised. The current strategy lends itself to even more questions being raised."
The coalition wrote to Duke's board in March, saying its confidence has been shaken by the Feb. 2 spill into the Dan River.
The letter expressed concern about an ongoing federal criminal probe and what the investors characterize as the company's inadequate response to the environmental disaster.
Coalition members received a letter two weeks ago saying Duke's board would not launch an investigation.
"Obviously it's disappointing," said Laura Campos, a spokeswoman with the Nathan Cumming Foundation. "We think the board of directors needs to step up and really make sure they're getting independent information and there's an independent review of what happened and what needs to happen going forward."
The company's letter, signed by Philip Sharp, a board member and chairman of the company's regulatory policy and operations committee, said Duke had already taken multiple steps, including a "comprehensive engineering review of every Duke Energy ash basin."
"This review will be the basis for implementing near-term actions and developing longer-term solutions across our entire system," he said.
Dempsey said the coalition will still bring the coal ash issue before the board.
"It's just interesting that the company obviously felt comfortable dismissing the concerns of some of the largest institutional investors that they have," he said.
It's not unusual for boards to face tough issues during annual shareholders meetings. In some cases, large institutional investors have pushed for change in corporate leadership and direction.
In Duke's case, the coalition of investors, citing a provision in the company's charter, demanded an initial report from the board at the shareholders meeting.
The group is comprised of directors of big investment funds and pension plans that hold Duke stock, including state treasurers in Connecticut, Oregon and Pennsylvania, as well as the Illinois State Board of Investment and California State Teachers' Retirement System.
After an initial dip, the company's stock price has remained largely steady at near $70 a share since the spill. The nation's largest electricity company, Duke reported $24.6 billion in total revenues for 2013, with nearly $2.7 billion in net profits.
In a filing with shareholders two weeks ago, Duke said cleanup costs resulting from the Dan River spill won't have a material effect on the company's bottom line.
The nation's largest electric company said in a regulatory filing with the U.S. Securities and Exchange Commission that it had spent $15 million so far on plugging the collapsed pipe at its Eden power plant that triggered the spill. The company has also begun trying to dredge some of the spilled ash from the river.
Duke said it can't yet assess what costs may result from new laws affecting how the company handles the ash at its 33 coal ash dumps in North Carolina, or from future legal claims, litigation or environmental fines.
Meanwhile, environmental groups are planning to protest outside Duke's headquarters during Thursday's shareholders' meeting.
The group, including the Sierra Club, said Wednesday they had launched an ad campaign to keep the pressure on the company to clean up the ash pits.
"Duke Energy's toxic coal ash legacy threatens North Carolinians' right to clean water," said Kelly Martin, senior campaign representative with Sierra Club's Beyond Coal campaign in North Carolina. "Our ads will run on prime-time television, bringing the message to households across North Carolina that Duke Energy needs to show real leadership and take action now to clean up its toxic coal ash."
North Carolina Gov. Pat McCrory has made a proposal he said would strengthen government oversight of the state's coal ash dumps. But the governor's plan didn't address the key issue of what will happen to Duke's ash pits.
McCrory, who worked at Duke for more than 28 years before retiring to run unsuccessfully for governor in 2008, said his plan would result in the "conversion or closure" of the dumps and close legal loopholes that allowed Duke to avoid cleaning up groundwater contamination leaching from unlined ash pits at 14 coal-fired power plants across the state.
All of Duke's ash pits are along the state's rivers and lakes — and the governor's plan doesn't force the company to move them.
Instead, his plan allows Duke to study the issue and set a timetable for how to eventually close the waste dumps.
Environmentalists have sharply criticized McCrory's plan, saying it doesn't go far enough.