Praxis Mutual Funds® has begun shareholder engagements with electric utilities to promote clean energy and consumer protection. The engagements aim to influence the electric utility industry to increase its use of low-carbon electricity generation as a way to reduce greenhouse gas emissions and protect long-term shareholder value.
These engagements coincide with fundamental shifts within the electric utility industry:
- The cost of renewable energy has dropped dramatically, particularly for solar and wind.
- Distributed generation is increasing, with more power being generated at the point of consumption, such as solar panels on roofs of houses and businesses.
- The anticipated rise in national and international regulation of greenhouse gas, making investments in carbon-heavy and polluting electricity sources increasingly difficult to justify.
- Growth in global electricity demand, which has been relatively flat for several years, due to increases in energy efficiency – a trend that is expected to continue.
Many utilities feel threatened by the changes, in part because they have invested significant capital in long-term assets like power plants that are expected to operate for more than 30 years. Some utilities are fighting the changes by requesting large, fixed-fee increases to subsidize aging, carbon-intensive power plants that are no longer cost-competitive. Increasing the monthly fee discourages energy efficiency and takes control and choice away from consumers, while disproportionately increasing costs to the poorest customers.
Praxis is part of a recently formed leadership team that is assessing the unique role investors can play in this transformational situation. The group is convened by Ceres, a nonprofit organization advocating for sustainability leadership. Through comprehensive planning, emissions reductions and low-carbon electricity generation, the group believes utilities can limit their risk and stand to benefit from the changes sweeping the industry.