Category Archives: Finance

Everybody Loses

In his January 2020 report, Why Support for the Atlantic Coast Pipeline Adds Risks to Shareholders and Ratepayers, Tom Hadwin, a former utility company executive and a member of the Steering Committee of the Allegheny-Blue Ridge Alliance, clearly explains why both stockholders and customers are losers in the Atlantic Coast Pipeline should be built.

His Executive Summary states:

  • Continued efforts to complete the Atlantic Coast Pipeline (ACP) are fraught with risks.
  • A huge surplus of generating capacity exists within the region. S&P Global Market Intelligence says we have a glut of gas-fired generation. The surplus capacity in the PJM region is growing and will last past 2050.
  • About 80% of the capacity of the ACP was reserved for new power plants. Large gas-fired facilities, once thought necessary when the pipeline was proposed, have been cancelled or significantly postponed.
  • Existing pipelines serving Virginia and the Carolinas have already increased in capacity by more than what the ACP would provide.
  • Our region has access to all the gas we need without the Atlantic Coast Pipeline.
  • Rather than saving us money, the ACP will add tens of billions of dollars to our energy costs in just 20 years.
  • Utility customers will be asked to pay in full for the capacity reservations on the ACP whether all of it is used or not.
  • The full report expands on these points, and also provides a summary of the ACP’s revoked permits and legal obstacles.

Reminding us that numerous recent articles document over and over a long-term glut of natural gas-fired power plants, a long-term glut in natural gas supplies, and a decreasing demand for natural gas, Hadwin says, “There is no reason to burden families and businesses in Virginia and North Carolina with more than $30 billion in added energy costs for an unnecessary pipeline.”

He concludes, “To embrace the future, our energy companies must cut the chain that ties them to the outdated business model that keeps their thinking confined to the options that worked well in the 20th century. They can embark on that new path by cutting loose the Atlantic Coast Pipeline. New opportunities arise when tough decisions are made.”

New Paper Underscores Lack of Need, High Risks of the ACP

The following announcement from the Allegheny-Blue Ridge Alliance (ABRA) appears in their ABRA Update 261 for January 30, 2020.

“Continued efforts to complete the Atlantic Coast Pipeline (ACP) are fraught with risks” to investors, ratepayers and those who live along the route of the ACP, according to a new paper released January 30 by ABRA. “Why Support for the Atlantic Coast Pipeline Adds Risks to Shareholders and Ratepayers” is authored by Thomas Hadwin, a former utility executive who is a member of ABRA’s Steering Committee.

Hadwin points out that since 2014, when the ACP was proposed, existing pipelines serving Virginia and the Carolinas have increased in capacity more than the ACP would provide. The paper explains that the cost for Dominion subsidiaries to use gas from the ACP would be over four times as expensive as gas transported by the Transco system, where sufficient capacity exists. The same would be true for Duke Energy’s subsidiaries.

Describing the environmental risks associated with the project, the paper notes that over 150-miles of the ACP route – one-fourth its length – would traverse terrain that is landslide prone. ABRA will be releasing next month a study on the landslide threat to pipelines built through the central Appalachian region. The paper concludes: “We have an overabundance of gas-fired generating capacity and gas transmission pipeline capacity. The Atlantic Coast Pipeline is not a solution. It is part of the problem.

New Study: Charitable Gifts by Utilities Used to Win Public Support

In a first-of-its-kind analysis, the Energy and Policy Institute has examined the charitable contributions of 10 leading investor-owned electric utilities in the U.S., finding that all of these major utilities use charitable giving to manipulate politics, policies and regulation in ways designed to increase shareholder profits, often at the expense of low-income communities whose communities are more likely to bear the brunt of climate impacts and suffer higher levels of air pollution.

Strings Attached: How utilities use charitable giving to influence politics and increase investor profits, finds that:

  • From 2013 to 2017, EPI estimates that the 10 utilities that we assessed – Ameren, American Electric Power, Arizona Public Service, Dominion Energy, DTE Energy, Duke Energy, Entergy, FirstEnergy, NextEra Energy, and Southern Company – gave approximately $1 billion to charitable organizations
  • That number, for just 10 companies, is 13 times greater than the $78 million that the entire utility sector – including political action committees and individual employees – contributed to federal elections in the 2014, 2016, and 2018 cycle
  • Much of the utilities’ charitable activity is geared explicitly to influence politics
  • Organizations who received contributions from the utility companies engaged in political activities on the companies’ behalf without disclosing that reality publicly
  • Utilities use charities to extort support from low-income communities and communities of color
  • These companies spend millions of dollars, earned from captive customers, to prosecute their political arguments, and have the resources to employ fleets of lobbyists and lawyers to represent them at public utility commissions and state legislatures.

Witnesses Tell SCC Dominion Has Sufficient Pipeline Capacity

From the Allegheny-Blue Ridge Alliance ABRA Update 239, August 1, 2019:

Two witnesses appearing before a July 30 Virginia State Corporation Commission (SCC) hearing on the proposed fuel factor for Dominion Energy to use in calculating future customer rates testified that the company has sufficient pipeline capacity to meet future energy demands.

Greg Lander, an energy consultant representing Appalachian Voices (an ABRA member), testified that Dominion “has sufficient pipeline capacity to serve its existing generation fleet. Further, because of the frequency, magnitude, and duration of the non-power plant deliveries under its existing pipeline contracts, I conclude that the Company has ample pipeline capacity to serve additional power generation load should that be necessary.” Mr. Lander’s analysis was echoed by Bernadette Johnson, a consultant retained by the SCC staff.

Mr. Lander’s filed testimony is available here. Ms. Johnson’s filed testimony is available here and here.

The SCC is expected to decide about Dominon’s fuel factor proposal in 2-3 weeks.

Joint Comment Made to FERC

Friends of Nelson joined 15 other public interest organizations in signing a joint comment to the Federal Energy Regulatory Committee (FERC) in response to their Notice of Inquiry on on whether and how to revise its rate of return on equity (ROE) policy for projects, including new gas pipelines. Discussion points in the joint comment include:

  • 14 percent ROE is excessive in relation to other capital-intensive regulated projects
  • Profit-driven pipeline affiliate deals place captive ratepayers at risk
  • Traditional utilities are lured by lucrative pipeline profits
  • A 14 percent ROE overstates utility pipeline investor risk
  • Pipeline investments are at risk of becoming stranded assets
  • Pipeline overbuild is occurring

To read the full comment, click here.

The comment period for FERC’s Notice of Inquiry ended on June 26, 2019.

Send Comments to FERC Before June 26

On March 21, 2019, FERC issued a notice of inquiry requesting “information and stakeholder views to help the Commission explore whether, and if so how, it should modify its policies concerning the determination of the return on equity (ROE) to be used in designing jurisdictional rates charged by public utilities. The Commission also seeks comment on whether any changes to its policies concerning public utility ROEs should be applied to interstate natural gas and oil pipelines.”

The high rate of return on equity (a guaranteed 14% for the Atlantic Coast Pipeline) allows for the construction of unnecessary pipeline projects, leaving the US with newly built fossil fuel infrastructure in a time of rapidly falling renewable energy prices and growing concern about climate change. Because utilities can pass along costs to consumers in their monthly bills, FERC has effectively allowed them to use their customer’s money to build pipelines that may never be fully used.

We urge everyone to comment to FERC, suggesting it change the way it determines rate of return. Comments from the public on FERC’s new inquiry are due on June 26, 2019. Because FERC makes it so difficult for people to submit comments electronically, we urge you to print, sign, and mail this letter – or write your own letter and mail it! Your letter must be postmarked by June 26.