Bloomberg News

Duke Investors Urged to Reject Directors on Coal-Ash Spill (1)

April 14, 2014

Decommissioned Duke Energy Coal Fired Power Plant

The Dan River flows downriver towards the decommissioned Duke Energy Corp. coal fired power plant in Eden, North Carolina. Photographer: John D. Simmons/Charlotte Observer/MCT via Getty Images

Duke Energy Corp. (DUK:US) shareholders should vote against four board members for lapses that led to a February coal-ash spill that fouled a North Carolina River, the California Public Employees’ Retirement System and New York City Comptroller Scott Stringer said.

The four directors -- G. Alex Bernhardt Sr., James B. Hyler Jr., James T. Rhodes and Carlos Saladrigas -- “have failed to fulfill their obligations of risk oversight as members of a committee overseeing health, safety, and environmental compliance at the company,” Anne Simpson, senior portfolio manager for Calpers, and Stringer wrote in a letter (DUK:US) filed with the U.S. Securities and Exchange Commission today.

About 39,000 tons of ash spilled from a pond at a shuttered coal-fired power plant near Eden, North Carolina, on Feb. 2, triggering investigations and subpoenas. The incident, the third-largest coal-ash spill in the U.S., coated 70 miles (113 kilometers) of the Dan River, according to the letter.

A federal grand jury is probing the state’s oversight of the company’s 33 coal-ash ponds in North Carolina. Governor Pat McCrory, a former Duke employee, has asked the company to remove coal from riverbanks to prevent a recurrence.

The state regulator, the Department of Environmental and Natural Resources, last month cited Duke for violating pollution permits when it pumped 61 million gallons of coal-ash pond wastewater into a tributary of the Cape Fear River. The state is also seeking to revive lawsuits filed last year over pollution from ponds at two plants. Duke has denied the permit violations.

‘Deafening Silence’

Calpers and the New York City pension funds own a combined 3.9 million shares in Duke. The Charlotte, North Carolina-based company had no immediate comment on the letter.

“The board’s silence has been deafening in the lead up to and aftermath of the Dan River spill,” Stringer, a Democrat, wrote in an e-mail. “ We intend to hold accountable those directors most responsible for these costly oversight failures.”

The annual meeting is scheduled for May 1. Bernhardt has been on the board for 23 years and Rhodes for 12. Saladrigas and Tyler, who both joined as part of Duke’s acquisition of Progress Energy Inc., have been board members for 13 and 6 years, respectively.

Duke, the largest U.S. utility owner, rose 0.3 percent to $72.06 at the close in New York. The shares have gained 2.3 percent since news of the spill became public, the worst performance on the 13-company Standard & Poor’s 500 Electric Utility Index.

To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net

To contact the editors responsible for this story: Susan Warren at susanwarren@bloomberg.net Tina Davis, Robin Saponar


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Companies Mentioned

  • DUK
    (Duke Energy Corp)
    • $73.87 USD
    • -0.11
    • -0.15%
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