In just over one week, NextEra management will hold its annual meeting in Oklahoma City. The parent company of FPL is required by SEC regulations to include all shareholders of record. The annual meeting provides a tiny window to executive management and executive compensation. The corporation is also obligated to announce resolutions proposed by shareholders according to SEC rule. One of this year's resolutions, filed by my wife and me, concerns sea level rise.
"Shareholders request that beginning Dec. 1, 2016, the Board of Directors provide an annual report, prepared at reasonable cost and omitting proprietary information, on material risks to operations, facilities, and markets based on a range of sea level rise scenarios projecting forward to 2100 based on best available science." Markets. That means, us.
FPL is the largest business unit of NextEra. Its major market is the eastern seaboard of Florida, defined by low lying topography and extraordinarily vulnerable to sea level rise. The Company's objections, filed in its proxy statement, are not responsive to our resolution.
For example, of its intention to build two new $20 billion nuclear reactors, NextEra writes: "The sea level rise projections for the Turkey Point project under Nuclear Regulatory Commission ("NRC") licensing review were developed in compliance with rigorous NRC requirements and processes, including relying on peer-reviewed data. National Oceanic and Atmospheric Administration estimates of sea level were used to project sea level rise over 100 years, and, if approved and constructed, the new Turkey Point nuclear reactors would comply with NRC standards for nuclear plants and be built more than 25 feet above current sea level, well above any predicted rise in sea level."
With only a few feet of sea level rise, the region surrounding the Turkey Point Nuclear Reactors will be under water. Even if roadways servicing FPL's nuclear facility are built above the rising seas, it will be impossible to protect farmland, housing subdivisions, and commercial areas in the immediate environs. On this and its markets throughout coastal Florida, the Company is silent.
Ten years ago, I was the mayor's appointee to the first iteration of the Miami-Dade Climate Change Task Force, representing Sierra Club. Over two dozen members volunteered their time to the advisory group authorized by the Miami-Dade County Commission. I resigned after concluding the meetings served the first purpose of paper shuffling by local elected officials.
A decade later, much has changed. Global warming is a top line concern. In January, the World Economic Forum in Davos called climate change the biggest threat to global growth in 2016. Miami is often cited in international press reports as a region with the most to lose from rising seas.
The issue our resolution seeks to clarify for investors: what will happen not just to FPL Nuclear reactors but to its substations, its ability to service overheard distribution lines, and especially: FPL's coastal markets for electricity. "25 feet above sea level" is the definition of a red herring if ratepayers cannot withstand a few feet of sea level rise.
The Company writes, "There is no justification for the time and expense of the annual report requested by the proposal, particularly when the possible effect of sea level rise has already been appropriately addressed and the analysis is available to the public."
FPL calls our resolution a "waste of time and money". Really?
Some South Florida municipalities, like the City of Miami Beach, have already invested hundreds of millions to fight the significant impacts of sea level rise in the context of protecting billions of dollars of infrastructure serving millions of Floridians; not in 100 years but within the next twenty to fifty years.
A report by the The Southeast Florida Climate Change Compact includes: "In the short term, sea level rise is projected to be 6 to 10 inches by 2030 and 14 to 26 inches by 2060 (above the 1992 mean sea level). In the long term, sea level rise is projected to be 31 to 61 inches by 2100. For critical infrastructure projects with design lives in excess of 50 years, use of the upper curve is recommended with planning values of 34 inches in 2060 and 81 inches in 2100."
FPL's Turkey Point reactors were commissioned in 1973 and are still operation more than forty years later. By that time metric -- forty years from 2020's when FPL's new nuclear reactors would be operational -- South Florida will be staring at 34 inches of sea level rise.
To be dismissive of sea level rise concerns, NextEra management abrogates its fiscal responsibility to shareholders. Management's answer that new nuclear reactors will be built twenty five feet above sea level at Turkey Point is non-responsive. Shareholders want an honest assessment of sea level rise, backed by the full engineering capabilities of one of Florida's largest corporations, not peevish assurances from its PR department.