Progress Energy 2010 Annual Report Download - page 47

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Progress Energy Annual Report 2010
We believe that we are in substantial compliance with
those environmental regulations currently applicable
to our business and operations and believe we have
all necessary permits to conduct such operations.
Environmental laws and regulations frequently change
and the ultimate costs of compliance cannot always be
precisely estimated.
HAZARDOUS AND SOLID WASTE MANAGEMENT
The provisions of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980,
as฀ amended฀ (CERCLA),฀ authorize฀ the฀ Environmental฀
Protection Agency (EPA) to require the cleanup of
hazardous฀waste฀sites.฀This฀statute฀imposes฀retroactive฀
joint and several liability. Some states, including North
Carolina, South Carolina and Florida, have similar types
of statutes. We are periodically notified by regulators,
including the EPA and various state agencies, of our
involvement or potential involvement in sites that may
require investigation and/or remediation. There are
presently several sites with respect to which we have
been notified of our potential liability by the EPA, the
state of North Carolina, the state of Florida or potentially
responsible parties (PRP) groups. Various organic
materials associated with the production of manufactured
gas, generally referred to as coal tar, are regulated under
federal and state laws. PEC and PEF are each PRPs at
several manufactured gas plant (MGP) sites. We are
also currently in the process of assessing potential costs
and exposures at other sites. These costs are eligible for
regulatory recovery through either base rates or cost-
recovery clauses (See Notes 7 and 21). Both PEC and
PEF evaluate potential claims against other PRPs and
insurance carriers and plan to submit claims for cost
recovery where appropriate. The outcome of potential
and฀pending฀claims฀cannot฀be฀predicted.฀Hazardous฀and฀
solid waste management matters are discussed in detail
in Note 21A.
We accrue costs to the extent our liability is probable
and the costs can be reasonably estimated. Because the
extent of environmental impact, allocation among PRPs
for all sites, remediation alternatives (which could involve
either minimal or significant efforts), and concurrence of
the regulatory authorities have not yet reached the stage
where a reasonable estimate of the remediation costs
can be made, we cannot determine the total costs that
may be incurred in connection with the remediation of
all sites at this time. It is probable that current estimates
could change and additional losses, which could be
material, may be incurred in the future.
In 2009, the EPA evaluated information about ash
impoundment dams nationwide and developed a listing
of 44 utility ash impoundment dams considered to have
“high฀ hazard฀ potential,”฀ including฀ two฀ of฀ PEC’s฀ ash฀
impoundment฀ dams.฀ A฀ “high฀ hazard฀ potential”฀ rating฀
is not related to the stability of those ash ponds but to
the potential for harm should the impoundment dam
fail. All of the dams at PEC’s coal ash ponds have been
subject to periodic third-party inspection for many years
in accordance with prior applicable requirements. The
EPA฀rated฀the฀44฀“high฀hazard฀potential”฀impoundments,฀
as well as other impoundments, from “unsatisfactory”
to “satisfactory” based on their structural integrity and
associated documentation.
Only dams rated as “unsatisfactory” would be considered
to pose an immediate safety threat. None of the facilities
received an “unsatisfactory” rating from the EPA. In
total, six of PEC’s ash pond dams, including one “high
hazard฀ potential”฀ impoundment,฀ were฀ rated฀ as฀ “poor”฀
based on the contract inspector’s desire to see additional
documentation and evaluations of vegetation management
and minor erosion control. Inspectors applied the same
criteria to both active and inactive ash ponds, despite the
fact that most of the inactive ash impoundments no longer
hold water and do not pose a risk of breaching and spilling.
PEC has completed several of the EPA’s recommendations
for the active ponds and other recommended actions
are under way. Following evaluations and inspections,
engineers have determined that one ash pond dam
requires modifications to comply with current standards
for an extra margin of safety for slope stability. Design and
permitting efforts for that work have been initiated. PEC
is working with the North Carolina Dam Safety program
to evaluate the remaining recommendations. We do not
expect mitigation of these issues to have a material impact
on our results of operations.
As of January 1, 2010, dams at utility fossil-fired power
plants in North Carolina, including dams for ash ponds,
are subject to the North Carolina Dam Safety Act’s
applicable provisions, including state inspection. Those
provisions are under the purview of the North Carolina
Division of Land Resources. The division has completed
its initial inspections of all of PEC’s dams. No significant
issues were found.
The EPA and a number of states are considering additional
regulatory measures that may affect management,
treatment, marketing and disposal of coal combustion
residues, primarily ash, from each of the Utilities’ coal-
fired plants. Revised or new laws or regulations under