By Karen Freifeld
Oct. 23 (Bloomberg) -- Dynegy Inc., owner of power plants in 11 states, must disclose significant financial risks associated with climate change stemming from its operations under an accord announced by former U.S. Vice President Al Gore and New York Attorney General Andrew Cuomo.
``Investors have a right to know all the material financial risks faced by coal-fired power plants associated with global warming,'' Cuomo said today in a statement. Gore said the deal ``is a key step in the effort to solve the climate crisis.''
Dynegy rose 8.8 percent. The energy company, branded the ``king'' of coal-fired power plants by the National Environmental Trust, recently announced plans to build new units in at least six states in a joint venture with LS Power Group of East Brunswick, New Jersey.
The settlement follows an August agreement with Xcel Energy Inc., which agreed to disclose potential costs tied to climate change. Under today's deal, Dynegy agreed to similar reporting to the U.S. Securities and Exchange Commission.
Cuomo said inquiries were still pending against Dominion Resources Inc., based in Richmond, Virginia; Peabody Energy Corp. of St. Louis; and AES Corp. of Arlington, Virginia, all of which were subpoenaed last year.
Peabody spokesman Vic Svec and AES spokeswoman Meghan Dotter didn't immediately return phone calls seeking comment on Cuomo's statement. Dominion spokesman Mark Lazenby had no immediate comment.
24 Percent
About 24 percent of Houston-based Dynegy's production capacity is fueled by coal, said David Byford, a company spokesman. Coal is more polluting than nuclear, wind, solar or natural-gas-fired power, according to estimates this year.
Dynegy rose 24 cents to $2.96 in New York Stock Exchange composite trading. The company has the capacity to produce about 18,000 megawatts of electricity, enough for more than 14 million average U.S. homes, based on an estimate by the U.S. Energy Department.
Dynegy Chief Executive Officer Bruce Williamson has said electricity buyers, not producers, dictate the types of units being built, choosing coal because it provides for lower costs.
Dynegy's mandated disclosures include an analysis of risks related to present and probable climate-change regulation, legislation and litigation, as well as physical impacts on the environment.
Carbon Strategies
As part of the settlement, Dynegy agreed to disclosures including current carbon emissions and projected increases in emissions from planned coal-fired power plants. The company also must report strategies for cutting its global warming and pollution emissions, and the amount of the expected reductions.
Cuomo said that energy company investors face financial risks as carbon-emitters become subject to increased regulation and lawsuits. ``It's about disclosure,'' Cuomo said at a press conference about the agreement in lower Manhattan.
``What is being announced here by the attorney general today has incredible importance for the environmental crisis,'' Gore said in the statement. ``Investors have a right to the truth so that they can be freed from unnecessary and avoidable risks.''
Byford said the company ``will continue to provide appropriate information to investors about climate change.''
To contact the reporter on this story: Karen Freifeld in New York at kfreifeld@bloomberg.net.
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