Cuomo Announces Entergy To Back-off On Plan That Would Have Cost Nys $432 Million Dollars
NEW YORK, NY (August 27, 2008) - Attorney General Andrew M. Cuomo today announced the first-ever binding and enforceable agreement requiring a major national energy company to disclose the financial risks that climate change poses to its investors. Cuomo’s agreement with Xcel Energy (NYSE: XEL) (“Xcel”) comes as many power companies, including Xcel, are investing in new coal-burning power generation that will significantly contribute to global warming emissions.
“This landmark agreement sets a new industry-wide precedent that will force companies to disclose the true financial risks that climate change poses to their investors,” said Attorney General Andrew Cuomo. “Coal-fired power plants can significantly contribute to global warming and investors have the right to know all the associated risks. I commend Xcel Energy for working with my office to establish a standard that will improve our environment and our marketplace over the long-term.”
The agreement includes binding and enforceable provisions that require Xcel to provide detailed disclosure of climate change and associated risks in its “Form 10-K” filings, the annual summary report on a company’s performance required by the Securities and Exchange Commission (“SEC”) to inform investors. These required disclosures include an analysis of financial risks from climate change related to:
- present and probable future climate change regulation and legislation;
- climate-change related litigation; and
- physical impacts of climate change.
Additionally, the agreement commits Xcel to a broad array of climate change disclosures, including:
- current carbon emissions;
- projected increases in carbon emissions from planned coal-fired power plants;
- company strategies for reducing, offsetting, limiting, or otherwise managing its global warming pollution emissions and expected global warming emissions reductions from these actions; and
- corporate governance actions related to climate change, including whether environmental performance is incorporated into officer compensation.
Substantial financial risks for energy companies that emit large quantities of carbon dioxide are being created by a number of new or likely regulatory efforts, such as New York’s newly adopted regional carbon regulations for power plants, and other future regulatory efforts, including federal regulation, Congressional action, and climate-change related litigation. These risks are especially exacerbated for power companies that are building new coal-burning power plants or other large new sources of global warming pollution emissions. Knowledge of these risks is important for investors to make informed financial decisions.
Xcel Energy provides electricity and natural gas to commercial and residential customers in eight Midwestern and Western States. Its annual revenues are more than $9 billion. In 2006, Xcel was among the top ten largest emitters of global warming pollution by utilities in the United States. Xcel is building a new 750 megawatt, coal-fired power plant in Pueblo, Colorado.
In September 2007, Attorney General Cuomo subpoenaed the executives of Xcel and four other major energy companies for information on whether disclosures to investors in filings with the SEC adequately described the companies’ financial risks related to their emissions of global warming pollution. The Attorney General issued subpoenas under New York State’s Martin Act, a 1921 state securities law that grants the Attorney General broad powers to access the financial records of businesses. In addition to Xcel Energy, the companies that received subpoenas were AES Corporation, Dominion Resources, Dynegy, and Peabody Energy. The Attorney General’s investigation of the remaining companies is ongoing.
Cuomo continued, “I will continue to fight for increased transparency and full disclosure of global warming financial risks to investors. Selectively revealing favorable facts or intentionally concealing unfavorable information about climate change is misleading and must be stopped.”
The Attorney General petitioned the SEC last year to require better corporate disclosure of climate-related risks in securities filings. The petition was coordinated by Ceres, a national coalition of investors and environmental groups. It is supported by more than $6 trillion of investors, including the treasurers and comptrollers from New York, California, Florida, Maryland, Rhode Island and five additional states, and the nation’s largest public pension funds, CalPERS and CalSTRS. The petition remains pending with the SEC.
Ceres President Mindy S. Lubber said, “This groundbreaking settlement will send ripples far beyond Xcel Energy. It serves notice that all companies face financial exposure from climate change and will be expected to better inform investors of their strategies for dealing with it.”
Director of the Natural Resources Defense Council’s State Climate Change Program Dale Bryk said, “As New York and other Northeastern states move forward with the nation’s first cap and trade program for global warming, investors need full disclosure of the financial risks faced by power companies and others with large carbon footprints. Attorney General Cuomo’s work to create an enforceable model for climate change disclosure is a game-changer on this important issue.”
Environmental Defense Fund Deputy General Counsel Vickie Patton said, “Investors from Wall Street to Main Street have a right to know whether publicly traded companies are responsibly addressing the financial risks due to global warming. Federal regulators should take a hard look at the Attorney General’s settlement and standardize companies’ disclosure of climate-related financial risks to ensure a fair marketplace for all investors.”
This case is being handled by Assistant Attorneys General Morgan Costello, Michael Myers, and Daniel Sangeap, under the supervision of Special Deputy Attorney General Katherine Kennedy, Executive Deputy Attorney General for Social Justice Mylan Denerstein and Executive Deputy Attorney General for Economic Justice Eric Corngold.
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