Report Released by Friends of the Earth and NC WARN: Billions of dollars could be lost if shareholders and various courts allow troubled Atlantic Coast Pipeline to move forward
An analysis by former energy executive Thomas Hadwin released today shows that rapidly changing energy markets, new legislation in Virginia, a surplus of gas across the region, and climate impacts of fracked gas are among the reasons Dominion Energy and Duke Energy should stop trying to build the Atlantic Coast Pipeline (ACP). The project is already billions over budget and construction has been stalled since 2018 by an onslaught of legal and regulatory problems.
The analysis outlines multiple factors that make the years-delayed gas pipeline a risky, unnecessary, and backward-looking investment that could leave Dominion and Duke shareholders on the hook for billions of dollars in stranded costs.
Ahead of the two corporations’ annual meetings this week, Friends of the Earth and NC WARN are urging shareholders to recognize the imprudence of pouring billions more into the ACP, and press corporate executives to cancel what the groups call a deeply unsound investment.
Hadwin’s analysis shows that the coronavirus pandemic has only amplified the pipeline’s current problems, which would bring fracked gas through West Virginia, Virginia and North Carolina and cost energy customers $30 billion.
“It is inappropriate for Dominion Energy and Duke Energy to saddle customers with higher energy costs for an unnecessary pipeline”, said Donna Chavis, senior fossil fuels campaigner at Friends of the Earth. “Constructing the ACP has never made sense for communities and our environment, especially at a time of climate crisis, and it makes no sense for investors either.”
Other key findings by the former electric and gas utility executive include:
- With gas production now in utter disarray, many producers are on the verge of bankruptcy.
- Gas from the ACP is intended for use in power plants. Even before the pandemic, there was a growing surplus of generating capacity serving the region. The new economic shock has lowered electricity use by an additional 8-10%.
- Current (pre-pandemic) plans require less than half of the capacity in new power plants than what was originally announced as the reason to build the ACP, with further decreases likely.
- Recent expansions to currently operating pipelines have increased capacity by more than what the ACP would provide and can transport gas far less expensively than the ACP.
- The political and regulatory landscape has changed dramatically since the pipeline was proposed. New climate and ratepayer laws will likely render the ACP unviable in Virginia.
- Lower cost renewables, storage, and more efficient energy use threaten the operation of higher-cost gas-fired units across the U.S., create thousands of jobs and lower energy costs.
- Without the ACP, state economies would be free of the drag that an unnecessary $30 billion increase in energy costs would produce. Investing in energy projects that serve customer interests would reduce risks and give more reliable returns than investing in the ACP.
The report concludes that the ACP should be abandoned, losses capped and priority given to the development of new projects that help create a modern energy system that re-aligns the interests of the shareholders with those of the ratepayers.
“Duke and Dominion executives have long gambled that they can fool investors and regulators into thinking fracked gas has a viable future”, said Jim Warren, executive director of NC WARN. “Along with gas being a key driver of the climate crisis, it’s also an economic loser, and we’re calling on the stockholders to force the cancellation of the ACP.”