Duke Energy Lawsuit: Fuel Charges, Coal Ash, and Securities Fraud

Duke Energy lawsuits over the past decade span criminal environmental prosecution, securities fraud, coal ash cleanup, climate deception, and rate disputes, with several matters resolved in 2025 and 2026. A North Carolina appeals court found the utility’s 2024 fuel rate approval illegal but declined to order refunds, a small town’s first-of-its-kind climate deception suit was dismissed, and a proposed 15% residential rate hike is being fought by the state’s attorney general.

Fuel Rate Ruling: Illegal, but No Refunds

In February 2026, the North Carolina Court of Appeals ruled unanimously that the state Utilities Commission “erred as a matter of law” when it let Duke Energy Carolinas fold roughly $19.1 million in under-recovered 2022 fuel costs into its 2024 fuel rider. Judge John Arrowood, writing for the three-judge panel, held that the statute’s plain language limited true-ups to costs incurred during the designated test period.¹²

Customers got no money back. While the appeal was pending, the North Carolina legislature enacted Senate Bill 266, the Power Bill Reduction Act, which removed the test-period restriction from the fuel rate statute. Because Duke could recover the same costs in future proceedings under the new law, the court concluded a refund order would provide “no meaningful relief.”³ Duke said the costs were “prudently incurred” and customer rates would remain unchanged.²

The bill that shielded Duke from refunds originated under Republican Senator Paul Newton, a former president of Duke Energy’s North Carolina operations. Governor Josh Stein vetoed it on July 2, 2025, citing research from NC State and Duke University projecting $23 billion in added ratepayer costs. The legislature overrode the veto on July 29, 2025.⁴⁵

The Pending Rate Hike and Attorney General’s Challenge

Duke Energy Carolinas has asked the North Carolina Utilities Commission to approve a roughly 15% increase in residential electricity rates, which would raise average monthly bills by about $29 over two years starting in 2027.⁶

Attorney General Jeff Jackson intervened, arguing the proposal would saddle ratepayers with $1.4 billion in unnecessary charges over two years. His office calls Duke’s requested return on equity of nearly 11% excessive and proposes 7.4% instead, which it says would save each residential customer roughly $435 while still letting Duke attract investment.⁷ Jackson has also asked for a separate rate class for data centers and other very large users, arguing Duke may be overstating data center growth projections and that other customers should not bear the infrastructure costs if that demand does not materialize.⁸ Governor Stein has formally backed the intervention, calling the proposed increase “simply too high.”⁵

Evidentiary hearings before the Utilities Commission were scheduled to begin July 7, 2026, with new rates potentially taking effect January 1, 2027.⁷ A separate petition signed by more than 72,500 people has demanded an independent audit of Duke’s billing system.⁹

The Carrboro Climate Deception Lawsuit

In December 2024, the Town of Carrboro filed what was described as the first climate deception lawsuit ever brought against an individual electric utility. The town alleged Duke had run a “decades-long campaign” to mislead the public about the dangers of fossil fuels, funding climate-skeptic organizations and greenwashing its record. Carrboro said it faced roughly $60 million in climate adaptation costs, including stormwater upgrades and road repairs, against an annual municipal budget of $81 million. The nonprofit NC WARN covered the town’s legal fees.¹⁰

The complaint drew on a report titled “Duke Energy Knew,” which documented that Duke’s predecessor utilities received early warnings about the link between fossil fuels and climate change in the 1970s and later supported disinformation campaigns in the 1990s.¹¹ The lawsuit cited Duke’s participation in a 1991 trade association campaign that explicitly aimed to “reposition global warming as theory (not fact).”¹² Legal claims included public nuisance, private nuisance, trespass, negligence, and gross negligence.¹³

On February 12, 2026, North Carolina Business Court Judge Mark Davis dismissed the case in a 32-page order. He ruled Carrboro had standing but that the claims were “nonjusticiable pursuant to the political question doctrine.” Energy policy, he wrote, is committed to the legislature, the Utilities Commission, and the Department of Environmental Quality, not the courts. Tracing Duke’s alleged deception to specific damages in Carrboro would require a jury to engage in “rank speculation” about the motivations of billions of emitters worldwide.¹⁴¹⁵ The court distinguished the case from traditional pollution suits, calling climate change a “non-linear, global phenomenon” caused by “literally billions of unrelated emitters.”¹⁶ Judge Davis did not reach the merits of the deception allegations themselves, nor did he rule on Duke’s separate argument that federal law preempted the claims.

On March 16, 2026, Carrboro announced it would not appeal, instead pressing Governor Stein to intervene in Duke’s continued fossil fuel expansion.¹⁷¹⁸

The Coal Ash Criminal Case and Cleanup Settlements

Duke Energy’s largest environmental liability grew out of the February 2014 coal ash spill at its Dan River steam station, which released tens of thousands of tons of coal ash into the river. In May 2015, three Duke subsidiaries pleaded guilty to nine criminal misdemeanor violations of the Clean Water Act before U.S. District Judge Malcolm J. Howard. Four counts related to Dan River; the rest covered unlawful discharges and equipment failures at Asheville, Cape Fear, H.F. Lee, and Riverbend.¹⁹

The total penalty was $102 million, the largest federal criminal fine in North Carolina history at the time: $68 million in criminal fines, $24 million to the National Fish and Wildlife Foundation for restoration, and $10 million to a wetlands mitigation bank. The subsidiaries were placed on five years of supervised probation with a court-appointed monitor.²⁰

In January 2020, Duke reached a separate settlement with environmental and civil rights groups (represented by the Southern Environmental Law Center) and the N.C. Department of Environmental Quality to remove roughly 80 million tons of coal ash from unlined ponds at six sites. Deadlines run from 2027 for most sites to 2039 for the largest. Environmental groups had been litigating over coal ash storage since 2012.²¹ An earlier October 2015 settlement with the state department resolved groundwater contamination claims at 14 coal ash facilities for roughly $20 million, including $7 million in fines and $10 to $15 million in accelerated cleanup costs.²²

Clean Air Act Settlement

Federal air-pollution enforcement against Duke started in 2000, when the government sued the company for modifying 13 coal-fired units at five North Carolina plants without required permits or pollution controls. The Supreme Court ruled in 2007 that Clean Air Act regulations apply to plant modifications that increase actual annual emissions.²³

A September 2015 consent decree resolved the remaining claims. Eleven of the 13 units had already been shut down. Duke agreed to permanently retire the remaining Allen plant units by 2024, pay $975,000 in civil penalties, and spend at least $4.4 million on mitigation projects including forest restoration and clean energy work in distressed communities.²⁴

$146 Million Securities Fraud Settlement

When Duke Energy completed its merger with Progress Energy on July 2, 2012, investors expected Progress CEO William D. Johnson to lead the combined company, as both utilities had publicly represented. Less than two hours after the merger closed, the board voted to remove Johnson and reinstall Duke CEO James Rogers. Duke announced the next day that Johnson had “resigned,” and he was paid $44 million in severance.²⁵

Investors filed a class action, Nieman v. Duke Energy Corp., in the U.S. District Court for the Western District of North Carolina. In July 2013, the court found plaintiffs had alleged “ample facts” that statements about Johnson’s role were false. The case settled in November 2015 for $146.25 million in cash, the largest securities fraud recovery in North Carolina history.²⁵ A related Delaware derivative suit alleging directors misled regulators about the leadership plan was allowed to proceed in 2016 and settled that November.²⁶

Ohio Billing Errors

Duke’s “Customer Connect” billing platform, rolled out in 2022, generated more than 100,000 billing errors in its first year. The Public Utilities Commission of Ohio investigated and proposed a $1.45 million fine in August 2024. In an April 2025 settlement, that fine was dropped in exchange for $1.2 million in bill credits to affected customers and a $250,000 contribution to a customer assistance fund. Duke was permitted to seek about $8 million in uncollected gas charges from customers, with interest-free payment plans of up to 24 months.²⁷

A proposed class action lawsuit over the same billing errors was dismissed in January 2025, with a Hamilton County judge ruling that the state utilities commission held exclusive jurisdiction over service-related billing disputes.²⁷

Rate Disputes in Other States

Duke operates regulated subsidiaries beyond North Carolina, and rate proceedings there generate their own contested filings and appeals. In Indiana, the state utility commission approved a $244.1 million annual revenue increase for Duke Energy Indiana in January 2025, roughly half of the company’s original $491.5 million request, and denied recovery of $92 million in coal ash costs and $1.9 million in annual private jet expenses for executives. Consumer advocates and industrial intervenors have filed appeals and objections to compliance filings.²⁸²⁹ In Florida, the Public Service Commission approved a multiyear rate agreement in August 2024 that reduced Duke Energy Florida’s original $503 million request to a $203 million base rate increase for 2025, with smaller increases through 2027.³⁰

1
FindLaw. In Re Application of Duke Energy Carolinas, LLC
2
WRAL. Court: Duke Fuel Rate Approval Violated Law, No Refunds
3
WECT. NC Court of Appeals Rules Duke Energy Broke Law in 2024 Fuel Rate Hike, No Refunds for Customers
4
Inside Climate News. Will North Carolina’s Power Bill Reduction Act Work
5
Office of NC Governor. Governor Josh Stein Opposes Duke Energy Rate Hike, Supports Attorney General Jeff Jackson’s Motion
6
ABC11. Duke Energy Rate Hike Opposed by NC Governor Josh Stein and AG Jeff Jackson
7
NC DOJ. Attorney General Jeff Jackson Fights to Save North Carolina Families Nearly $1.4 Billion on Duke Energy Carolinas Bills
8
WHQR. NC Attorney General Says Duke Energy Overshot the Mark on Rate Hike Proposal
9
NC Newsline. NC Utilities Commission to Consider Duke Energy’s Request for Rate Hikes
10
Floodlight News. North Carolina Town Sues Duke Energy for Climate Deception
11
NC Newsline. New Report: Duke Energy Predecessors Understood Climate Change and Ignored It for Decades
12
Climate Integrity. Major Utility Duke Energy Sued After New Evidence of Deception
13
Climate Case Chart. Town of Carrboro v. Duke Energy Corp.
14
Carolina Journal. Judge Dismisses Carrboro’s Climate Lawsuit Against Duke Energy
15
NC Courts. Town of Carrboro v. Duke Energy Corp., 2026 NCBC 13
16
Courthouse News. Judge Quashes Small Town’s Climate Change Suit Against Duke Energy
17
Sue Duke Energy. Lawsuit
18
NC WARN. Town Opts Not to Appeal in Climate Deception Lawsuit, Calls on Governor to Rein in Duke Energy
19
U.S. Department of Justice. Duke Energy Subsidiaries Plead Guilty and Sentenced to Pay $102 Million for Clean Water Act Violations
20
U.S. Department of Justice. Assistant Attorney General John C. Cruden Delivers Remarks at Sentencing of Duke Energy
21
Carolina Public Press. Duke Energy Agrees to Settlement for Statewide Removal of Coal Ash
22
NC DEQ. DEQ and Duke Energy Reach Estimated $20 Million Settlement
23
U.S. Department of Justice. Duke Energy Corporation to Reduce Emissions at Power Plants in North Carolina and Fund Environmental Projects
24
U.S. EPA. Duke Energy Corporation Clean Air Act Settlement
25
Robbins Geller Rudman & Dowd LLP. Nieman v. Duke Energy Corp., Et Al.
26
U.S. District Court for the District of Delaware. In Re Duke Energy Corporation Derivative Litigation
27
WCPO. About 15,000 Duke Energy Customers Saw a Spike in Their Gas Bills This Summer. Here’s Why
28
Citizens Action Coalition. Duke Rate Hike 2024
29
IURC. Cause No. 46038
30
Duke Energy. Duke Energy Florida Rates 2024