Power Utilities Subpoenaed By NY Attorney General

NY Attorney General Andrew Cuomo has subpoenaed five power companies to establish whether they disclosed sufficient information to investors about the financial risks involved in their plans to construct coal-fired power plants. Cuomo is using the Martin Act -- the same securities law Eliot Spitzer used to probe corruption on Wall Street -- to compel responses from AES Corp., Dominion, Dynegy, Peabody and Xcel. They received letters from the AG dated September 14 that said carbon dioxide emissions, a byproduct of coal production, will likely be subject to greater and more costly regulation. An environmental coalition is spearheading a national campaign to oppose over 100 proposed coal-fired power plants; the NY Times notes this might be the only time securities law has ever been employed for an environmental cause. "Selective disclosure of favorable information or omission of unfavorable information concerning climate change is misleading," the AG's letter said. Peabody spokesman Vic Svec called the letter "inaccurate" and "outrageous." "The legal system was designed to protect — not harass — those such as Peabody who are providing clean energy solutions for America," he said. Xcel Energy said in an email to Bloomberg News, "Our financial disclosures are adequate...We look forward to discussing this matter further with the New York attorney general."

Sources: AP, MarketWatch, New York Times, Bloomberg
Commentary: AES: A Deeper Dig In The Accounting House • MIT Coal Study: U.S. Must Take Lead in Carbon Emission Storage • Coal Cost Reduction Saves Big for Utilities
Stocks/ETFs to watch: AES, D, DYN, BTU, XEL. ETFs: UTH, XLU, PUI
Earnings call transcripts: Dominion Resources Q2 2007, Xcel Energy Q2 2007

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