Ten Myths Debunked: The Proposed Exelon-Pepco Merger in Maryland

Public-CitizenIn early 2015, the Maryland Public Service Commission (PSC) will hold hearings on the proposed merger between Exelon Corporation and Pepco Holdings, Inc. (Pepco). The proposed merger would make Exelon—already a top political spender in Maryland and a company with a track record of opposing many clean energy policies—the largest utility company in Maryland and the nation.
The PSC must sign off on the merger before it can proceed, which makes it vitally important that all Marylanders become aware of the facts around this case, and voice their concerns now.
ccanFULL-transparentBelow is a list of ten facts on the proposed merger and Exelon’s track record that debunk common myths.
Click here to view a printable PDF version of the memo.

Fact #1: This merger is NOT a done deal.

It’s a myth that a merger of this type is something that would be hard for the PSC to deny. Nothing could be further from the truth. In fact, the Maryland PSC has a track record of blocking mergers that threaten the public interest.
In 1997, Pepco attempted to merge with Baltimore Gas & Electric Co. (BGE), but the two companies walked away from the deal after the Maryland PSC ordered that the merged company would have to slash electric rates by hundreds of millions of dollars to protect the public. Similarly, FPL Group (now NextEra) tried and failed to acquire Constellation Energy (owner of BGE) in Maryland in 2006. Also in 2006, a proposed merger between Exelon and Public Service Enterprise Group, a New Jersey-based electric utility, was rejected by that state’s Board of Public Utilities after New Jersey officials determined that “the proposed merger would result in a company that is so large, and controls such a significant segment of the gas and electric generation markets, that it could exert market power to drive up energy prices for all New Jersey ratepayers.”[1]
The market power concerns are just as prevalent now. The merger between Exelon and Pepco would give Exelon control over 23.4% of the transmission service activity within our electricity grid region.[2] It is very plausible that with enough surfacing of the facts, Maryland’s PSC could deny the merger or impose enough conditions that the companies decide to walk away. The most important thing right now is that all concerned Maryland residents and businesses make their concerns clear so that they can be fully considered by the PSC.

Fact #2: Exelon is NOT promising to improve Pepco’s reliability goals.

Pepco has a poor track record when it comes to reliability, and many Marylanders are looking for a change. But it’s a myth that Exelon is proposing to do anything more than Pepco. In their merger application, Exelon stated that the company will be “committing to implement Pepco’s current plan to improve system reliability.” In other words, Exelon will do what Pepco was already planning to do anyway. Pepco Holdings has total assets worth $14.8 billion and the company earned $4.7 billion in annual operation revenue in 2013.[3] Exelon is not bringing new ideas to the table to improve reliability, and if Pepco believes that they need outside help to improve their service, the company can use its significant financial resources to hire consultants and contractors to do exactly that.

Fact #3: Exelon publicly champions ANTI-renewable energy policies.

Although Exelon holds some renewable energy assets, solar and wind power account for only 3.7% of the corporation’s total energy resources.[4] It’s a myth that Exelon considers clean energy a top priority. Publicly, the company champions anti-renewable energy policies. Exelon calls itself a “leading voice against the extension of the Production Tax Credit [PTC],”[5] which is the primary federal incentive for promoting land-based wind energy. The PTC is a reasonable way of keeping wind costs down, and by opposing it, Exelon is helping to shift those costs to states like Maryland that have current renewable electricity goals in place. At the same time, Exelon advocates for anti-free market reforms to support their aging nuclear fleet. In 2014 in Illinois, Exelon lobbyists floated the idea of allowing their nuclear plants in that state, which are 35 years old on average, to receive “clean energy credits” like solar and wind.[6] Such a policy would essentially end support for those renewables in favor of Exelon’s decades-old nuclear fleet, which comprise 52% of its generation assets. Later that year Exelon lobbied for a resolution (HR 1146) that required state agencies to devise state funding mechanisms to keep the company’s unprofitable nuclear stations afloat. The resolution directed state agencies to develop “market-based solutions that will ensure that the premature closure of [Exelon’s] nuclear power plants does not occur and that the dire consequences to the economy, jobs, and the environment are averted.”

Fact #4: Exelon’s proposed “Customer Investment Fund” would SHORTCHANGE Maryland.

It’s a myth that Exelon is promising Maryland a $100 million “customer investment fund,” as touted by some commentators. The $100 million would be spread across Maryland, Delaware, New Jersey, and the District of Columbia. Only $40 million would be spent in Maryland, of which $29 million would be spent in the “Pepco” service territory and $11 million would be spent in the Delmarva Power & Light (DPL) territory. Exelon estimates that the money could be spent on bill credits, assistance for low-income customers and energy-efficiency measures, but they do not mention that the proposed $40 million is substantially less than what Pepco utilities already spend on those programs each year.
To put the proposed fund in perspective, Pepco spent $67 million on energy efficiency programs in 2013, including $3.4 million on programs for low-income customers. DPL spent $19 million on energy efficiency programs in 2013, including $2.7 million on programs for low-income customers. Combined, Pepco and DPL spent $86 million on energy efficiency programs in 2013. Pepco and DPL also invested $23 million and $5.7 million respectively in “demand response” programs to decrease energy consumption in their service territories during the highest electricity demand periods.[7] Combined, Pepco and DPL spent $28.7 million on demand response programs in 2013. They invested those funds as part of their EmPOWER Maryland energy efficiency obligations, which are managed by the PSC. Rather than approve the merger and trigger $40 million to be spread across the state, the PSC can and should set nation-leading energy efficiency goals for Pepco, DPL, and Exelon’s subsidiary, BGE, and order them to invest at levels necessary to achieve those goals.

Fact #5: A bigger utility would mean LESS competition—and, potentially, higher rates—for Maryland.

If Exelon merges with Pepco, the Chicago-based corporation would become the largest electric utility in the U.S. It’s a myth that a bigger utility is better for Maryland. The merged utility would provide electricity to over 80% of Maryland ratepayers yet the parent company—Exelon Corporation—would continue to operate the largest fleet of aging nuclear power plants in the country. These nuclear plants have been struggling in recent years due largely to slack energy demand and low electricity rates. This creates a conflict of interest. Exelon would be in charge of keeping electricity rates low for Maryland customers at the same time as their nuclear power plants need to receive higher electricity rates to stay in business. The independent market monitor for PJM, our region’s electricity grid operator, and officials from both Delaware and the District of Columbia have raised concerns that this merger could give Exelon anti-competitive monopolistic power over the electricity market.[8] If this merger is approved, there is a risk that Exelon could use its substantial market power over the regional electric transmission infrastructure to control access to the wholesale electricity market or affect the competitiveness in the wholesale electricity market where the company operates power plants.

Fact #6: Exelon’s track record on efficiency is WORSE than Pepco’s.

It’s a myth that Exelon would do better on energy efficiency. Exelon’s only commitment to energy efficiency in this merger is to “maintain and promote [Pepco’s] existing energy efficiency and demand response programs.” It should be noted that Exelon’s subsidiary, BGE, has a worse energy efficiency track record than Pepco in Maryland. In their 2014 EmPOWER Maryland Energy Efficiency report, the Maryland Public Service Commission projected that the Pepco Holdings subsidiaries, Pepco and Delmarva Power & Light, would achieve 99% and 199% of their 2015 energy savings goals respectively and 96% and 830% of their 2015 peak demand production goals respectively. By contrast, Exelon’s BGE is projected to achieve only 67% of its 2015 energy savings goals and 76% its 2015 peak demand production goals.[9] Similarly, in Illinois, where Exelon is the dominant utility, the company is projected to achieve a dismal 35% to 47% of the statutory efficiency goals in its electricity service territory over the next three years.[10] Exelon has made no specific commitments to improve its performance and its record indicates a lack of commitment to energy efficiency.

Fact #7: The merger could JEOPARDIZE job security for Maryland workers.

It’s a myth that Exelon is promising not to fire employees. While Exelon has committed to no “net” involuntary merger-related job losses of Pepco utility employees for at least two years after the merger, that is very different from saying that they will not fire any Pepco employees. Pepco has 5,000 employees in the mid-Atlantic region. If, for example, Exelon fired 100 lineman after the merger but hired 100 managers, the net number of employees would remain the same (5,000) even though 100 people lost their jobs. Exelon has not made any commitments to retain individual Pepco employees beyond a handful of highly paid executives. Workers are not being promised job security for the next two years, and when the “net employment” commitment period expires, workers will lose even that small token of job protection.

Fact #8: Exelon’s shaky financial footing puts Maryland ratepayers at RISK.

It’s a myth that Exelon would lower rates. For all Pepco’s problems, they are a financially sound company and they do not need a merger to stay afloat. By contrast, Exelon is in a precarious financial position that is overly reliant on an aging and uneconomic nuclear fleet. While Exelon and Pepco have said that they expect the merger to create “synergies” that will create “cost saving opportunities,” they have not identified how those cost savings will be achieved or how those savings will be identified or verified.
Exelon has steadily seen its market value shrink for the last several years, and it is difficult to see how this merger would fundamentally change the company’s risky market position. Exelon Corporation’s shares have declined in value by 30% in the last five years, while shares in Pepco Holdings have risen by 79% over the same period.[11] Fitch Ratings announced a negative warning on Exelon’s credit rating on the day the merger was announced, saying that they “did not consider the acquisition of [Pepco] to meaningfully lessen [Exelon’s] business risk.”[12] If the merger is approved and Exelon’s credit rating declines, Maryland ratepayers could see a rate hike down the line as Exelon faces higher costs of borrowing.

Fact #9: This merger is far different—and RISKIER—than Exelon’s 2012 merger with Constellation.

Exelon did merge with Baltimore-based Constellation Energy in 2012, but it’s a myth that Exelon’s current merger proposal is just a repeat of 2012. The circumstances now are very different. In 2008, Constellation was beset with credit concerns following the Great Recession as the company saw its stock and market value plummet by 56%. The threat of bankruptcy was imminent and the company owned some very risky generation assets. While Pepco is facing challenges in improving reliability and customer service, there is no imminent threat to the company’s financial viability. Pepco stock has increased by 79% in the last five years. This merger is more about Exelon trying to hedge their own risky market position, and should be looked at very differently from the merger that Maryland approved in 2012.

Fact #10: Exelon’s claims on jobs are SHAKY at best.

It’s a myth that this merger would create jobs. In their filing with the PSC, Exelon claimed that the merger will create 6,300 to 7,200 jobs across Maryland. Six thousand of those jobs, though, are expected to come from “enhanced reliability commitments.” Earlier in the application Exelon committed only “to implement Pepco’s current plan to improve system reliability.” So Exelon is committing to create 6,000 jobs by doing what Pepco already said they would do without the merger. Another 1,200 jobs are expected to come from energy efficiency measures through a “customer investment fund.” But Exelon already has energy efficiency programs in Maryland and Illinois, where they run local utilities, and they’re falling short on their statutory goals in both states. Rather than approve this merger, the Maryland PSC can and should set nation-leading energy efficiency goals for Pepco and Exelon’s subsidiary, BGE, and order them to invest at levels necessary to achieve those goals.
For more information please contact:

  • James McGarry, Chief Policy Analyst, Chesapeake Climate Action Network, at 240-396-1983 or James@chesapeakeclimate.org
  • Tyson Slocum, Energy Program Director, Public Citizen, at 202-454-5191 or Tslocum@citizen.org

1.  “Public Advocate and Rate Counsel Oppose Currently Proposed PSEG-Exelon Merger.” State of NJ Division of the Rate Counsel, 26 Apr. 2006. <http://www.state.nj.us/rpa/news/2006/060426_pseg_exelon_merger.html>
2. “Comments of the Independent Market Monitor for PJM.” Before the Federal Energy Regulatory Commission. Docket No. EC14-96-000. 21 Jul 2014. <http://www.monitoringanalytics.com/reports/Reports/2014/IMM_Comment_EC14-96-000_20140721.pdf>
3. Pepco Holdings, Inc. Form 10-K: ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2013. Rep. U.S. Securities and Exchange Commission, 28 Feb. 2014. <http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=62854&fid=9298222>
4. Exelon Corporation. Form 10-K: ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2013. Rep. U.S. Securities and Exchange Commission, 14 Feb. 2014. <http://www.exeloncorp.com/performance/investors/secfilings.aspx>
5. Exelon Corporation. Proc. of Edison Electric Institute Financial Conference. N.p., 12 Nov. 2013. Web. <http://www.exeloncorp.com/performance/investors/events.aspx>
6. Daniels, Steve. “Exelon Warns State It May Close 3 Nukes.” Crain’s Chicago Business. 3 Mar. 2014. <http://www.chicagobusiness.com/article/20140301/ISSUE01/303019987/exelon-warns-state-it-may-close-3-nukes>
7. Maryland Public Service Commission. The EmPOWER Maryland Energy Efficiency Act STANDARD REPORT OF 2014. Rep. N.p., Mar. 2014. Web. <http://webapp.psc.state.md.us/intranet/Reports/2014%20EmPOWER%20Maryland%20Energy%20Efficiency%20Act%20Standard%20Report.PDF>
8. District of Columbia: “Comments of the Office of the People’s Counsel for the District of Columbia.” Before the Federal Energy Regulatory Commission. Docket No. EC14-96-000. 21 Jul 2014. Delaware: “Protest of the Delaware Public Service Commission.” Before the Federal Energy Regulatory Commission. Docket No. EC14-96-000. 21 Jul 2014.
9. Maryland Public Service Commission. The EmPOWER Maryland Energy Efficiency Act STANDARD REPORT OF 2014. Rep. N.p., Mar. 2014. Web. <http://webapp.psc.state.md.us/intranet/Reports/2014%20EmPOWER%20Maryland%20Energy%20Efficiency%20Act%20Standard%20Report.PDF>
10. Hinman, Jennifer M. “Re: Question about ComEd Energy Efficiency Goals.” Message to James McGarry. 22 Sept. 2014. E-mail.
11. PEPCO Holdings, Inc. (POM) and Exelon Corporation (EXC) Stock Chart, 5-year history. 22 Oct. 2009 – 22 Oct. 2014. <http://www.google.com/finance?q=EXC%2C+POM&ei=zmBOVKCtJcmt8gbXkoDYCw>
12. “Fitch Places Exelon’s Ratings on Negative Watch Following Acquisition Announcement.” Business Wire, 30 Apr. 2014. <http://www.businesswire.com/news/home/20140430007060/en/Fitch-Places-Exelons-Ratings-Negative-Watch-Acquisition#.VCx8AfldVnY>

Wading into Baltimore’s Rising Waters, Coalition Launches Campaign to Pass Nation-Leading Clean Energy Legislation

NAACP, Maryland Working Families, Baptist Reverend, health professionals and students join business and environmental leaders in calling on state lawmakers to double Maryland’s commitment to clean electricity in 2015

BALTIMORE – At a podium half-submerged in the Baltimore Harbor, public-interest leaders today launched a broad-based campaign aimed at doubling Maryland’s clean energy goals for wind and solar power in the 2015 legislative session.
Representatives from faith, health, social justice, student, business and environmental groups began Friday’s press conference standing up to their hips in water along Baltimore’s vulnerable harbor to dramatize the threat of sea-level rise. The leaders pointed to several recent climate change studies painting a flooded future for Maryland’s largest city and its capital city Annapolis. In response, the leaders underscored the urgency of transitioning Maryland off of planet-heating fossil fuels, and they declared their top energy priority in Annapolis in 2015 will be passing a 40 percent clean electricity standard.
Specifically, the legislation to be introduced would require utilities to obtain 40% of their electricity from clean sources by 2025, effectively doubling the existing requirement of 20% by 2022 under Maryland’s Renewable Portfolio Standard law. In addition to the exceptionally strong and diverse coalition assembled in-person on Friday, leaders shared a new letter signed by 21 prominent local, statewide and national groups endorsing the campaign and a recently published letter by Bishop Wolfgang Herz-Lane, President of the Ecumenical Leaders Group, endorsing the campaign.
“This fall, supported by the work of Interfaith Power & Light, Maryland’s religious communities have renewed our commitment to stewardship and care for all God’s creation,” said Reverend Darriel Harris of the Baltimore Food & Faith Project. “This morning, we challenge our leaders in Annapolis to do the same.”
The Ecumenical Leaders’ Group — representing seven denominations of Christian churches throughout Maryland — recently voted to endorse a 40% clean electricity standard for Maryland. In less than a month, forty religious leaders representing diverse faith traditions have signed onto their call.
Maryland’s official greenhouse gas reduction plan, released in 2013, identifies strengthening the state’s clean electricity standard as the most powerful single policy tool available to lawmakers. Polling released earlier this week indicates that 65 percent of Marylanders support doubling the state’s target to 40% by 2025.
MD 40 percent presser land 10-17
“Poor communities and communities of color here in Maryland are suffering at the hands of the fossil fuel industry,” stated Gerald Stansbury, President of the Maryland State Conference of the NAACP. “2015 can be the year that Maryland takes the biggest step we’ve taken yet to right that wrong.”
Maryland still gets more than half of its energy from dirty coal and gas. In addition to threatening cities like Baltimore and Annapolis with rising sea levels and increased flooding, these fuels threaten Marylanders’ health, with the impacts disproportionately harming low-income communities and communities of color.
“By cutting our addiction to fossil fuels, we will not only be ensuring a safer — and drier — future, we will also be improving the health of every Maryland resident starting today,” said Dr. Gina Angiola, MD, a board member of Chesapeake Physicians for Social Responsibility. “Our state has the dubious distinction of being the worst in the Eastern U.S. for ground-level ozone pollution, and MIT recently found that Baltimore City has the highest rate of premature death in the nation due to air pollution. This isn’t a problem we can afford to ignore.”
Baltimore native Christine Keels, a lifelong asthma sufferer, emphasized that Baltimore residents suffer from this air pollution every day. “I carry a medical supply kit with me everywhere I go. As an asthma patient, I think about how dirty the air is every day when I wake up,” said Keels. “For once, I’d just like to drive with the windows down and take a deep breath.”
Business leaders emphasized that, by passing a nation-leading clean electricity standard, state lawmakers have an opportunity to establish Maryland as a regional hub for clean energy jobs and investment.
“Doubling our commitment to clean energy means more jobs for Maryland, including more public sector jobs, more manufacturing and constructions jobs,” added Charly Carter, Executive Director of Maryland Working Families. “That is a big win for workers and our communities.”
Bruce Chatman, CEO and President of Essex Renewable Power LLC, said, ”Doubling our commitment to clean energy in Maryland means more companies like mine, employing more Marylanders – from engineers to construction employees, from blade, battery and solar panel manufacturers to gearbox makers, from electricians to operators – working for Maryland-based small businesses building the new clean energy economy.”
The coalition declared that they will continue building bigger and broader support for doubling Maryland’s clean energy goals, and plan to bring a powerful statewide grassroots movement with them to Annapolis in 2015.
“Addressing climate disruption is a moral obligation, but more importantly it is an opportunity to build a brighter future for Maryland based on renewable, clean power,” said Josh Tulkin, State Director of the Sierra Club, Maryland Chapter, who spoke on behalf of the Maryland Climate Coalition. “Doubling our state’s commitment to renewable energy, to 40% by 2025, means progress not just on climate and public health, but also on jobs and economic leadership for Maryland. The Sierra Club is ready to do everything we can to pass this legislation in 2015.”
“Flooding that used to occur just a day or two a year has become increasingly common, more so in Baltimore and Annapolis than nearly anywhere in the country,” said Mike Tidwell, director of the Chesapeake Climate Action Network, and also a member of the Maryland Climate Coalition. “But just as the tides are rising, so is a grassroots movement demanding action. This movement will be sweeping Annapolis come January with one goal: doubling our state’s clean power supply.”
PHOTOS: https://www.flickr.com/photos/chesapeakeclimate/sets/72157648809030601/
RESOURCES:

CONTACT:
Mike Tidwell, 240-460-5838, mtidwell@chesapeakeclimate.org
Kelly Trout, 240-396-2022, kelly@chesapeakeclimate.org

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The mission of the Maryland Climate Coalition is to unite Marylanders to mitigate climate change to protect our environment, health, and economy.

In First Step of Legal Battle, Groups Challenge Cove Point LNG Export Project’s Federal Approval

Environmental and community advocates file legal papers in controversial project

WASHINGTON, D.C.—Environmental and community groups took the first step late yesterday in a likely legal battle against a controversial liquefied natural gas (LNG) export facility. On behalf of the Chesapeake Climate Action Network, Sierra Club, Lower Susquehanna Riverkeeper, Patuxent Riverkeeper, and Potomac Riverkeeper the environmental law organization Earthjustice filed a motion for rehearing (PDF) with the Federal Energy Regulatory Commission (FERC), demanding the agency withdraw its approval of an LNG export facility proposed at Cove Point in southern Maryland. The filing positions the groups to sue the agency to challenge FERC’s inadequate environmental review of the project.
Groups also filed a motion for a stay (PDF), urging FERC to halt further construction on the $3.8 billion project. The agency approved the project on September 29 over the objections of opponents who argued the massive facility, proposed by Dominion Resources, will spur air and water pollution from fracking across the mid-Atlantic region and, according to federal data, could contribute more to global warming over the next two decades than if the Asian countries importing the facility’s LNG exports burned regionally sourced coal.
In the days following FERC’s approval, Dominion moved quickly to begin construction on the project, ignoring FERC’s requirement that their construction and emergency plans be made available for community review before requesting to proceed. Additionally, despite public outcry over the potential for a catastrophic explosion at the facility, Dominion filed an updated emergency response plan with FERC but insisted on keeping all of the details of the plan secret from the public — claiming this information, along with other details of their project, is “proprietary.” In statements to the press, Dominion explained that it is planning on building a new evacuation route, but has yet to provide the details to FERC.
“In neglecting to prepare a thorough review of the environmental impacts of Dominion’s controversial project, FERC is prioritizing the desires of a powerful company over the health and safety of the people of Calvert County, Marylanders, and communities throughout the Marcellus shale region,” said Earthjustice Associate Attorney Jocelyn D’Ambrosio, who filed the legal papers on behalf of the coalition. “The public deserves far more from the people tasked with regulating the energy industry. We are demanding that FERC go back and do the necessary review of this project and order Dominion to halt construction in the meantime. If they refuse, they should prepare to defend their reasons in federal court.”
“FERC is once again acting like it’s above the law, effectively hitting the on-switch for Dominion’s bulldozers before groups were able to exercise their legal right to challenge a widely contested ruling,” said Mike Tidwell, director of the Chesapeake Climate Action Network. “Unless FERC hits the pause button on construction at Cove Point, Calvert County residents will face immediate and likely permanent damage to their environment and quality of life, all based on a fundamentally flawed review that could very well be overturned in the courts.”
“My neighbors and I are frankly appalled at the prospect of this project moving full speed ahead without a thorough review of the potentially catastrophic impacts to our community and environment. And the fact that Dominion is concealing its emergency response plan from the public only adds to our concerns and solidifies our belief that they are hiding the truth about the dangers of this project,” said Tracey Eno, a member of Calvert Citizens for a Healthy Community. “We’ve been blatantly ignored by most of our local, state and federal elected leaders. Now the people at FERC are acting as if we, the citizens of Lusby, are inconsequential and expendable. Our only hope could rest in the courts.”
“In its haste to accommodate Dominion’s sense of urgency, FERC simply ignored and failed to consider numerous impacts of this massive construction project to the environment, quality of life and safety of people and communities. We as citizens are not only entitled to raise questions, we are just as entitled to get answers,” said Patuxent Riverkeeper Fred Tutman. “From the outside, it appears as if FERC was plainly designed and predestined to approve this project regardless of its impacts or implications. Citizens are now asking for nothing more than what we were entitled to in the first place: a fair hearing and due consideration of our claims and concerns.”
“FERC cannot allow this project to proceed until FERC addresses fundamental flaws in FERC’s analysis,” said Sierra Club Staff Attorney Nathan Matthews. “Most importantly, the agency failed to consider the simple fact that exporting LNG will mean more drilling and fracking, putting residents of the Marcellus and others at risk of air pollution, contaminated groundwater, and increased climate pollution.”
BACKGROUND:
The Dominion Cove Point project would take gas from fracking wells across Appalachia and liquefy it along the shore of the Chesapeake Bay for export to Asia. The project would be the first LNG export facility built so close to so many homes, the first built in close proximity to Marcellus Shale fracking operations, and a potential trigger of more global warming pollution than all seven of Maryland’s existing coal-fired power plants combined. In spite of this, FERC’s highly limited Environmental Assessment omitted credible analysis of the project’s lifecycle global warming pollution, potentially catastrophic threat to hundreds of nearby residents, pollution of the Chesapeake Bay and risk to the critically endangered North Atlantic right whale, along with all the pollution associated with driving demand for upstream fracking and fracked gas infrastructure.
Dominion’s project has faced and will continue to face significant and widespread grassroots opposition. A coalition of state, national and community groups opposing the project submitted more than 150,000 comments to FERC by the June public comment deadline. In mid-July, more than 1,000 people marched on FERC’s Washington, D.C. headquarters calling on the agency to halt approvals of all LNG export projects, including the Dominion Cove Point facility.
CONTACT:
Kelly Trout, 240-396-2022, kelly@chesapeakeclimate.org
Diana Dascalu-Joffe, 240-396-1984, diana@chesapeakeclimate.org

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RESOURCES:
Motion for rehearing filed by groups: http://earthjustice.org/sites/default/files/files/Request_for_Rehearing.pdf
Motion for a stay filed by groups: http://earthjustice.org/sites/default/files/files/FERC_stay.pdf

CCAN Responds to Gov. McAuliffe's Release of the Virginia Energy Plan

Governor pledges to catch up to neighboring states in renewable energy and efficiency investments
RICHMOND—Dawone Robinson, Virginia Policy Director at the Chesapeake Climate Action Network, had the following statement in response to Governor Terry McAuliffe’s remarks this morning in releasing the Virginia Energy Plan:
“Governor McAuliffe’s emphasis today on investing in energy efficiency and expanding solar power in Virginia are encouraging. Virginia’s vast and untapped renewable energy potential is well documented. We can catch up to our neighbors in clean energy, but only if we finally put the policies in place to harness it. We look forward to working with lawmakers in January to ensure real progress is made.
“However, the plan’s support for expanding fracked gas pipelines is worrisome and in fact contradictory to the governor’s consistent call to address climate change. Rather than supporting Dominion Virginia Power’s titanic gas pipeline, Governor McAuliffe should instead call on Dominion to quickly build safe and reliable offshore wind power in the 112,000 acres the company exclusively leased in September of last year.
“Today Governor McAuliffe spoke passionately about the need to address climate change by catching up to neighboring states in renewable energy and efficiency investments. We hope that in the coming months Governor McAuliffe will show the leadership we need and work toward rapid expansion of renewable energy, rather than compound the impacts of climate change with more fossil fuels like natural gas.”
CONTACT:
Dawone Robinson, 804-767-8983, dawone@chesapeakeclimate.org
Kelly Trout, 240-396-2022, kelly@chesapeakeclimate.org

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Federal Regulators and Elected Leaders Declared 'Guilty' on Gas Exports

Cove Point Opponents Declare FERC and Elected Leaders ‘Guilty’ on Gas Exports in Friday Protests, Vow to Keep Fighting

In ‘People’s Court’ at FERC headquarters, activists ‘convict’ regulators and leaders—from Pres. Obama to Chairman LaFleur to Gov. O’Malley—for selling out people’s safety and the climate

Calvert citizens rally at the home closest to Dominion’s facility, declaring, ‘We have nothing to lose because we have everything to lose’

WASHINGTON, DC—Vowing to continue the fight to block a proposed liquefied natural gas (LNG) export facility at Cove Point in southern Maryland, activists held tandem demonstrations on Friday outside the headquarters of the Federal Energy Regulatory Commission (FERC) and at a home directly across the street from Dominion Resources’ proposed facility in Lusby.
The actions came in response to FERC’s ruling earlier this week to grant Virginia-based Dominion approval to build the $3.8 billion project. Environmental groups are preparing to petition FERC to reconsider this ruling, given the agency failed to conduct a full environmental impact statement or to fully consider the environmental damage that would come from increased fracking or global warming pollution.
A “People’s Court” convened outside FERC headquarters on Friday morning to “convict” federal regulators and elected officials alike who have helped facilitate Dominion’s polluting project. With Patuxent Riverkeeper Fred Tutman presiding as “judge,” FERC Chairman Cheryl LaFleur, President Barack Obama, Governor Martin O’Malley, Congressman Steny Hoyer, U.S. Senators Barbara Mikulksi and Ben Cardin, and the Calvert County Board of County Commissioners all received unanimous “guilty” verdicts.1
View the courtroom photos at: https://www.flickr.com/photos/chesapeakeclimate/sets/72157647915257870/
“The Cove Point ruling is a massive failure of federal regulatory responsibility and of political leadership,” said Mike Tidwell, director of the Chesapeake Climate Action Network. “We’re here to name names, and to show our resolve to keep fighting in the streets and in the courts.”
Later the same day, members and supporters of Calvert Citizens for a Healthy Community (CCHC) held a press conference and demonstration in the front yard of the family home that is Dominion’s closest neighbor in Lusby, Maryland. The southern Maryland residents vowed to re-double their opposition.
“We are appalled that our government officials and agencies show such blatant disregard for the health and lives of fellow Americans by allowing this project to be the first LNG export facility—in the history of the world—to be built in such a highly populated residential area,” said CCHC members in a statement. “Without a complete Environmental Impact Statement (EIS) and Quantitative Risk Assessment (QRA) the hazards of this operation are not fully analyzed, thus there is no way to adequately mitigate and prepare for all possible harm to residents and first responders.”
“At this point, we have nothing to lose, because we have everything to lose. This is not a done deal, it’s merely the beginning of the next chapter,” said Tracey Eno, a spokesperson for CCHC.
On Wednesday, the Baltimore Sun reported on a clear concession by Dominion that the export project—including the first large-scale gas liquefaction train ever built in a residential neighborhood—could bring grave safety dangers to nearby residents. Despite repeated assertions that potential explosion, fire or flammable vapor gas cloud catastrophes would not extend off-site, the company is now “looking into” constructing a new road to serve as an evacuation route. Currently, hundreds of residents would have no escape route apart from driving directly past the Dominion site.
Environmental groups that have intervened in the FERC process will be petitioning FERC for a rehearing of the Cove Point decision within the next 30 days. If FERC refuses to revisit its starkly limited environmental assessment, it is highly likely that groups will pursue legal avenues to sue the agency under the National Environmental Policy Act.
1. The specific charges leveled at regulatory and elected leaders on Friday included:

  • President Barack Obama: GUILTY for promoting a destructive “all of the above” energy policy.
  • FERC Chairman Cheryl LaFleur: GUILTY for continuing FERC’s legacy as servant of the gas industry—not the public.
  • Governor Martin O’Malley: GUILTY for literally falling asleep as citizens pleaded for explosion answers.
  • Congressman Steny Hoyer (D-MD 5th District): GUILTY for being Dominion’s chief facilitator for Cove Point pollution and harm to the Chesapeake Bay.
  • Senator Ben Cardin: GUILTY for blatant climate hypocrisy in supporting worse-than-coal gas exports.
  • Senator Barbara Mikulski: GUILTY for failing to demand a full EIS from FERC.
  • Calvert County Board of County Commissioners: GUILTY for giving “sweetheart deals” to Dominion while exposing children to appalling risks.

CONTACT:
Kelly Trout, 240-396-2022, kelly@chesapeakeclimate.org
Mike Tidwell, 240-396-2153, mtidwell@chesapeakeclimate.org

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Calvert Citizens for a Healthy Community Responds to Federal Ruling on Cove Point

Contact: Tracey Eno, Calvert Citizens for a Healthy Community, 443-624-8022, traceyeno@comcast.net
LUSBY, MD—Calvert Citizens for a Healthy Community (CCHC) responds to the Federal Energy Regulatory Commission (FERC) decision to grant Dominion Cove Point LNG approval to build an LNG refinery/export facility directly adjacent to their neighborhoods:
“We are appalled that our government officials and agencies show such blatant disregard for the health and lives of fellow Americans by allowing this project to be the first LNG export facility—in the history of the world—to be built in such a highly populated residential area. Lusby, Maryland, with a population of 20,483 people, is the wrong place for this dangerous industry. Without a complete Environmental Impact Statement (EIS) and Quantitative Risk Assessment (QRA) the hazards of this operation are not fully analyzed, thus there is no way to adequately mitigate and prepare for all possible harm to residents and first responders.”
CCHC is determined to re-double their opposition. “At this point, we have nothing to lose, because we have EVERYTHING to lose. This is not a done deal, it’s merely the beginning of the next chapter,” says Tracey Eno, a spokesperson for CCHC.
Founded in November 2013, Calvert Citizens for a Healthy Community (CCHC) is a community organization that formed in opposition to the proposal to transform a dormant liquefied natural gas import facility in Lusby, MD into a major industrial refinery and export terminal in Lusby (Calvert County, Maryland).
Eno continues, “Considering that our County Commissioners signed a non-disclosure agreement and refused to discuss Dominion publicly, and considering that Dominion does not want the public to understand the hazards of their plan, citizens felt it imperative to focus their efforts on saving themselves. The organization’s purpose is to research and disseminate information about public safety and environmental hazards related to the Dominion Cove Point (DCP) plant which may not otherwise be public knowledge.”
Contrary to DCP’s representations to FERC, suggesting that DCP is in a remote area, approximately 360 homes and a public park lie within just 4,500 feet of the DCP site. This is of significance, considering that during their research, CCHC discovered a 2006 MD DNR report which shows those homes to be at risk of a flash fire NOW—before any new equipment is even added.
From the start, the people living near the DCP facility have not been represented or protected by elected and appointed officials responsible for ensuring their health and safety—from the county to state to federal levels:

(a) The Calvert County Board of County Commissioners (BOCC) signed a non-disclosure agreement with Dominion on August 21, 2012, completely shutting out the public from the process which would ultimately affect them. What’s more, the BOCC decided not to tell the public that the agreement even EXISTED. Commissioner Susan Shaw was quoted in a DC Media Group as saying, “They’re [the public are] never privy to all the information. Do you think we’d let the public know what we’re doing?”
(b) The BOCC exempted DCP’s expansion from local zoning ordinances. A judge has since ruled that action to be a violation of the Maryland Constitution.
(c) The BOCC dismissed the expertise of their own Calvert County Environmental Commission, the one group whose mission is to provide unbiased, scientific information on specific local environmental issues. The Environmental Commission was told to “not concern itself” with the Dominion Cove Point project and instead directed to focus on another (less urgent and much less impactful) topic.
(d) The Maryland Public Service Commission approved construction of a power plant that will not provide any energy to citizens of Maryland, and delegated any further fact-finding and decisions to FERC. The PSC accepted DCP’s purchase of emission reduction credits from elsewhere in the state, without acknowledging that Lusby residents will be forced to bear the burden of increased pollution in their own lungs.
(e) The Maryland Board of Public Works, including Governor Martin O’Malley, voted to approve a wetlands license for construction of a large, temporary pier from which DCP will off-load large equipment to be carried over small county roads to the DCP site. At the hearing, Governor O’Malley quite literally fell asleep—and then approved what appeared to be a pre-determined conclusion, with little or no concern for local citizens.
(f) Now, with this decision, FERC joins the other governmental bodies in blithely dismissing the harmful effects—both ongoing and threats of major leaks, explosions and fires—due to dangerous propane, LNG, aqueous ammonia and other chemicals on site.

In May, 2014 members of CCHC and scores of others appeared at the sole FERC “meeting” in Maryland—and waited from 7am until early evening to state their concerns. For all the hours of waiting, they then learned that not one FERC commissioner was present—and that their voices were unlikely to reach the decision-makers in any meaningful way. (A transcript of more than seven hours of testimony could not capture the real, personal, expert and intense concerns of people who live near the proposed refinery/export facility.)
The CCHC demands have been simple and reasonable. Before granting approval, FERC should:

A) Conduct an Environmental Impact Study (EIS) in order to have a comprehensive overview of pros and cons, with which to base their decision.
B) Order a Quantitative Risk Assessment (QRA) from Maryland Department of Natural Resources, for the safety of on-site workers, residents, and first responders.

These two actions would ensure fact-based, objective and up-to-date assessments. Instead, FERC is using an outdated 2006 Environmental Impact Statement that did not address exports or the $3.8 billion in expanded facilities. The Environmental Assessment (which is less vigorous than an EIS) recently undertaken by FERC staff relied heavily on information provided by DCP, with little or no third-party verification.
Furthermore, CCHC has protested FERC’s failure to demonstrate compliance with the most current fire safety standards in NFPA 59A 2013, a fatal flaw in the Environmental Assessment (EA) that could cost first responders and residents their lives. The new standards appear to have been a direct response to explosions that occurred at a Skikda, Algeria LNG export facility in 2004, that resulted in serious casualties and extensive property damage. Yet elected officials at all levels have inexplicably refused to require that the latest fire safety standards be applied.
The issues now extend far beyond Lusby and Calvert County. FERC’s go-ahead to DCP must be a wake-up call to communities across Maryland, Pennsylvania and Virginia. Transporting fracked gas for export from Cove Point requires methane-leaking pipelines and noisy, polluting compression stations that turn the gas into transportable liquid. As notice of Dominion’s application for Cove Point was published in the Federal Register on April 19, 2013, and all interventions were due on or before May 3, 2013—just 2 weeks later—every community must be vigilant about DCP’s further plans, as well as those of related companies with different names.
To rectify the situation, comply with the law, and ensure the public welfare and safety of citizens and first responders, CCHC calls for the following actions:
** That the Secretaries of Homeland Security and Transportation step in and insist on full compliance with NFPA 59A 2013 before Lusby becomes home to the first large scale liquefaction train ever to be installed in such a densely populated residential neighborhood in the history of the industry.
** That FERC reconsider and reverse its decision—and order a comprehensive Environmental Impact Study and Quantitative Risk Assessment.
** That Governor O’Malley use any and all legally granted powers to cause the cessation of construction pending the ability of CCHC and its allies to gain a judicial decision on the request for an injunction.

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20 Maryland Groups Oppose the Exelon-Pepco Merger

For Immediate Release
Thursday, October 2, 2014

Maryland Leaders Unveil Broad Opposition to Exelon-Pepco Merger

Environmental, consumer, student, business, and faith leaders announce coalition united to stop the merger in order to protect clean, reliable and affordable energy for Maryland

BALTIMORE—A proposed merger between utility giant Exelon and regional utility Pepco Holdings, Inc. faced major new obstacles Thursday when leading environmental, consumer, student, business and faith groups announced their staunch and united opposition at a Baltimore press conference. Unveiling a letter signed by 20 groups, the coalition detailed why the proposed merger would harm consumers and the environment and prevent Maryland from realizing a clean, affordable, and reliable 21st-century electric grid.
Today’s open letter to the pubic lays out the step-by-step evidence for why the merger should be rejected by the Maryland Public Service Commission. The PSC will hold hearings on the merger in early 2015. The letter states that the coalition is “unequivocally opposed to this merger as proposed.” It states that given Exelon’s track record, the groups “are concerned that there is no way forward for this merger that would produce the key reforms and positive elements that Maryland’s electricity grid requires.”
“The proposed merger would take Maryland in exactly the wrong direction at a time when we should be investing in a modern and more customer-centric electricity system,” said Tyson Slocum, Energy Program Director of Public Citizen, a consumer watchdog group. “Marylanders deserve a 21st century electric grid that delivers cleaner, more local, and more reliable energy, but this merger would lock over 80% of Marylanders into a 20th century grid controlled by a single company based in Chicago.”
The proposed merger would make Exelon, already a top spender on lobbying in Annapolis and a company with a track record of opposing many renewable energy policies, the largest utility company not just in Maryland, but the entire nation. Exelon is already the largest nuclear power plant owner in the country. The Maryland Public Service Commission (PSC) must sign off on the merger before it can proceed, and several environmental groups joining Thursday’s event have already intervened in the PSC case.
“Unfortunately, Exelon has been one of the leading voices against policies promoting wind power and other renewable technologies,” said Bruce Burcat, Executive Director of the Mid-Atlantic Renewable Energy Coalition (MAREC), which represents wind and solar companies across the East Coast. “But these smart renewable energy policies have helped bring the price of wind energy down to the point that it is now cost-competitive with new traditional power plants, while delivering health and environmental benefits. Exelon is promoting an agenda that would raise the cost of renewable technologies in an effort to reverse the gains made, and that will continue to be made, as a result of these vital and highly effective policies.”
“The Public Service Commission should reject this merger because Exelon opposes most of the major renewable energy policies that Maryland needs to fight climate change,” said Mike Tidwell, director of the Chesapeake Climate Action Network. “Maryland has historically been a renewable energy leader and rightly so. With 3,190 miles of coastline, Maryland is the third most vulnerable state in the country to sea-level rise from climate change. Maryland can show real leadership by saying ‘no’ to an energy monopoly in our state, and ‘yes’ to clean and affordable energy for all Marylanders.”
“So many of us across DC and Maryland have been working hard for years to save energy and to shift to cleaner power,” said Joelle Novey, director of Interfaith Power & Light (MD.DC.NoVA), which works with faith communities throughout the region. “We’re very concerned that Exelon’s way of doing business will interfere with our ability to make our own choices about how our energy is produced, distributed, and used.”
Click here to view a PDF copy of the open letter signed by 20 groups opposing the merger.
CONTACT:
Kelly Trout, 240-396-2022, kelly@chesapeakeclimate.org
Mike Tidwell, 240-460-5838, mtidwell@chesapeakeclimate.org

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Groups Condemn Federal Ruling on Cove Point LNG Export Facility

Environmental and Community Leaders Denounce Federal Ruling on Cove Point LNG Export Facility

Feds approve massive $3.8 billion source of pollution without a full Environmental Impact Statement

Groups weigh motion for rehearing to prevent safety, climate and economic harm

WASHINGTON, DC—Environmental and community groups are bitterly denouncing today’s decision by the Federal Energy Regulatory Commission (FERC) to approve permits for the controversial liquefied natural gas (LNG) export facility proposed at Cove Point in southern Maryland. They said FERC’s decision defies the facts that the massive $3.8 billion facility, proposed by Dominion Resources, will incentivize environmental damage from fracking across the mid-Atlantic region and, according to federal data, would likely contribute more to global warming over the next two decades than if Asian countries burned their own coal.
Groups that have intervened in the FERC case emphasized that they are assessing issues on which to file a motion for rehearing—a necessary step before appeal. They vowed to continue the fight to protect communities across Maryland and the region from the potentially unprecedented pollution and safety risks Dominion’s Cove Point project would trigger.
Groups also called the Cove Point decision a simultaneous stain on the records of Maryland Governor Martin O’Malley, Congressman Steny Hoyer (D-Md.), and U.S. Senators Ben Cardin and Barbara Mikulski, who failed to substantively challenge FERC’s reckless process—including the agency’s refusal to conduct a full Environmental Impact Statement—despite pleas from voters and newspapers like the Baltimore Sun.
“FERC’s decision to allow LNG exports from Cove Point is fundamentally flawed because the agency failed to consider the simple fact that exporting LNG will mean more drilling and fracking, and that means more climate pollution, more risk of contaminated groundwater, and more threats to the health of people who live near gas wells,” said Deb Nardone, director of the Sierra Club’s Beyond Natural Gas campaign. “FERC should be standing up for the public good, not the interests of dirty polluters.”
“FERC’s decision to approve Cove Point is the result of a biased review process rigged in favor of approving gas industry projects no matter how great the environmental and safety concerns,” said Mike Tidwell, director of the Chesapeake Climate Action Network. “FERC refused to even require an environmental impact statement for this $3.8 billion facility right on the Bay. We intend to challenge this ruling all the way to court if necessary. For the safety of Marylanders and for people across our region facing new fracking wells and pipelines, we will continue to fight this project until it is stopped.”
“FERC’s failure to demonstrate compliance with the most current safety standards in the National Fire Protection Association (NFPA) 59A 2013 is a fatal flaw in the Environmental Assessment that could cost residents and first responders their lives,” said Tracey Eno, a member of Calvert Citizens for a Healthy Community. “Members of Calvert Citizens for a Healthy Community (CCHC) believe that these new standards were a direct response to the horrific explosions that occurred at a Skikda, Algeria LNG export facility in 2004, resulting in serious casualties and extensive property damage. We have endured the betrayal of our own elected officials—most notably, our five Calvert County Commissioners, our federal representatives and Governor Martin O’Malley—who have all inexplicably refused to insist on the latest fire safety standards for the Dominion Cove Point LNG export expansion. We now call on the Secretaries of Homeland Security and Transportation to step in and insist on full compliance with NFPA 59A 2013 before Lusby becomes home to the first large-scale liquefaction train ever to be installed in a such a densely populated residential neighborhood in the history of the industry.”
“Potomac Riverkeeper is extremely concerned about the impact of this new LNG export facility on the entire Potomac and Shenandoah Watershed,” said Sarah Rispin, General Counsel for Potomac Riverkeeper, Inc. “We believe that FERC failed to take into account the cumulative impact that having a major export facility on the Chesapeake Bay will have on the watershed, by driving increased fracking activity in the Marcellus and Utica Shale formations, and the construction of new pipelines serving the facility that will crisscross the region.”
“We are carefully reviewing FERC’s decision to approve the Cove Point export facility with our clients and planning our next steps,” said Jocelyn D’Ambrosio, associate attorney at Earthjustice. “If FERC has refused to revisit its inadequate environmental review, will have no choice but to petition FERC to reconsider its decision, and ultimately we may have to take the case to court.”
“FERC’s decision today ignores the many diverse impacts that an LNG export facility will have on local communities both near and far away,” said Michael Helfrich, director of Lower Susquehanna Riverkeeper. “LNG export threatens local communities’ health and safety and waterways, and is simply not in the public interest.”
The Chesapeake Climate Action Network and Earthjustice, the nonprofit law organization that has been representing the Lower Susquehanna Riverkeeper, Patuxent Riverkeeper, Potomac Riverkeeper, Shenandoah Riverkeeper, and the Sierra Club in the FERC proceeding, are poised to petition FERC and potentially to sue the agency to challenge an inadequate environmental review.
The Dominion Cove Point project would take gas from fracking wells across Appalachia and liquefy it along the shore of the Chesapeake Bay for export to Asia. The project would be the first LNG export facility ever built so close to so many homes, the first built in close proximity to Marcellus Shale fracking operations, and a potential trigger of more global warming pollution than all seven of Maryland’s existing coal-fired power plants combined. Yet, in its final order, FERC affirmed its highly limited Environmental Assessment, which omitted credible analysis of the project’s lifecycle global warming pollution, potentially catastrophic threat to hundreds of nearby residents, pollution of the Chesapeake Bay and risk to the critically endangered right whale, along with all the pollution associated with driving demand for upstream fracking and fracked gas infrastructure.
Dominion’s project has faced and will continue to face significant and widespread grassroots opposition. A coalition of state, national and community groups in opposition to the project submitted more than 150,000 comments to FERC by the June public comment deadline. In mid-July, more than 1,000 people marched on FERC’s Washington, DC headquarters calling on the agency to halt approvals of all LNG export projects, including the Dominion Cove Point facility, followed the next day by a peaceful sit-in that led to 25 arrests.

Contact:

Kelly Trout, 240-396-2022, kelly@chesapeakeclimate.org
Mike Tidwell, 240-460-5838, mtidwell@chesapeakeclimate.org

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Report Warns Investors: AVOID Dominion’s Cove Point LNG Export Project

For Immediate Release
September 10, 2014

Report Warns Investors: AVOID Dominion’s Cove Point LNG Export Project

Analysis details serious financial, governance and sustainability risks of controversial Dominion Midstream master limited partnership to export fracked gas

NEW YORK—A report released today warns investors of serious financial, corporate governance, and sustainability risks associated with Dominion Resources’ new gas export subsidiary, Dominion Midstream, which would own a controversial $3.8 billion liquefied natural gas export facility at Cove Point in southern Maryland. The report, prepared by the financial research firm Profundo, recommends that investors avoid buying units in Dominion Midstream (DM.). The company is currently awaiting approval from the U.S. Securities and Exchange Commission to make an initial public offering (IPO) on the New York Stock Exchange.
“Investors buying the common units of Dominion Midstream Partners (DM.) should realize that this company’s cash-flow is purely dependent on the Cove Point Liquefaction Project, for which further delays are expected,” said Jan Willem van Gelder, director of Profundo, the research firm that prepared the investor risk report. “In combination with the limited voting power of the unitholders and the dominant position of parent company Dominion Resources, investors are likely to face very uncertain returns.”
Key performance risks highlighted in the report include:

  • Sustainability: The Cove Point project has already faced significant public protests and is likely to face mounting legal challenges because it threatens to cause significant air and water pollution, including impacts to the sensitive ecology of the Chesapeake Bay, to trigger more climate pollution than all seven of Maryland’s existing coal-fired power plants combined, and to drive the expansion of environmentally damaging fracking.
  • Market volatility: The volatile and unpredictable prices of natural gas overseas could make export projects from the United States unprofitable, thus rendering Dominion’s Cove Point facility a stranded asset.
  • Financial: Dominion Midstream’s undiversified cash flow and sole reliance on two customers increases the risks to investors from likely legal challenges or other delays, which could cause cost overruns or lead to missed contract deadlines for exporting gas overseas.
  • Governance: Dominion Midstream unitholders would be last in line to receive cash distributions from the project. Meanwhile, no agreement requires parent company Dominion Resources to pursue a business strategy favoring Dominion Midstream, and the underwriters of the IPO are also investors in the parent company—constituting clear conflicts of interest.

“Dominion Midstream is concentrating significant financial risk on the success of Cove Point. The project faces continued delays in a business environment in which carbon pollution regulations are becoming stricter and the feasibility of the tax-free, master limited partnership structure is uncertain,” said Matt Patsky, CEO of Trillium Asset Management. “Long-term, I believe that investment in renewable energy infrastructure is a much smarter decision.”
Dominion Midstream filed an application with the Securities and Exchange Commission (SEC) in March 2014 to proceed with an IPO estimated to be worth approximately $400 million. In May, a Dominion shareholder and the Chesapeake Climate Action Network filed an official complaint with the SEC over Dominion’s failure to adequately disclose significant risks associated with the project.
“The Cove Point facility is already behind its original schedule. Even if Dominion receives the regulatory approvals it needs to begin construction, public interest groups are preparing for significant legal challenges that could cause further delay,” said Diana Dascalu-Joffe, senior general counsel at the Chesapeake Climate Action Network. “The project depends on an environmentally toxic and economically volatile fracking bubble, is vulnerable to the same climate change impacts it would worsen, and could be subject to increasingly costly regulations because of its large pollution footprint. This report warns investors of the full array of financial and reputational risks that come with Dominion’s massive fossil fuel bet.”
The $3.8 billion Cove Point gas export terminal, proposed on the Chesapeake Bay in southern Maryland, continues to face steep public opposition and protests because of its potential role in speeding hydraulic fracturing, or “fracking.” The proposal would also create global warming pollution on par with coal, and expose hundreds of nearby residents to potential explosion, flammable vapor cloud, and other liquefied gas catastrophes. Dominion is awaiting permit approval from the Federal Energy Regulatory Commission, which received an unprecedented number of public comments—more than 150,000—gathered by dozens of community, state and national groups that oppose the project.
The Profundo risk report was commissioned by the Chesapeake Climate Action Network.
The full report is available at: http://chesapeakeclimate.org/wp-content/uploads/2014/09/Dominion-Midstream-IPO-Risk-Report-9-10-2014.pdf
Contact:
Kelly Trout, 240-396-2022, kelly@chesapeakeclimate.org
Diana Dascalu-Joffe, 240-396-1984, diana@chesapeakeclimate.org

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The Chesapeake Climate Action Network is the first grassroots, nonprofit organization dedicated exclusively to fighting global warming in Maryland, Virginia, and Washington, D.C. Our mission is to build and mobilize a powerful grassroots movement to call for state, national and international policies that will put us on a path to climate stability. Learn more at www.chesapeakeclimate.org.

Climate Advocates Denounce McAuliffe Decision on Dominion Gas Pipeline

For Immediate Release
September 2, 2014

Climate Advocates Denounce McAuliffe Support for Dominion’s Massive ‘Atlantic Coast’ Fracked Gas Pipeline Project

Mega-project, which already faces stiff resistance from Va. landowners, counteracts the governor’s commitment to tackling climate change

RICHMOND—Today, Governor Terry McAuliffe stood next to Dominion Resources CEO Thomas Farrell to announce his support for a major expansion of Dominion’s proposal to build a pipeline to carry fracked natural gas from West Virginia, across central Virginia, to North Carolina. Once called the “Reliability Project,” the new 550-mile, $5 billion proposal is now the joint-venture “Atlantic Coast” pipeline.
Mike Tidwell, executive director of the Chesapeake Climate Action Network, had the following statement in response:
“Today Governor McAuliffe has made a huge mistake that harms the environment. Barely two months after re-launching the state’s climate change commission, the governor has regretfully embraced a Dominion gas pipeline project that threatens to contribute significantly to the climate crisis. Tom Farrell’s 550-mile, $5 billion pipeline system would incentivize more fracking across the region and contribute to emissions of methane, a powerful heat-trapping gas which, according to growing scientific data, could disrupt the climate on par with coal.
“In supporting this project, Governor McAuliffe is now complicit with Tom Farrell in locking Virginia into a multi-billion-dollar investment in more fossil fuels at a moment when scientists say we must be investing in truly carbon-free wind, solar, and energy efficiency technologies. We’ve come to expect this type of move from Dominion, the state’s top climate polluter and a company that has continually held Virginia back from serious commitments to clean energy. But we’re downright disappointed to see this from Governor McAuliffe.
“In making his announcement, Governor McAuliffe failed to mention the scientific data showing that methane, which leaks from fracking wells and pipelines, is as much as 87 times more powerful than carbon dioxide in heating the atmosphere over a 20-year period. The governor is lining up on the wrong side of farmers and landowners who live along Dominion’s proposed pipeline route and who see this project as a direct threat to their safety and livelihoods. The groundswell of grassroots resistance that Dominion is already facing will surely only grow in response to today’s news.
“Given the urgency of tackling climate change, this is the wrong project at the wrong time. Instead of touting a massive investment in more communities destroyed by fracking wells, divided by pipelines, and wrecked by runaway climate change, Tom Farrell and Gov. McAuliffe should be announcing a full-scale investment in Virginia’s vast and barely tapped clean energy resources.”
Contact:
Kelly Trout, 240-396-2022, kelly@chesapeakeclimate.org
Mike Tidwell, 240-460-5838, mtidwell@chesapeakeclimate.org

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