DUKE 

ENERGY~ 

March 12, 2014 

Mr. Pat McCrory 

Governor of the State of North Carolina 

NC State Capitol 

1 East Edenton Street 

Raleigh, NC 27601 

Mr. John Skvarla 

Secretary, Department of Environment and Natural Resources 

NC State Capitol 

1 East Edenton Street 

Raleigh, NC 27601 

Dear Governor McCrory and Secretary Skvarla: 

,§- ' 11'- • , ._,--

Lynn J. Good 

President, CEO and Vice Chair 

Duke Energy Corporation 

550 South Tryon Street 

Charlotte, NC 28202 

This letter provides an update to my February 28 letter and delivers recommendations 

for near-term and longer-term actions at our ash basins in North Carolina. Taken 

together, these near-term and longer-term actions comprise our comprehensive ash 

basin plan. Our recommendations have been developed around guiding principles 

designed to prevent future events and to identify opportunities to improve ash pond 

management activities. 

We are committed to working with the State of North Carolina, the North Carolina 

General Assembly, the North Carolina Utilities Commission (NCUC) and all of our 

regulators as we develop an updated, comprehensive plan that protects the 

environment and provides safe, reliable and cost-effective electricity to North 

Carolinians. As we progress through implementation, we will continue to refine and 

expand these recommendations, including the design, engineering and cost 

estimates. We will also be working on these matters with our regulators in other 

states we serve. 

We have accepted responsibility for the Dan River ash discharge and have taken a 

number of immediate actions following the event: 

• We installed a permanent plug on the 48-inch stormwater pipe on February 8, 

and permanently plugged the 36-inch pipe on February 21 . 

• Crews have removed coal ash in an area of the riverbed below the broken 

stormwater pipe's discharge point. We will continue to work with state and 

federal agencies as we determine next steps needed for the river. 
• Company representatives presented information about the Dan River ash release 

to the North Carolina General Assembly's Environmental Review Commission on 

February 17 and to the NCUC on February 24. 

• We have worked with the North Carolina Division of Water Resources to redirect 

stormwater around the basins in a manner compliant with our National Pollution 

Discharge Elimination System (NPDES) permit, until a permanent solution is 

devised. 

• We, along with various agencies, have continually tested the water in the Dan 

River. The drinking water has remained safe. 

We will continue to work with you, your staffs and all appropriate regulatory agencies to 

finalize our work at Dan River. 

For more than a century, our company has provided reliable and affordable electricity to 

our customers. Coal-fired power plants produced a good portion of that electricity. 

Throughout the past few decades, we have dedicated significant resources to the 

management and monitoring of our ash basins. We continue to place the safe 

operations of these ash basins as one of our highest priorities. 

We have formed a team dedicated to strengthening our comprehensive strategy for 

managing all of our ash basins. John Elnitsky, most recently the company's vice 

president of project management and construction, is leading this effort. This team will 

focus on implementing our recommendations listed below as well as identifying and 

addressing ongoing improvement opportunities. This work will provide an opportunity 

for us to assess our ongoing storage techniques and will influence the ash basin closure 

strategies for our retired facilities, recognizing that any storage technique embodies cost 

and risk-reduction tradeoffs. We want to make certain that we, our regulators and other 

stakeholders can have a high degree of confidence in the integrity of our ash basins. 

As stated above, our comprehensive plan is comprised of both near-term and longerterm actions. Our near-term actions set forth below address three specific retired 

plants, specific actions related to three active operating units (Cliffside 5 and both 

Asheville units), and an approach to reduce risk on remaining ponds at all retired plants. 

These actions are first steps in a more comprehensive plan that will address all retired 

sites (21 ponds/7 sites) and pond management at active sites (12 ponds/7 sites). Of 

course, implementing our near-term recommendations and longer-term plans depends 

on state and federal agreement that these are prudent, cost-effective and 

environmentally sound options. They are as follows, with associated time frames: 

• Permanently close the Dan River ash ponds and move ash away from the river to 

a lined structural fill solution or a lined landfill. This work will be started 

immediately upon securing the appropriate fill solution or landfill location and any 

necessary permits, with an expected completion th.ereafter of 24-30 months. 

• Accelerate planning and closure of the Sutton ash ponds to include evaluation of 

possible lined structural fill solutions and other options. A conceptual closure 

plan will be submitted to the North Carolina Department of Environment and 

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Natural Resources (NCDENR) within six months, and removing the water from 

the ash basins will be completed in the next 18-24 months. 

• Move all ash from Riverbend away from the river to a lined structural fill solution 

or a lined landfill. Work will begin immediately upon securing the appropriate fill 

solution or landfill location and any necessary permits, with an expected 

completion thereafter within 48-54 months. 

• Continue moving ash from the Asheville plant to a lined structural fill solution. 

We continue to look for ash reuse opportunities where such uses remain 

permissible under the upcoming coal ash regulations. 

• Convert the three remaining North Carolina units to dry fly ash (Cliffside 5 and 

both Asheville units) or retire the units. Conversion work, if selected, will be 

completed within 30-36 months of receiving permits. 

• Minimize the potential risk of a discharge similar to Dan River by accelerating the 

removal of water from the ash ponds at all retired coal plants. Upon receipt of 

permits, dewatering will be completed within 24-36 months. 

In addition, we have taken immediate action to initiate a near-term comprehensive 

engineering review of all of our ash basins to identify and address potential risks. This 

review consists of a risk-informed approach to confirm the structural integrity of the ash 

basins and associated structures, as well as the characterization and evaluation of all 

stormwater discharges near ash basins. We expect this engineering review to continue 

over the next six-to-eight months. 

We are also developing a comprehensive longer-term ash basin strategy for all ash 

ponds in North Carolina and throughout our service territory. This strategy will include a 

review of active ponds, inactive ponds and closure strategies for the remaining retired 

plants, will be informed by outside experts, and will include a risk-informed, tiered 

approach. The work will include a review of the effectiveness of ash storage 

management programs and practices to confirm that longer-term solutions are 

sustainable and lessons learned are captured for company-wide application. This 

comprehensive strategy will evaluate options up to and including complete conversion 

to all dry handling. This work will be completed by year-end. 

We want to get the near-term and longer-term strategies right and implemented in a 

timely way. That will require close coordination with NCDENR and/or the United States 

Environmental Protection Agency (EPA) on permitting, as well as consideration of many 

factors including environmental and transportation issues for each community where 

coal ash is stored. We look forward to working with and incorporating the input of those 

agencies, as well as your offices and the General Assembly, to accomplish these 

objectives. 

As our plans progress, it will be important to align our steps with upcoming federal 

regulations. The EPA issued a proposed rule on June 21, 2010, regarding federal 

regulation of coal ash. A final rule is expected by December 19, 2014. In addition, the 

EPA issued a proposed rule June 7, 2013, for Steam Electric Effluent Guidelines that 

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regulates wastewater streams from power plants. The final rule is expected no sooner 

than May 2014. Our longer-term solutions must satisfy these rules. 

As we continue to refine our recommendations, we would like to meet to discuss the 

near-term items and our comprehensive strategy. Such a meeting should include 

technical expertise from the company and your agencies to listen to and challenge 

assumptions. Cost estimates to implement these recommendations are very dependent 

upon the actual disposal methods that are approved (e.g., cap in place versus structural 

fill or lined landfills), and we will work with the state to make estimates available as we 

narrow the range of options at each particular site. 

Low-cost power generation has fueled the development of our state over the last 

century. As scientific knowledge and technology have advanced, we have worked 

constructively with the policymakers and regulators of our state to develop cost-effective 

ways to continue providing reliable, low-cost energy to our citizens while protecting 

public health and the environment. 

We look forward to continuing this work as we develop and implement these 

recommendations for both immediate and longer-term solutions to coal ash storage and 

disposal. 

Sincerely, 

Lynn J. Good 

President and Chief Executive Officer 

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