Two of Nation’s Largest Natural Gas Utilities Fail to Plan for Stranded Assets

FOR IMMEDIATE RELEASE

MEDIA CONTACT: Stefanie Spear, [email protected], 216-387-1609

BERKELEY, CA—MARCH 11, 2020—Last week, the U.S. Securities and Exchange Commission (SEC) allowed Sempra Energy and Dominion Energy to omit resolutions filed by shareholder representative As You Sow to address the growing potential for stranded natural gas assets at the utilities. The ruling enables two of the largest power utilities in the U.S. to leave investors in the dark on the critical, emerging issue of natural gas-based stranded asset risk. As You Sow filed the resolutions on behalf of investors seeking enhanced disclosure on whether the companies are sufficiently addressing the risk that climate action and market forces will reduce demand for natural gas, leaving the companies with stranded gas assets. 

The risk of growing reliance on natural gas to create electricity and power homes is raised in a recent report by As You Sow and Energy Innovation, Natural Gas: A Bridge to Climate Breakdown — An Investor Brief on Overcoming the Power Sector’s Natural Gas Dependence. The report addresses a range of risks to shareholder value from the increasingly imprudent and unnecessary overbuild of gas infrastructure. 

“In the face of the clean energy transition and the urgent need to reach the Paris Climate Agreement’s goal, increasing reliance on emissions-intensive natural gas is a risky bet,” stated Lila Holzman, Energy Program Manager of As You Sow. “Sempra and Dominion are both continuing to build out significant gas assets in states with aggressive climate change targets. As states clamp down on greenhouse gas emissions, long-lived natural gas infrastructure is increasingly likely to be stranded. By excluding the shareholder resolutions, these companies are seeking to avoid responsibility for a risk that will only grow.”

California, where Sempra is based, has passed legislation and issued an executive order calling for 100 percent clean energy and economy-wide decarbonization by 2045. California’s transition from natural gas is already underway as demonstrated by the California Public Utility Commission recently initiating a rulemaking to “manage the state's transition away from natural gas-fueled technologies.” Virginia, where Dominion is headquartered, recently passed legislation to reach 100 percent clean power by 2045. Dominion’s gas-based Atlantic Coast Pipeline project is already facing considerable pushback, and its total projected cost has ballooned from $5 billion to $8 billion.

A new report by Synapse Energy Economics, commissioned by Majority Action, highlights Dominion Energy, Duke Energy, and Southern Company’s exposure to natural gas stranded asset risk by mapping the stark disconnect between each company’s current retirement and investment plans, and their decarbonization targets

“Company strategy must be aligned with decarbonization goals,” stated Daniel Stewart, Energy Program Fellow at As You Sow. “To the extent utilities are over-investing in natural gas, and underinvesting in renewable energy alternatives, companies run the risk of being saddled with underutilized gas assets and having to implement the type of early retirements we’ve seen with coal. Investors must press companies to avoid this.”

In contrast to Sempra and Dominion, Southern Company responded to a similar shareholder resolution by committing to provide investors with enhanced disclosures about how the company’s investment plans, including natural gas investments, align with its “low to no carbon” greenhouse gas reduction target. 

“We look forward to better understanding Southern’s approach to natural gas,” commented Holzman. “New gas investments create stranded asset risk. Southern’s commitment to enhance gas-related disclosures will provide needed transparency to investors assessing how well the company is managing that risk.”

To learn more about As You Sow’s work on climate change, click here.

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As You Sow is a nonprofit organization that promotes environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies. See our resolutions here.