Dominion Resources – Financial Risks of Continued Reliance on Coal (2011)

Outcome: 7%

WHEREAS
For electric power companies, continued reliance on coal is increasingly problematic in the face of declining reserves of high quality central Appalachian coal, unprecedented price increases and coal price volatility, and the high cost of carbon capture and storage for coal plants. By comparison, natural gas prices have reached record lows and supplies are increasingly abundant in the U.S., and costs for wind and solar are declining.
Coal combustion for electricity is a major contributor to air pollution, accounting for one third of the nitrous oxides (NO_x), 50% of the mercury, a hazardous air pollutant, and over 36% of the carbon dioxide (CO₂) emitted in the U.S.  Older coal plants emit substantially more of these pollutants per megawatt hour (MWh) than newer plants.
The U.S. Environmental Protection Agency (EPA) is moving, in some cases pursuant to court order, to tighten regulation of the air, water and waste impacts of coal plants. Industry analysts (Bernstein Research, Jeffries & Company, Standard & Poor’s, Wood Mackenzie) have concluded that the cost of additional environmental control equipment for NO_x, particulates and mercury may make it uneconomic to retrofit small, older coal plants.  Pending EPA regulations governing storage and disposal of coal combustion wastes will likely increase operating costs for coal plants.
EPA is also developing regulations for CO₂ and other greenhouse gas emissions.  However, the lack of national climate policy to reduce CO₂ emissions further adds to economic uncertainty for coal plants. Commercial deployment of carbon capture and storage technology for coal plants is 10 to 15 years away and “would increase electricity costs by about 30 – 80%,” the U.S. Government Accountability Office reports.
This unprecedented combination of forces has led a number of utility companies to announce coal plant retirements. Dominion has stated that it expects to close two aging coal plants in Massachusetts and Indiana within 5-7 years if environmental regulations occur as expected, as it would become uneconomic to run them. Nevertheless, with 41% of its 2009 electric generation originating from coal-fired units, Dominion will remain heavily reliant on coal. Coal combustion contributes more than 90% to the company’s total NO_x, SO_2, CO₂ and mercury emissions, according to a data extrapolated from the report Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the United States (Natural Resources Defense Council, 2010).
RESOLVED
Shareowners request that Dominion’s Board of Directors, at reasonable cost and omitting proprietary information, issue a report by September 2011 on the financial risks of continued reliance on coal contrasted with increased investments in efficiency and cleaner energy, including assessment of the cumulative costs of environmental compliance for coal plants compared to alternative generating sources.