The parent company of Virginia’s largest electric utility announced, last month, that it had bought six solar development projects in California – arrays that will supply enough energy to power nearly 35,000 homes.
The news upset advocates for green energy here. They want Dominion to develop solar here, and they’ll be speaking up at the company’s annual shareholders meeting this week in Cleveland.
As a regulated monopoly, Dominion Virginia Power has two masters – the State Corporation Commission that wants to keep rates down, and shareholders who want high profits. Electric rates are lower here than in 26 other states.
“Our rates are 25% below the national average, and the lowest on the East Coast.”
Dominion CEO Tom Farrell says it’s not profitable to build solar plants here, and Farrell cares about profits. Much of his compensation – which has averaged in excess of $12 million a year – depends on making money for shareholders. He also argues there are practical problems with solar.
“You don’t have enough land in Virginia to replace all of our power plants with renewable resources. The notion that we can somehow transition away from fossil fuels instantly, quickly, inexpensively is complete fantasy. It will take decades.”
In California, rates are higher, and utility spokesman Dan Genest says it’s a place where Dominion can learn the ropes.
“One of the goals we have in doing these projects on the merchant side – the unregulated side, where our shareholders are paying for it and not our customers, is to learn how to operate these things, to see if we can find ways to lower the costs so we can bring it back here and have it be approved by the State Corporation Commission.”
But that’s not good enough for Ruth McElroy Amundson, who bought shares in Dominion so she could push for more clean, renewable energy. She’s not happy to see the company converting from coal burning plants to waste wood or biomass. It is a renewable resource, but …
“Biomass plants actually emit more CO2 per kilowatt hour produced, and so it’s not really a good investment to change those plants to biomass.”
And she’s worried that the company is building gas burning plants, because getting that stuff out of the ground means releasing lots of methane, a damaging greenhouse gas. Amundson and other activist shareholders have been introducing resolutions at annual meetings, asking Dominion to report on the financial risks of climate change, the use of biomass and the release of methane, but those resolutions have never gotten more than 22% of shareholder votes.
“The people who are doing most of the voting on them are large pension funds, and they do not tend to vote against the advice of the company, because if the company were to do badly financially after that, someone could say it’s your responsibility to make sure that these companies make money, and you voted against the advice of the executive board.”
Still, shareholders who care deeply about the environment should consider speaking up, according to Jared Harris, a professor at UVA’s Darden School of Business.
“You know, 15-20 years ago you’d be considered crazy if you were an investor and you brought that up, but now I think it’s taken pretty seriously as an economic issue.”
He says companies are free to ignore shareholder resolutions. They’re kind of like a polls.
“The Iowa Straw Poll isn’t an election. It’s not binding, but it can be influential.”
And Amundson does believe she’s making a difference.
“Some of the board members that have spoken with me or some of the VPs give me new energy to go on, because they seem like they’re learning from this.”
Dominion is taking some baby steps here in the Commonwealth. Last month it installed more than 2,000 solar panels on the roof of a toner recycling company in Goucester – creating the largest solar array in the state. As part of a pilot program, the utility leases that space, and the power generated goes to the grid.