In an apparent environmental first, Xcel Energy Inc. has agreed to spell out the potential impact of global climate change on its fortunes and that of its investors, according to a deal announced Wednesday by the utility and New York Attorney General Andrew Cuomo.
The agreement resolves a yearlong investigation of Xcel. It commits the Minneapolis-based gas and electric utility to specific disclosures in an annual government regulatory filing of its pollutants and the cost of reducing them.
"This landmark agreement sets a new industrywide precedent," Cuomo said, calling it the first such legally binding arrangement with an energy company. Cuomo had acted under a broad New York statute concerning disclosures in financial documents, and Xcel, which has no operations in New York, chose not to contest his jurisdiction.
Xcel downplayed the change. General counsel Michael Connelly said in an interview that the utility already discloses most of the information in its 10-K report to the U.S. Securities and Exchange Commission (SEC) -- the same place disclosures will be filed under the agreement -- and that all of it appears in other forums -- including the Carbon Disclosure Project, an international nonprofit that gathers reports about climate-connected risks and opportunities for businesses and their shareholders.
Still, disclosing it all in one place could reach a broader audience.
"For them to disclose this kind of information I think is significant and groundbreaking, in the sense that it really could have an effect on how investors view companies with carbon risks going forward," said Bill Grant, director of the conservation group Izaak Walton League in St. Paul.
Cuomo's office focused much of its concern on coal-fired power plants because of their carbon emissions, a significant source of global warming. Carbon limits arranged through a special tax or capping system are considered inevitable and costly, and Xcel has a new coal plant coming online next year -- a third unit at its Comanche site in Pueblo, Colo.
But the utility, which has 3.3 million electricity customers and 1.8 million natural gas customers across eight states including Minnesota, is also building a reputation for embracing renewable energy. As it opens the Comanche unit, it plans to close two others in Colorado. The American Wind Energy Association ranks it the largest wind-energy producer among U.S. utilities.
And Grant said Xcel recently chose to expand its energy capabilities using natural gas and wind instead of buying power from a North Dakota coal plant. "That was clearly done with carbon in mind," Grant said.
The terms of the settlement specify that Xcel's 10-K cover three areas of potential business risks: Current litigation, and current and probable laws and regulations; Xcel's carbon emission numbers; and company plans for reducing or managing its emissions connected to global warming.
A Cuomo spokesman said that the office is still in negotiations about disclosures with four other utilities subpoenaed at the same time as Xcel: AES Corp., Dominion Resources, Dynegy and Peabody Energy. The office also petitioned the SEC to require more disclosure of climate-related risks in securities filings.
H.J. Cummins • 612-673-4671
