Atlantic Coast Pipeline Closure and Dominion Energy Divestiture Highlight Impact of Environmental Factors on Utilities
Duke Energy and Dominion Energy recently cancelled their Atlantic Coast Pipeline (ACP) project, a natural gas pipeline planned to traverse West Virginia, Virginia, and North Carolina. Dominion coupled this announcement with another that it would be divesting its natural gas transmission and storage segment.
- The utilities announced the pipeline in 2014, and including project exit costs, Dominion and Duke will have spent an estimated $4.3–$5.3Bn in the development and construction of the ACP project
- During the development phase, the ACP project encountered numerous regulatory hurdles, primarily related to state and federal environmental permits. The impacts of these and other hurdles include:
- In parallel to this announcement, Dominion made public that it would sell its natural gas transmission and storage segment to Berkshire Hathaway, underlining the utility’s shift toward its state-regulated businesses—notably its downstream natural gas and increasingly clean energy focused utility segments.
- As Dominion highlighted in its presentation of the sale to investors, a strategic theme the divestiture supports is the utility’s commitment to net-zero carbon and methane emissions by 2050, as the sale will enable Dominion to immediately reduce its emissions footprint.
- Both decisions highlight the impact of environmental issues on a utility’s decision making.
- The cancellation of the ACP project by Duke and Dominion demonstrates how environmental-permitting challenges drove regional risk to pipeline development.
- Dominion’s divestiture demonstrates how some utilities may position their businesses to meet environmental targets and refocus toward state-regulated segments.
 CNN, Energy companies cancel construction of Atlantic Coast Pipeline, https://www.cnn.com/2020/07/05/us/duke-dominion-energy-cancel-atlantic-coast-pipeline/index.html
 Charlotte Business Journal, Duke Energy, Dominion abandon the $8 billion Atlantic Coast Pipeline, https://www.bizjournals.com/charlotte/news/2020/07/05/duke-energy-dominion-abandon-the-atlantic-coast-p.html
 Construction Dive, $8B Atlantic Coast Pipeline project canceled due to legal uncertainties, https://www.constructiondive.com/news/supreme-court-ruling-advances-8b-pipeline-project/579974/
 Duke Energy, Dominion Energy and Duke Energy cancel the Atlantic Coast Pipeline, https://news.duke-energy.com/releases/dominion-energy-and-duke-energy-cancel-the-atlantic-coast-pipeline
 Oil and Gas Journal, Atlantic Coast Pipeline hires main construction contractor, https://www.ogj.com/pipelines-transportation/article/17250126/atlantic-coast-pipeline-hires-main-construction-contractor
 Dominion Energy, July 06 2020 8K SEC Filing, https://d18rn0p25nwr6d.cloudfront.net/CIK-0000715957/b951da4d-8add-45e4-9b20-4bee407d5780.pdf
 Dominion Energy, Dominion Energy Agrees to Sell Gas Transmission, Storage Assets to Berkshire Hathaway Energy– Strategic Repositioning Toward ‘Pure-Play’ State-Regulated, Sustainability-Focused Utility Operations, https://news.dominionenergy.com/2020-07-05-Dominion-Energy-Agrees-to-Sell-Gas-Transmission-Storage-Assets-to-Berkshire-Hathaway-Energy-Strategic-Repositioning-Toward-Pure-Play-State-Regulated-Sustainability-Focused-Utility-Operations
 Dominion Energy, July 6 2020, Dominion Energy Investor Update Call Transcript, p 4-5; https://s2.q4cdn.com/510812146/files/doc_downloads/2020/07/2020-07-06-DE-IR-Dominion-Energy-Investor-Update-Conference-Call-Transcript-6-July-2020-9_00-AM-ET-vTC.pdf
 Dominion Energy, July 6 2020, Dominion Energy Investor Update Call Transcript, p 3; https://s2.q4cdn.com/510812146/files/doc_downloads/2020/07/2020-07-06-DE-IR-Dominion-Energy-Investor-Update-Conference-Call-Transcript-6-July-2020-9_00-AM-ET-vTC.pdf
Additional Contributing Author: Mike KerriganView More
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