At some point, taxpayers are going to realize that sea level rise isn't an abstract problem that randomly hits a few unfortunates.
Yesterday, the Washington Post reported on the results of a analysis in the journal, Nature.
"Sea levels could rise nearly twice as much as previously predicted by the end of this century if carbon dioxide emissions continue unabated, an outcome that could devastate coastal communities around the globe, according to new research published Wednesday. The startling findings, published in the journal Nature, paint a far grimmer picture than current consensus predictions, which have suggested that seas could rise by just under a meter at most by the year 2100."
So really, now is the time to have a substantive dialogue including the investors and top managers of the industry indispensable to modern civilization: the nation's electric utilities.
In South Florida, one of the regions with the most to lose from sea level rise, there is one corporate interest that has the expertise, resources and skill to begin breaking down what exactly is at stake when sea level rise materializes. That company is Florida Power and Light, a subsidiary of one of the nation's largest utilities, NextEra Energy, Inc. (NEE)
There are compelling reasons for the board of directors and top executives of nation's electric utilities to help investors, shareholders and the public understand the real risks of sea level rise to markets and infrastructure on America's coasts.
First and foremost: the liabilities are unlimited. Just because the liabilities are unlimited doesn't mean they are abstract. No, the risks to its markets and infrastructure are quantifiable and ought to be lifted out of the few sentences on risk in fine print, required to be included in SEC filings.
Continued high emissions of heat-trapping gases could launch a disintegration of the ice sheet within decades, according to a study published Wednesday, heaving enough water into the ocean to raise the sea level as much as three feet by the end of this century.
With ice melting in other regions, too, the total rise of the sea could reach five or six feet by 2100, the researchers found. That is roughly twice the increase reported as a plausible worst-case scenario by a United Nations panel just three years ago, and so high it would likely provoke a profound crisis within the lifetimes of children being born today.
Late last year, I proposed a shareholder resolution for the upcoming annual meeting of NextEra Energy, Inc. specific to sea level rise impacts and risk disclosure. NextEra fought the resolution with the Securities and Exchange Commission, writing among other points that it -- essentially -- can't see that far into the future. My shareholder resolution was approved by the SEC and will soon appear in NEE proxy materials for the 2016 annual meeting.
NextEra and FPL could decide to change strategy with respect to risk disclosure of climate change. I understand the point of view of NextEras management that investors expect predictable returns (and executive compensation follows). However, with global warming and sea level rise, the costs to FPL are quantifiable. Its markets in Florida are arguably the most at risk in the nation from sea level rise. Assessing those risks for investors and ratepayers couldn't happen a moment too soon.
The new research, published by the journal Nature, is based on improvements in a computerized model of Antarctica and its complex landscape of rocks and glaciers, meant to capture factors newly recognized as imperiling the stability of the ice. The new version of the model allowed the scientists, for the first time, to reproduce high sea levels of the past, such as a climatic period about 125,000 years ago when the seas rose to levels 20 to 30 feet higher than today.
FPL is spending hundreds of millions of ratepayer dollars to advance plans for two new nuclear reactors at Turkey Point. If those plants are ever built, Turkey Point would be the largest nuclear power generation facility in the U.S. Recent disclosures -- also anticipated decades ago by environmentalists -- demonstrate that its existing reactors, built with 1960's technology, are likely violating federal law through a malfunctioning cooling canal systems. (On existing problems, ratepayers have had no help at all from the Florida legislature or the administration of Gov. Rick Scott or his presumptive successor, Ag. Secretary Adam Putnam. So far as climate change is concerned, Gov. Scott has barred state officials from even using the words.)
While NextEra management indicated its opposition to my shareholder proposal, at the very least a marker has been put out: future generations will judge the actors and the result. Those actors include the electric utility industry's major investors; managers of pension funds, mutual funds, and hedge funds.
"You could think of all sorts of ways that we might duck this one," said Richard B. Alley, a leading expert on glacial ice at Pennsylvania State University. "I'm hopeful that will happen. But given what we know, I don't think we can tell people that we're confident of that."
That statement, alone, should trigger risk analyses beyond the fine print buried in SEC filings by the nation's electric utilities.
NextEra Shareholder Proposal
Filer: Alan Farago and Lisa Versaci
Subject(s): Report On Range Of Projected Sea Level Rise/ Climate Change Impacts
Resolved Clause Summary: NextEra Energy Inc.'s (Company/NextEra) operations and markets will be substantially impacted by sea level rise (SLR), a geophysical manifestation of climate change. The Company shall provide investors and shareholders with an assessment of extraordinary risk based on a probable range of sea level rise according to best available science.
WHEREAS: The Securities and Exchange Commission recognized the financial impacts of climate change when it issued Interpretive Guidance on climate disclosure in February 2010, including: "Registrants whose businesses may be vulnerable to severe weather or climate related events should consider disclosing material risks of, or consequences from, such events in their publicly filed disclosure documents."
The Company's principal subsidiary, Florida Power & Light Company (FPL), is one of the largest rate-regulated electric utilities in the United States. Its markets are among the most vulnerable in the nation to sea level rise.
SUPPORTING STATEMENT: Sea level rise as a consequence of climate change is an extraordinary risk to the Company's markets and facilities, leading to diminished energy utilization rates, downtime or closure of facilities due to damage to facilities, danger to employees, disruption in supply chains, disruption of markets and power supply, and unlimited financial liability.
According to NOAA: "In the context of risk-based analysis, some decision makers may wish to use a wider range of (SLR) scenarios, from 8 inches to 6.6 feet by 2100." In contrast, FPL planning documents for two new nuclear reactors at its Turkey Point facility predict less than one foot SLR by 2100. FPL planning documents omit current federal SLR guidelines and science-based analyses such as provided by the Southeast Florida Regional Climate Compact / Sea Level Rise Work Group assessment. Using the lowest estimate of SLR for the Company's planning purposes leads to inaccurate information for shareholders.
BE IT RESOLVED: Shareholders request that NextEra Energy Inc. report material risks and costs of sea level rise to company operations, facilities, and markets based on a range of SLR scenarios projecting forward to 2100, according to best available science. The requested report shall be available to shareholders and investors by December 1, 2016, be prepared annually at shoreasonable cost and omit proprietary information.