Duke Energy 2015 Annual Report Download - page 153

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PART II
DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. •
DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
disposal and other environmental matters. These regulations can be changed
from time to time, imposing new obligations on the Duke Energy Registrants.
The following environmental matters impact all of the Duke Energy
Registrants.
Remediation Activities
In addition to the Asset Retirement Obligations discussed in Note 9,
the Duke Energy Registrants are responsible for environmental remediation
at various sites. These include certain properties that are part of ongoing
operations and sites formerly owned or used by Duke Energy entities. These
sites are in various stages of investigation, remediation and monitoring.
Managed in conjunction with relevant federal, state and local agencies,
remediation activities vary based upon site conditions and location, remediation
requirements, complexity and sharing of responsibility. If remediation activities
involve joint and several liability provisions, strict liability, or cost recovery
or contribution actions, the Duke Energy Registrants could potentially be held
responsible for environmental impacts caused by other potentially responsible
parties, and may also benefit from insurance policies or contractual indemnities
that cover some or all cleanup costs. Liabilities are recorded when losses
become probable and are reasonably estimable. The total costs that may be
incurred cannot be estimated because the extent of environmental impact,
allocation among potentially responsible parties, remediation alternatives and/or
regulatory decisions have not yet been determined. Additional costs associated
with remediation activities are likely to be incurred in the future and could be
significant. Costs are typically expensed as Operation, maintenance and other
in the Consolidated Statements of Operations unless regulatory recovery of the
costs is deemed probable.
The following tables contain information regarding reserves for probable
and estimable costs related to the various environmental sites. These reserves
are recorded in Other within Deferred Credits and Other Liabilities on the
Consolidated Balance Sheets.
(in millions)
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Balance at December 31, 2012 $ 75 $ 12 $ 33 $ 14 $ 19 $ 15 $ 8
Provisions / adjustments 26 — 4 (1) 5 20 1
Cash reductions (22) (1) (10) (5) (5) (8) (2)
Balance at December 31, 2013 79 11 27 8 19 27 7
Provisions / adjustments 32 (1) 1 4 (3) 28 4
Cash reductions (14) — (11) (7) (4) (1) (1)
Balance at December 31, 2014 97 10 17 5 12 54 10
Provisions / adjustments 9 1 4 — 4 1 5
Cash reductions (9) (1) (4) (2) (2) (1) (3)
Balance at December 31, 2015 $ 97 $ 10 $ 17 $ 3 $ 14 $ 54 $12
Additional losses in excess of recorded reserves that could be incurred for
the stages of investigation, remediation and monitoring for environmental sites
that have been evaluated at this time are not material except as presented in
the table below.
(in millions)
Duke Energy $ 74
Duke Energy Carolinas 22
Duke Energy Ohio 42
Duke Energy Indiana 7
North Carolina and South Carolina Ash Basins
On February 2, 2014, a break in a stormwater pipe beneath an ash basin
at Duke Energy Carolinas’ retired Dan River Steam Station caused a release of
ash basin water and ash into the Dan River. On February 8, 2014, a permanent
plug was installed in the stormwater pipe, stopping the release of materials into
the river. Duke Energy Carolinas estimates 30,000 to 39,000 tons of ash and
24 million to 27 million gallons of basin water were released into the river. In
July 2014, Duke Energy completed remediation work identified by the EPA and
continues to cooperate with the EPA’s civil enforcement process. During 2014,
Duke Energy Carolinas incurred repairs and remediation expenses related to
the release of approximately $24 million. No additional expenses were recorded
in 2015. Duke Energy Carolinas will not seek recovery of these costs from
customers. Other costs related to the Dan River release, including pending or
future state or federal civil enforcement proceedings, future regulatory directives,
natural resources damages, additional pending litigation, future claims or
litigation and long-term environmental impact costs, cannot be reasonably
estimated at this time.
North Carolina Department of Environmental Quality (NCDEQ), formerly
the North Carolina Department of Environment and Natural Resources, has
historically assessed Duke Energy Carolinas and Duke Energy Progress with
Notice of Violations (NOV) for violations that were most often resolved through
satisfactory corrective actions and minor, if any, fines or penalties. Subsequent
to the Dan River matter discussed above, Duke Energy Carolina and Duke Energy
Progress have been served with a higher level of NOVs, including for violations
at L.V. Sutton Plant and Dan River Steam Station. In August 2014, NCDEQ
issued an NOV for alleged groundwater violations at Duke Energy Progress’ L.V.
Sutton Plant. On March 10, 2015, NCDEQ issued a civil penalty of approximately
$25 million to Duke Energy Progress for environmental damages related to
groundwater contamination at the L.V. Sutton Plant. See “Litigation” section
below for information related to the resolution of this civil penalty. On February 8,
2016, NCDEQ assessed a penalty of approximately $6.8 million, including
enforcement costs, against Duke Energy Carolinas related to storm water
pipes and associated discharges at the Dan River Steam Station. Duke Energy
Carolinas recorded a charge to Operation, maintenance and other on the
Consolidated Statements of Operations and Comprehensive Income in December
2015. Duke Energy Carolinas is reviewing the NCDEQ action to determine next
steps and cannot predict the outcome of this matter. These fines and penalties
are unprecedented and were not consistent with historic enforcement practices