Fossil duels: How utilities can respond to activist groups

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Fossil duels: How utilities can respond to activist groups

Faced with challenges from increasingly strident environmental organizations, utilities must choose a course of action.

It shouldn’t come as a shock to our readers that electric and natural gas utilities aren’t among the most highly regarded companies among consumers.

But recently, utilities have come under intense scrutiny from environmental groups mainly for doing something they’ve done for 100 years: use fossil fuels. The pressure is coming not only in the form of protests, but court actions, as well.

At the heart of the battle is coal. While utilities are well aware of the falling prices of natural gas and are actively working to replace or divest their use of coal, their progress toward these goals is not happening fast enough for some activist groups.

Other activists are not satisfied with the idea of replacing coal with natural gas – seeing this solution as only a “lesser evil” that offers cleaner emissions,  but still produces CO2. They would rather use solar or wind generation instead.

The trouble is current renewable generation resources simply can’t provide all of the energy we require, and the costs associated with rapidly building a new renewable generation infrastructure that could support our needs in the near future will be unbearable to utility customers and unacceptable to Public Utility Commissions. It’s going to take time and long-term planning. The industry can’t turn on a dime.

As a result, utilities are in an unenviable position and are reacting in a variety of ways – some of which are better than others:

  • Pursue a settlement. In these cases, the utilities generally acknowledge the concern and try to avoid a protracted confrontation by offering a settlement. The settlement often has a financial aspect, which allows the activist organization to continue its efforts.
  • Turn a cold shoulder. Some utilities do not acknowledge activists at all. They do not directly engage these organizations, omitting them in carefully worded press statements related to court rulings. Instead, they continue to produce Facebook posts about their environmental activities and corporate philanthropies.
  • Fight back. Other utilities have decided to take on such organizations directly. These utilities, which generally operate in Red (predominantly Republican) states, have organized local businesses and even their utility commissions to help them.
  • Work together to develop a plan of action. Some utilities have had success engaging with environmental groups to develop a plan of action. But while a collaborative, proactive approach certainly seems to be the best option, some NGOs are looking for solutions on their terms, and are not willing to negotiate or wait. Emboldened by court victories and with full coffers, many are escalating their battle against utilities that use coal.

Once these activist groups have succeeded in reducing the coal consumption of utilities, they most likely will turn their attention to other industries that use coal, like metal refineries or chemical manufacturers.

Which strategy should you pursue if an activist group targets your company? That depends on many factors, such as the availability and usability of other fuel sources, the business and regulatory climate of your state, and your financial situation.

Activist groups are winning in the courts and growing richer and more powerful. They aren’t going away anytime soon. So prepare your company and develop a plan of action that best suits your business.

Skills

Posted on

June 18, 2013

About the Author

Jim Lyza

Jim is a former contributor to Shelton Insights.

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