Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Regulation
    • SECURE 2.0
    • Special Reports
    • Washington
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • 2023 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2023 Defined Contribution East Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Canadian Pension Risk Strategies
    • 2023 Retirement Income
Breadcrumb
  1. Home
  2. Online
June 03, 2009 01:00 AM

Earnings wipeout possible for some under carbon program

Barry B. Burr
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    American Electric Power Co., Allegheny Energy and Ameren Corp’s future earnings potentially could be more than wiped out by costs under a cap-and-trade program requiring purchase of carbon emission credits, according to a report released Tuesday by the Investor Responsibility Research Center Institute and Trucost, a provider of data and analysis on corporate environmental impact.

    American Electric Power’s costs under such a program would be 117% of earnings beginning in 2012, making it the most affected of the S&P 500 companies. Allegheny and Ameren would be the second and third most affected of the S&P 500 companies with costs more than 100% of earnings, although figures for the two companies were not in the report.

    The study assumes the cost of the spot price of carbon emissions under a cap-and-trade program in 2012 when it could begin would be a Trucost-estimated $28.24. It also assumes companies have the same earnings per share as they had in the study’s 2007 base year and that companies pay those costs rather than reduce carbon emissions or pass them costs onto customers, said Jon Lukomnik, IRRC Institute program director.

    The study calculated the carbon exposure of 497 of the S&P 500 companies; data on three companies was unavailable. Among a variety of analyses, the study compared companies on the potential carbon costs relative to earnings before interest, tax, depreciation and amortization.

    For 203 of the companies, carbon costs would equate to less than 1% of EBITDA, the report said.

    Not so fast, companies say

    Pat D. Hemlepp, director of corporate media relations at American Electric Power, said a bill in Congress — revised after the study was conducted in March — reduces some of the cost of compliance.

    “The scenario looked at in the study may not be in touch with what’s coming out of Congress,” Mr. Hemlepp said. In addition, the “cost of environmental compliance is something regulators have allowed utilities to pass onto customers,” he said. “Instead of wiping out earnings, it would increase cost to customers.”

    Company officials have been working with congressional members “to accomplish what they want to accomplish on climate but do it in a way that has the lowest potential cost impact to customers,” since such costs are allowed by regulators to be passed on to them rather than taken from earnings, Mr. Hemlepp added.

    In a statement, Ameren officials said: “Any cost increases as a result of compliance would generally be passed on to these customers and would not be expected to have a significant negative impact to Ameren. Increased costs associated with climate legislation for non-rate-regulated generation would be recovered through market prices or allowance allocations.

    “The current version of the Waxman-Markey bill provides a free allocation of allowances for a transition period (through 2030). This provision would mitigate a portion of these costs for both the non-rate-regulated generators and the retail-rate-regulated businesses. In the case of the non-rate-regulated generation, the allocations are expected to offset much of the compliance costs that are not recovered via the increased wholesale market price.”

    Allegheny Energy officials couldn’t be reached.

    The report identifies the costs and emissions for only a few of the companies; otherwise Trucost “would be giving away what it is paid to do,” said Mr. Lukomnik.

    The IRRC Institute provides research on corporate responsibility for investors.

    Recommended for You
    memorial-day-flag_i.jpg
    No P&I Daily on Memorial Day
    Good_Friday_i.jpg
    No P&I Daily on April 7
    OCIO: Steady Hand at the Wheel
    Sponsored Content: OCIO: Steady Hand at the Wheel

    Reader Poll

    May 1, 2023
     
    SEE MORE POLLS >
    Sponsored
    White Papers
    Counting on a Crisis: A Catalyst for Investment Innovation?
    A Strategic Allocator's Guide to Productivity and Profits
    Biodiversity: why investors should care
    Quantifying sustainability – the numbers, the data, and the people
    Valuing Banks: Hidden Losses Versus Assets
    Research for Institutional Money Management
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Regulation
      • SECURE 2.0
      • Special Reports
      • Washington
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • 2023 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2023 Defined Contribution East Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Canadian Pension Risk Strategies
      • 2023 Retirement Income