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Shareholders ask Dominion for report on risk of stranded natural gas assets

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Shareholders ask Dominion for report on risk of stranded natural gas assets

May 11, 2022 | 6:33 pm ET
By Sarah Vogelsong
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Shareholders ask Dominion for report on risk of stranded natural gas assets
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A natural gas -fired power plant. (Stock photo via Getty Images)

NORFOLK — After a shareholder vote Wednesday, Dominion Energy will issue a report on how it is responding to the risk of stranded natural gas assets as the global response to climate change intensifies. 

“The risks are very high right now when it comes to climate change,” said Freeda Cathcart, the Virginia shareholder who put forward the proposal, during the company’s annual shareholder meeting at Norfolk State University. 

Stranded assets are infrastructure that has been built but becomes useless or redundant before ratepayers have finished paying it off. Environmental groups and some investors are concerned that as utilities shift away from fossil fuels, companies nationwide could be left on the hook for costs related to gas plants and pipelines shuttered before the end of their useful life. 

In its 2022 proxy statement, a document that outlines matters up for shareholder vote, Dominion’s board of directors wrote that “the company is not investing in natural gas infrastructure in a manner that may lead to stranded assets.” 

Dominion had previously sought to exclude Cathcart’s resolution from a list of those to be taken up by shareholders at the May 11 meeting. The company argued it already includes information about the sustainability of its gas assets in “existing reports and public disclosures.” 

On March 10, however, the U.S. Securities and Exchange Commission ruled that Dominion could not prevent the proposal from being taken up by shareholders. 

“Based on the information you have presented, it appears that the company’s public disclosures do not substantially implement the proposal,” the SEC wrote in a letter to the company. 

Dominion’s Board of Directors ultimately took no stance on the resolution, telling shareholders they made “no recommendation either for or against” it. 

A second proposal put forward by shareholder David Backer to include “medium-term” targets for Dominion’s greenhouse gas emissions reduction goals, which was opposed by the board of directors, was defeated. 

Although Dominion has taken significant steps to divest its gas storage and transmission business — the company sold most of its assets in the sector to Berkshire Hathaway in July 2020 at the same time that it canceled the controversial Atlantic Coast Pipeline — it continues to operate a large number of natural gas plants and runs a natural gas utility in North Carolina. It is also exploring renewable natural gas, or gas sourced from landfills and animal operations, and the blending of hydrogen into gas in a still unproven effort to reduce gas emissions

In Virginia, Dominion invested billions over the past decade in natural gas, including nearly five gigawatts of gas capacity at its Bear Garden, Warren, Brunswick and Greensville plants. The newest of those facilities, at Greensville, began operation in 2018. All are required by the Virginia Clean Economy Act to close by no later than 2045. 

Since then, the company has largely pivoted toward renewables, although Dominion CEO, president and chair Bob Blue on Wednesday, responding to one shareholder’s accusation that the company was spreading “green energy propaganda,” emphasized the need for “a diverse mix” of energy sources to fill customer needs.

Environmental groups have been critical of the company’s newer natural gas investments. Cathcart also highlighted concerns over a contract Dominion Energy North Carolina has to obtain gas from the still-incomplete Mountain Valley Pipeline. 

“There was a time when we thought gas would be a bridge to the future,” she said. “We’ve come to an end of that bridge.” 

Several local activists with banners outside of the Norfolk State building where Wednesday’s annual meeting was held urged Dominion to respond to climate change more rapidly and withdraw from commitments to Mountain Valley Pipeline. 

“We want Dominion to be a better steward and not support projects like the Mountain Valley Pipeline,” said Hampton resident Charles Brown. 

Latasha Holloway, director of the Virginia Beach Coalition, a group seeking reforms in areas including voting rights, policing and housing, said reducing greenhouse gases was critical to helping the Hampton Roads region reduce tidal flooding linked to rising sea levels. 

“We definitely want to see our flooding issues remedied, and this is a way of getting ahead of those issues,” she said.

CORRECTION: This story has been corrected to fix the name of the shareholder who put forward the proposal for medium-term greenhouse gas emission targets. That shareholder was David Backer.