Duke's board to hear shareholders' concerns

CHARLOTTE, N.C. (AP) -- Some Duke Energy investors plan to push the utility's board of directors to investigate issues surrounding a massive coal ash spill that dumped toxic sludge into a 70-mile stretch of a North Carolina river.

About 200 protesters gathered in front of the Duke Energy headquarters Thursday morning as the company held its annual shareholders meeting.

The Rev. William Barber, president of the North Carolina chapter of the NAACP, told the protesters that the facts need to be brought out in the open. Barber said many of the coal ash pits are located in rural areas around minority communities.

"Duke is trying to say they have made a mess and now the people have to clean it up. What we're saying is they ought to clean it up," Barber said.

Bill Dempsey, senior vice president of finance at the Nathan Cummings Foundation, said Duke has the chance "to do the right thing for their investors." His foundation is among a coalition of 20 large institutional investors in the Charlotte-based company.

"They can have an independent investigation and put to rest many of the questions that are raised. The current strategy lends itself to even more questions being raised," Dempsey said.

The coalition wrote to Duke's board in March, saying its confidence has been shaken by the Feb. 2 spill into the Dan River. Two weeks ago, coalition members received a letter saying Duke's board would not launch an investigation.

"Obviously it's disappointing," said Laura Campos, the Nathan Cumming Foundation's director of shareholder activities. "We think the board of directors needs to step up and really make sure they're getting independent information and there's an independent review of what happened and what needs to happen going forward."

The company's letter, signed by Philip Sharp, a board member and chairman of the company's regulatory policy and operations committee, said Duke had already taken multiple steps, including a "comprehensive engineering review of every Duke Energy ash basin."

Dempsey said the coalition will still bring the coal ash issue before the board.

It's not unusual for boards to face tough issues during annual shareholders meetings. In some cases, large institutional investors have pushed for change in corporate leadership and direction.

In Duke's case, the coalition of investors, citing a provision in the company's charter, demanded an initial report from the board at the shareholders meeting.

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.

After an initial dip, the company's stock price has remained largely steady at near $70 a share since the spill. Duke reported $24.6 billion in total revenues for 2013, with nearly $2.7 billion in net profits.

In a filing with shareholders two weeks ago, Duke said cleanup costs resulting from the Dan River spill won't have a material effect on the company's bottom line.

The nation's largest electric company said in a regulatory filing with the U.S. Securities and Exchange Commission that it had spent $15 million so far on plugging the collapsed pipe at its Eden power plant that triggered the spill. The company has also begun trying to dredge some of the spilled ash from the river.

Duke said it can't yet assess what costs may result from new laws affecting how the company handles the ash at its 33 coal ash dumps in North Carolina, or from future legal claims, litigation or environmental fines.

North Carolina Gov. Pat McCrory has made a proposal he said would strengthen government oversight of the state's coal ash dumps. But the governor's plan didn't address the key issue of what will happen to Duke's ash pits.

McCrory, who worked at Duke for more than 28 years before retiring to run unsuccessfully for governor in 2008, said his plan would result in the "conversion or closure" of the dumps and close legal loopholes that allowed Duke to avoid cleaning up groundwater contamination leaching from unlined ash pits at 14 coal-fired power plants across the state.

All of Duke's ash pits are along the state's rivers and lakes — and the governor's plan doesn't force the company to move them.

Instead, his plan allows Duke to study the issue and set a timetable for how to eventually close the waste dumps.

Environmentalists have sharply criticized McCrory's plan, saying it doesn't go far enough.

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