View Electric Power Companies Letter (Pdf)

New York City Comptroller William C. Thompson, Jr. and a dozen leading U.S. investors, today sent letters to 43 of the country's 50 largest investor-owned greenhouse gas emitters in the industry requesting that they report within a year how future greenhouse gas limits will affect their financial bottom lines and steps they are taking to reduce those financial impacts and improve their competitive positioning.

The letter to company CEOs was sent by 15 investors managing more than $550 billion of assets, including controllers and comptrollers from New York City , New York State and California , state treasurers from California , Maryland and Connecticut , and a half-dozen labor pension funds, social investment funds and foundations. Many of the investors are part of the Investor Network on Climate Risk, a leading U.S.-based investor coalition working on climate risk issues.

The request comes as a growing number of electric power companies are preparing climate risk evaluation reports at the request of shareholders, including four that have already been done by American Electric Power (AEP), Cinergy, TXU and Southern. According to a recent analysis of three of those reports by the Boston-based Ceres investor coalition, there is widespread concern in the industry about regulatory uncertainty and the potential financial exposure it is causing for long-term capital investments.

“Shareholders need to know if the companies they own are adopting strategies that will enable them to survive or thrive in a world of increasing environmental concern and regulation regarding global climate change,” Thompson said.

“Wall Street firms should insist upon climate risk analysis as standard practice and all companies should be preparing them voluntarily without investors having to file shareholder resolutions,” added Mindy Lubber, president of Ceres, a coalition of investment funds, environmental organizations and public interest groups that has been spearheading investor activity on the climate risk issue. Ceres also coordinates INCR.

Thompson and Lubber said the climate risk reports from power sector companies should include financial analysis of likely regulatory scenarios and the strategic actions being taken to prepare for those scenarios.

The report comes as the industry is proposing to build more than 100 new coal-fired power plants in the coming years – investments that could be substantially affected when greenhouse gas regulations are adopted in the U.S. , as is widely expected.

“Managing a power company in these uncertain times is an enormous challenge with both risks and opportunities for investors if they don't watch these investments carefully,” Lubber said.

Ceres has convened a group of investors, environmentalists and industry representatives that will recommend best practice guidelines for analyzing and disclosing climate risks this fall. The results will immediately be shared with power sector companies and Wall Street firms.

Investors consider the electric power industry to be a likely target for regional and national carbon regulations because it is the largest source of greenhouse gases in the United States , contributing 39 percent of the country's emissions and 10 percent of the world's.

Two states in the Northeast have already imposed carbon emission limits on power plants and a handful of other states, including California , Colorado and Utah , now expect power companies to factor carbon emission costs into their proposals for new power plants.

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Letters were sent to 43 of the 50 investor-owned electric power companies listed below. The companies are the top 50 investor-owned CO2 emitters in the U.S. power industry based on Ceres 2004 Benchmarking Air Emissions Report. (The seven companies that did not receive letters have prepared or are preparing to plan climate risk reports. They are identified with asterisks.)

*American Electric Power, Columbus , Ohio

*Southern Company, Atlanta , GA

Xcel, Minneapolis , MN

*Cinergy, Cincinnati , Ohio

*Progress Energy, Raleigh , NC

Ameren, St. Louis , MO

Edison International, Roemead , CA

*FirstEnergy, Akron , Ohio

ScottishPower , Scotland

Dominion, Richmond , VA

Allegheny Energy, Greennsberg , PA

AES, Arlington , VA

Duke Energy, Charlotte , NC

FPL Group, Juno Beach , FL

Entergy, New Orleans , LA

*DTE Energy, Detroit , MI

CenterPoint Energy, Houston , TX

Reliant Resources, Houston , TX

E.ON, Germany

Mirant, West Atlanta . GA

PPL, Allentown , PA

Westar Energy, Topeka , KA

Dynegy, Houston , TX

Wisconsin Energy, Milwaukee , WI

OGE Energy, Oklahoma City , OK

Alliant Energy, Madison , WI

CMS Energy, Jackson , MI

MidAmerican Energy, Des Moines , IA

PG&E, San Francisco , CA

*TXU, Dallas , TX

Calpine, San Jose , CA

PSEG, Newark , NJ

Constellation Energy Group, Baltimore , MD

TECO Energy, Tampa , FL

Great Plains Energy, Kansas City , MO

SCANA, Columbus , SC

DPL, Dayton , Ohio

NiSource, Merrilville , IN

Pinnacle West Capital, Phoenix , AR

Exelon, Chicago , IL

WPS Resources, Green Bay , Wis

UniSource Energy, Tuscon , AZ

KeySpan, Brooklyn , NY

Sierra Pacific Resources, Reno , NV

TransAlta , Canada

Oglethorpe Power, Tucker, GA

Aquila , Kansas City, KA

Vectren, Evansville , IN

ALLETE, Duluth , MN