RALEIGH) — Duke Energy shareholders called on the company's board on Thursday to launch an independent investigation into issues surrounding a massive coal ash spill that coated 70 miles of a North Carolina river in toxic sludge.
A letter sent to Duke's board of directors by a coalition of more than 20 large institutional investors says their confidence has been shaken by the Feb. 2 spill into the Dan River. The letter also expresses concern about an ongoing federal criminal probe and what the investors characterize as the company's inadequate response to the environmental disaster.
The letter comes as North Carolina's environmental agency was forced to admit state inspectors twice missed a large crack in an earthen dike holding back millions of tons of ash at a different Duke facility near the Cape Fear River.
Federal prosecutors have issued at least 23 subpoenas as part of a grand jury investigation into the spill and whether the company has received preferential treatment from state officials. North Carolina Gov. Pat McCrory worked at Duke for more than 28 years, and the company and its executives have been generous political supporters of his campaign and Republican groups that support him.
Citing a provision in the company's charter, the investors demand an initial report from the board at an annual shareholders meeting scheduled May 1.
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.
"In the wake of this catastrophic spill, shareholders are demanding answers and action," said Oregon State Treasurer Ted Wheeler. "As the owners of public corporations, shareholders expect companies to do business the right way, which will bolster public confidence, sustain the environment, and enhance long-term share value."
After an initial dip, the company's stock price has remained largely steady at about $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.
But Duke faces hundreds of millions in cleanup costs from the spill, and political pressure has been building on the company to move 33 coal ash dumps away from lakes and rivers in North Carolina. That could potentially cost the company billions more.
The ash, a byproduct left after coal is burned to generate electricity, contains toxic chemicals including arsenic, lead and mercury.
Duke spokesman Tom Williams said Thursday the company has already engaged independent engineering experts to perform a comprehensive assessment of all of its ash dumps. That review will be completed by May 31, he said.
"Our management has regularly updated the board on matters related to the Dan River coal ash discharge and our comprehensive plan to prevent future similar events, which includes taking a second look at our ash pond management activities," Williams said.
In the last month, North Carolina regulators have issued eight environmental violations against Duke for the Dan River spill and issues at several of its other facilities.
Photos taken earlier this month show that state regulators initially missed the crack in the dam at Duke's Cape Fear Plant.
State Department of Environment and Natural Resources spokesman Jamie Kritzer said inspectors from the agency visited the ash dump on March 11, but did not see the crack. The inspectors returned March 18, but were focused on a different part of the plant, Kritzer said.
Aerial photos taken March 10 by the environmental group WaterKeeper Alliance show the fissure, which was clearly marked by metal stakes topped with orange streamers. The dam also appears to be sagging and bulging near the crack.
The agency has said it didn't know about the crack until Duke reported it on March 20, after the company was cited for illegally pumping 61 million gallons of contaminated wastewater into the river.
Duke has refused to comment on its latest environmental violation or whether the crack was in any way connected to the unlawful pumping, which had been going on for months.
Kritzer said the state agency, which is known as DENR, may now consider seeking a change to North Carolina law, which currently only requires dam owners to notify regulators when there is judged to be a likelihood the dam might fail and emergency action is proposed.
"We feel it would have been prudent for the company to have informed DENR about the crack in the earthen dam as soon as the company identified the crack," Kritzer said. "Duke Energy did not let our inspectors know about the crack until the afternoon of March 20, and at that time told our inspectors that the company had spotted the crack about two weeks earlier."
The state then ordered the company to come up with an emergency action plan. Duke says the crack has since been repaired and that the dam was not in danger of collapse.
Though inspectors were concerned the water level in the pond was low, the state agency did not take any enforcement action on the issue until after the photos taken by the WaterKeeper Alliance were widely reported in the media.
Donna Lisenby, a spokeswoman for the environmental group, said the public can't trust DENR to thoroughly investigate Duke's coal ash ponds.
"They want the public to believe they failed to notice a 35-foot-long, 4-inch-wide crack so large a fifth grader could have seen it," she said. "Once again Duke failed to notify the agency of a serious problem in a timely fashion and DENR failed to find the problem even when they were standing right on top of it."