On March 10, 2011, the Fukushima Daiichi nuclear power plant was a multi-billion dollar asset generating significant revenue for Tokyo Electric Power Company (TEPCO), Japan’s largest utility. A few days later, that asset turned into a multi-billion dollar liability. Since then, the Japanese government has nationalized TEPCO and spent some $44 billion to keep the company operating. Conservative estimates put the total and eventual cost of the Fukushima disaster and its clean-up at over $100 billion.
Accidents are not the only risks faced by utilities that own nuclear power plants. Outages are another major expense—and frequently occur because of inadequate ongoing maintenance of the plants, including their safety systems. In fact, in the 2006 UCS report Walking a Nuclear Tightrope: Unlearned Lessons of Year-Plus Reactor Outages, nuclear safety project director Dave Lochbaum reports that “through bad management and ineffective regulatory oversight, year-plus outages have cost ratepayers and stockholders nearly $82 billion in lost revenue (in 2005 dollars) over time. Regardless of cause, location, reactor type, and owner, these outages also accounted for nearly 135 reactor years (or 3.4 reactor lifetimes) of downtime.”
Shareholders of energy companies that operate nuclear power plants should take notice of these risks and assume a greater role in advocating for increased nuclear power safety and security in order to ensure the companies’ financial stability. Indeed, the New York State Comptroller has done just that.
On May 8, 2012, shareholders of Dominion Resources voted on a first-of-its-kind resolution regarding nuclear power safety filed by New York State Comptroller Thomas P. DiNapoli, trustee of the New York State Common Retirement Fund. The resolution called upon the company, which operates nuclear power plants in Connecticut, Virginia and Wisconsin, to appoint a committee of independent directors to conduct a special review of its nuclear safety policies and practices. The resolution received 60,742,182 votes cast in favor, with a share value of $3.17 billion. The percentage was 17.6%, which represented a near record vote for a resolution dealing with nuclear power issues and demonstrates significant shareholder concern. The fund filed a number of similar shareholder resolutions with other energy companies that own nuclear reactors. It received commitments from FirstEnergy and Westar Energy to conduct similar reviews, without requiring shareholder votes.
Dave Lochbaum helped the Comptroller’s office by providing his technical expertise and advice, and participating in a series of conference calls on safety issues that the fund held with portfolio companies with nuclear reactors.
Other state and local pension funds have also been active in corporate governance matters through their use of divestment and public pressure. For example, the Massachusetts Pension Reserves Investment Management (PRIM) Board announced in January 2012 that it divested all of its holdings in companies with major ties to Iran’s energy industry, complying with a state law designed to pressure Iran to halt its nuclear weapons program and other destabilizing acts in the Persian Gulf region.
Shareholders of energy companies that operate nuclear power plants – like the people who live near them – have a unique stake in and ability to advocate for their safety and security. Nuclear power safety advocacy can include shareholders filing resolutions, state residents encouraging their state treasurer to file shareholder resolutions on behalf of state employees and retirees with holdings in the state pension fund, and concerned citizens writing to the Nuclear Regulatory Commission and Congress to demand increased nuclear power safety and security.
To find out about more ways to get involved in UCS’ Nuclear Power Safety and Security Campaign, write us at firstname.lastname@example.org.
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