Dominion richly deserved to lose this one. As Glen Besa of the Virginia Sierra Club told me, “That loud sucking sound is Dominion vacuuming money from its customers’ pockets for a $19 billion dollar boondoggle, the proposed third nuke at North Anna.”
SEC DENIES DOMINION EFFORT TO BLOCK SHAREHOLDER VOTE ON FINANCIAL RISKS OF $19 BILLION NUCLEAR REACTOR
VCCC: Controversial Plan to Build Most Expensive Nuclear Reactor in US Poses Huge Danger to Shareholders and Virginia Ratepayers; Renewables Seen to Lag in State As Project Sucks Up Resources.
RICHMOND, VA. – April 27, 2016 — The major utility Dominion has failed to convince the U.S. Securities and Exchange Commission (SEC) to block a shareholder resolution calling on the company to analyze the financial risks faced by investors if it is not able to complete a new nuclear reactor (North Anna 3) that already has cost more than $600 million and would end up with a sky-high price tag of $19 billion or more.
The Virginia Citizens Consumer Council (VCCC) said that the SEC move clears the way for a shareholder vote on Resolution #5 at the Dominion annual meeting May 11, 2016 in Columbia, S.C. Available online at http://bit.ly/1NzQv6B, the shareholder resolution was filed by Ruth McElroy Amundsen, an engineer for 32 years with an undergraduate degree in physics from Stanford.
The Amundsen resolution states:
“RESOLVED: Shareholders request that Dominion prepare and make public a financial analysis by November 30, 2016 reporting on the potential impact on earnings, share price and dividends should the State Corporation Commission deny a certificate for the development of North Anna 3 and further deny the recovery of $1.87 billion in costs associated with the North Anna 3 nuclear reactor incurred prior to an order denying a certificate to construct the reactor.”
For the supporting memo for the resolution, go to http://bit.ly/1Uh4wrg.
Controversy over the North Anna-3 reactor project flared up in the public eye in late 2015 when Scott Norwood, an energy analyst for the Virginia Office of the Attorney General, Division of Consumer Counsel, estimated that “after including a conservative estimate of construction interest costs, the current capital cost forecast for NA3 would be approximately $19.3 billion.” The Office of Attorney General then testified before the Virginia State Corporation Commission that the high price tag makes the project unreasonable and urged that Dominion abandon its plans for North Anna 3.
In December 2015, the Virginia State Corporation Commission concluded: “The evidence demonstrates that Dominion has already incurred approximately $580 million in development costs related to North Anna 3 through September 30, 2015, and that, based on current forecasts, the total cost of North Anna 3, including an estimate of construction interest costs, would be approximately $19.3 billion. The Virginia jurisdictional share of this estimated $19.3 billion capital investment would increase the total rate base for the Virginia jurisdiction by approximately 100%, and would obviously, if it were recoverable, represent a large enough increase in electric bills for residential and business customers to impact Virginia’s economic climate.”
Commenting on her resolution, Amundsen said: “I am very grateful that shareholders, who need Dominion to make the right long-term moves, will now get to weigh in on North Anna 3. The problem with waiting to make this decision is that doing so is very expensive, and pulls capital away from other projects that might be in the better long-term interests of the company and its shareholders. Because the financial stakes are so high, it is important to have shareholders fully aware of the financial risks Dominion is taking by proceeding with North Anna 3. Given what is at risk here, it should be a simple matter for Dominion to report out the calculations it already has made.”
VCCC President Irene Leech said: “The massive $19 billion cost for the North Anna 3 nuclear reactor project makes it the biggest single threat posed today to the pocketbooks of Virginia consumers. The ever-escalating cost of this project and the fact that it is at least twice as expensive as other alternatives, including energy efficiency and renewables, makes this a situation that cries out for responsible shareholders to speak up and be heard. It is time for shareholders and ratepayers to make their voices heard now. If fuel diversity is the concern, Virginia would be better off catching up with other states by developing more renewable energy resources and better supporting energy efficiency, which would be a bargain compared to North Anna 3.”
Norwood, the expert for the Virginia Attorney General, found that Dominion intends to incur $1.87 billion in costs related to planning and developing the new nuclear reactor, North Anna 3, by 2018 and $4.7 billion by the end of 2020.
As the background section of the shareholder proposal notes: “The [North Anna 3] price tag makes it far more expensive even than the other nuclear plants currently under construction in Tennessee, Georgia and South Carolina. All three are behind schedule and over budget, which does not inspire confidence in the industry’s ability to contain costs. As a result of this high capital cost, Norwood found that the ‘total delivered cost of power from NA3 is more than $190 per MWh in 2028.’ That translates into more than 19 cents per kWh. Average wholesale price of electricity in the [Virginia] region was 5.3 cents per kWh in 2014.” A total of five reactors are under construction in the three states.