New York Attorney General Andrew Cuomo says an energy company with ties to Nevada failed to disclose the risks involved in developing coal-fired power plants that are believed to contribute to global warming.
Cuomo sent subpoenas to five companies, including Dynegy, a Houston-based company that is developing a 1,590-megawatt, coal-fired plant White Pine Energy Station near Ely. The letter raises concerns about eight power plants that Dynegy is developing, including the Ely project.
Dynegy is developing the Nevada project as a joint venture with LS Power Group of East Brunswick, N.J., which acquired 40 percent of publicly held Dynegy earlier this year.
In a letter to Dynegy Chief Executive Officer Bruce Williamson, officials with the New York agency said Dynegy “made no disclosure of projected CO2 emissions from the proposed plants” in proxy materials for the merger of the companies this year.
Future state and federal regulations on carbon dioxide emissions “would add significant cost to carbon-intensive coal generation,” the letter states. The letter cited a report that said Dynegy could be burdened with more than $1 billion in annual emission allowance expenses because of new regulations.
“We are concerned that Dynegy has failed to disclose material information about the increased climate risks Dynegy’s business faces,” Special Deputy Attorney General Katherine Kennedy and investor protection bureau chief Matthew Gaul wrote.
The letters invoke New York’s Martin Act, a securities law that gives broad powers to state prosecutors. New York Gov. Eliot Spitzer used these powers to investigate allegations of wrongdoing on Wall Street when he was the state’s attorney general.
Federal and state laws require public companies to disclose material matters to investors.
Dynegy spokesman David Byford said the company believes it made required public disclosures. The energy company does not proceed with projects until it “fully understands and fully addresses” all risks, Byford said.
Keith Bardellini, a securities lawyer in Los Angeles said Cuomo is using a securities disclosure requirement “to force the companies to acknowledge the global warming effect.”
Public Utilities Commission spokesman Rick Hackman said he did not expect the White Pine project to come before the commission for approval for a year or two. The state commission will review whether the power plant developers received required permits from state, local and federal agencies.
“What shareholders have or have not been told is not likely to be something the commission is going to take into consideration,” Hackman said.
Sierra Pacific Resources, which is developing another 1,500-megawatt coal-fired project near Ely, was not among the companies served with subpoenas.
“We have not been contacted, and it would be inappropriate right now to comment on any ramifications (of the subpoenas),” Sierra spokesman Adam Grant said.
The other companies receiving subpoenas were AES Corp., Dominion Resources, Peabody Energy Corp. and Xcel Energy.
Bloomberg News contributed to this report.