Paige Sheehan, a spokeswoman for Duke Energy which runs the LV Sutton Power Station, said floodwaters had breached a steel-retaining wall containing a large coal ash dump along the shoreline.
Floodwaters topped the earthen dike at the northern side of Sutton Lake on Friday. Water from the lake then flooded one of three large coal ash dumps lining the lakeshore.
As the Cape Fear River swelled in the wake of Hurricane Florence, Duke installed a steel barrier at the coal ash pond to block the waste from flowing out.
Duke's handling of its ash waste has faced intense scrutiny since a drainage pipe collapsed under a waste pit at an old plant in Eden in 2014, triggering a massive spill that coated 70 miles of the Dan River in gray sludge. As flood waters continue to travel through the lake, the smaller breaches are widening.
Company officials said that because the river is already running high after the hurricane, they do not expect the breaches in the dam to affect the water level.
But a spokeswoman also said they can not rule out that coal ash was released and will continue to monitor the situation.
"What we know is the Cape Fear River has spilled into the Sutton Lake", Michael Regan, director of the NC Department of Environmental Quality, said at Gov. Roy Cooper's press briefing Friday morning.
The ash left over from coal burned to generate electricity contains an array of chemicals, including mercury, lead, arsenic and other toxic heavy metals.
"Teams from three Department of Environmental Quality regulatory divisions have been closely monitoring conditions at Duke Energy's Sutton facility, remaining in close contact with onsite engineers throughout the week".
"Sutton Lake has spilled over into Duke's transmission yard, so they have evacuated their employees".
Duke Energy said on September 19, that water samples collected by its employees and tested at the company's own lab showed "no evidence of a coal ash impact" to Sutton Lake or the Cape Fear River.
North Carolina's top environmental regulator said the possible environmental harm isn't yet known.
River forecasts project the Waccamaw will reach a new historic flood level this weekend, eclipsing a record height set by Hurricane Matthew in 2016. It plans to conduct flyovers as well as on-the-ground testing and drone inspections of the dam.
"Coal ash is non-hazardous, and the company does not believe this incident poses a risk to public health or the environment".
Separately, company spokesman Paige Sheehan told Reuters they can not rule out the possibility that coal ash might have entered the Cape Fear River.
Duke denied a request for an Associated Press reporter to cross the barricade, saying the lake situation "continues to change" and is "not safe".
The coal-fired Sutton plant was retired in 2013 and replaced with a new facility that burns natural gas.
The 625-megawatt natural gas plant on the site was powered down on Friday after the lake breach.
Last weekend another coal ash landfill ruptured, spilling enough material to fill 180 dump trucks.
Sheehan said the 1971 ash basin was about 50 percent excavated before Florence dumped more than 30 inches of rain into the open pit. The utility company paid $102 million in fines and restitution and pleaded guilty to nine Clean Water Act violations as a result. The group said the samples would be analyzed by a private lab to determine whether the gray muck contained coal ash.
Staff from the Waterkeeper Alliance, an environmental group, visited the flooded dumps at the H.F. Lee Power Plant by boat Wednesday and took photographs and collected samples of gray sludge and water they said was washing into the floodwaters.
The agency and Duke said the coal ash ponds are structurally sound.
Santee Cooper spokeswoman Mollie Gore said no significant environmental impact is expected because almost all the ash has been removed from the basin and water pumped in to prevent the dike from breaking.