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Three utilities agree to more water-risk disclosure

Platts
Dominion, Southern Company and PPL agreed to significantly expand reporting and disclosure on water availability risks and plans for mitigating those risks, according to Ceres, a coalition of investors and public interest groups, which works with companies on sustainability issues. The agreements were made in response to shareholders' resolutions filed several months ago asking them to evaluate and disclose their strategies on water risks, including low flows, thermal impacts and emerging regulations. The resolutions were withdrawn recently after the utilities' agreements.

Dominion, Southern Company and PPL agreed to significantly expand reporting and disclosure on water availability risks and plans for mitigating those risks, according to Ceres, a coalition of investors and public interest groups, which works with companies on sustainability issues.

The agreements were made in response to shareholders' resolutions filed several months ago asking them to evaluate and disclose their strategies on water risks, including low flows, thermal impacts and emerging regulations. The resolutions were withdrawn recently after the utilities' agreements.

The three agreements were among 29 filed with 19 US electric companies in the 2011 proxy season on environmental issues, Ceres said.

"Water scarcity is a growing risk to many public utilities and investors want to know how companies are preparing for increased competition for supplies, emerging regulations and potential revenue losses from shortages," said Mindy Lubber, president of Ceres and director of the $9.5 trillion Investor Network on Climate Risk.

In response to shareholders' requests, Southern Company, based in Atlanta, agreed to prepare a comprehensive "water action report," describing its water management philosophy, water use and consumption by generation type, discharges and risks.

"We have asked Southern Company to be mindful of these issues, and are pleased that the company has given shareholders the assurance it will integrate these considerations into its long-term planning," said Denise Nappier, Connecticut state treasurer, whose office manages $24.6 billion in assets and was the lead filer of the shareholder resolution.

In response to a shareholder resolution filed by private investor Ann Anundson, Dominion, based in Richmond, Virginia, committed to respond to the Carbon Disclosure Project's water survey, which asks companies to report their water use and risks associated with changing water availability. The non-profit UK-based group acts on behalf of 551 institutional investors holding $71 trillion in assets under management. The global water risk survey, now in its second year, was sent to 400 global companies that operate in water-intensive sectors, ranging from electric utilities to beverage companies.

PPL, based in Allentown, Pennsylvania, agreed to report on the water intensity of its generation, its water resources, cooling system types and water rights of major facilities. "We are pleased with PPL's willingness to discuss water issues with investors this year," said Luan Steinhilber, analyst and director of shareholder advocacy at Miller/Howard Investment, the lead filer on the shareholder resolution. Miller/Howard has $1.9 billion in assets under management.

Power plants account for 40% of the US' freshwater withdrawals, requiring 136 billion gallons daily for generating and cooling turbines, according to Ceres.

A single nuclear generating unit can use as much as 1.1 million gallons of water per minute, Ceres said. If water levels fall below the intake structure, lowering the structure can cost upwards of $200 million for a single nuclear or coal plant. Installing a less water-intensive cooling system can cost more than $1 billion.

Drought and growing water demand have placed increasing stress on water supplies and added to the challenges facing utilities in many regions. During the 2007-2008 drought in the Southeast, Southern was forced to buy $33 million in fossil fuels to replace lost power in Atlanta when hydropower declined by half, according to Ceres.

This article originally appeared on Platts.

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