April 2, 2014 | By Barbara Vergetis Lundin

Duke Energy shareholders are calling for an independent internal investigation into the circumstances surrounding the February 2, 2013 spill of more than 30,000 tons of coal ash and 27 million gallons of contaminated water at the Duke Energy Cape Fear plant into the Dan River in North Carolina. The North Carolina Department of Environment and Natural Resources found that Duke Energy failed to take all reasonable measures to prevent the spill. The events have shaken shareholder confidence in Duke Energy and its board.

Credit: The North Carolina Department of Environmental Resources

The investigation will examine whether adequate policies and procedures exist within the company and at the board level to prevent spills in the future and to ensure compliance with current regulations and best practices. The shareholders expect that Duke Energy will do business in a way that will promote public confidence, sustain the environment and enhance long-term share value.  

The letter submitted to request the investigation cites concerns about the severity of the Dan River spill, Duke's purported violations of numerous regulations, the issuance of federal subpoenas, and the lack of clarity of clean-up costs and future storage plans for coal ash. The investigation will focus on the circumstances surrounding allegations that are now the subject of a federal criminal investigation involving Duke, as well as the lobbying and political activities regarding regulatory and enforcement efforts at the company's coal ash facilities.

"The spill, subsequent revelations regarding regulatory violations and the ensuing criminal investigation have created serious reputational risks," the shareholders wrote. "These developments also raise broader questions about Duke's approach to the management of long-term environmental risks like climate change and water pollution and underscore the need for greater transparency of political and lobbying activity. If they remain unaddressed, these matters may have material consequences for Duke Energy and its long-term shareholders."

State Treasurer Rob McCord, one of the institutional investors calling for the investigation and the sole fiduciary of $2.2 million of Duke securities held by several commonwealth funds, is concerned over the fact that Duke's conduct could diminish the long-term value of Pennsylvania's nearly $44 million in securities issued by the company.

"While a lax approach to managing environmental risks may appear to benefit shareholders in the short-term by reducing expenditures, recent events show this approach dramatically increases risk for investors," said McCord. "These events are a reminder that we need to properly manage environmental risks not only for the health and well-being of our citizens, but also for taxpayers and investors who foot the bill when incidents occur."

For more:
- see this letter

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