A group of Madison Gas & Electric shareholders says the company took advantage of new corporate-friendly federal guidelines to avoid having to map out a path to clean energy by mid-century.
Four shareholders who belong to MGE Shareholders for Clean Energy submitted a resolution to direct the Madison-based utility to draft a plan to eliminate coal and transition to 100 percent renewable energy by 2050.
MGE objected, and on Wednesday the U.S. Securities and Exchange Commission ruled in the company’s favor, saying the resolution seeks to “micromanage” the company and may be omitted from proxy materials at the 2019 annual shareholder meeting.
Tony Gibart, an attorney and member of the MGE shareholder group, said the company is taking advantage of SEC guidelines issued in 2017 under the Trump administration that have broadened the definition of micromanaging in response to increased shareholder activism.
“There is this greater deference to corporations to the detriment of shareholders,” Gibart said. “That’s new.”
Organized in 2014 in opposition to MGE’s proposed increases in flat monthly customer fees, Shareholders for Clean Energy has proposed 15 resolutions; 11 of those were withdrawn after the company agreed to negotiate with the group.
MGE’s attorneys argued the four shareholders who submitted the request collectively own just 0.006 percent of the company’s stock and that past SCE resolutions have failed to gain widespread support.
An identical resolution received 11 percent support at last year’s annual meeting.
“As a very small grassroots group, we felt like 11 percent of the vote was a big victory for us,” said Beth Esser, co-founder of the group, which she said has grown to include about 100 shareholders.
MGE spokeswoman Dana Brueck said the company sought to exclude the proposal because shareholders rejected it last year — not because of any changes at the SEC.
MGE, which has committed to cutting 80 percent of carbon emissions by 2050 and has increased its renewable capacity six-fold in the past four years, argues there is little difference between the shareholders’ request and what the company is already doing.
“We have the same goal — deep decarbonization,” said chairman and CEO Jeff Keebler. “We appreciate the voices of all of our customers, shareholders and community stakeholders. Every action we are taking is moving us toward our deep decarbonization goals. We have supported our communities’ 100 percent renewable energy goals and we are working with them to help them achieve those goals.”
But the shareholders say the company needs to go further to help avoid a potentially catastrophic rise in global temperatures and to mitigate financial risks.
They contend that MGE’s part ownership in the Columbia and Elm Road coal plants — accounting for nearly two-thirds of the company’s generation capacity — constitutes a financial risk. They cite a recent report from Bloomberg New Energy Finance that found nearly half of U.S. coal plants — including Columbia — would operate at a loss in the free market.
“They should be supporting what we’re asking for,” said Don Ferber, one of the shareholders behind the resolution. “They need to know all these answers.”
In letters to the SEC, attorneys for MGE argued that coming up with a plan for 100 percent renewables would “distract management” from meeting the existing goals and would not add “any meaningful information” to what is already publicly available.
In his budget proposal released earlier this month, Gov. Tony Evers called for a statutory goal that all the state’s electricity be carbon-free by 2050.
Four of the state’s largest investor-owned utilities aim to cut 80 percent of carbon emissions by 2050. Xcel Energy, which serves customers in western Wisconsin, is the only major U.S. utility to embrace the 100 percent target.
In a report released last week, Xcel said it can achieve 80 percent reductions cost-effectively with existing technologies — including nuclear power — but will need resources not yet commercially available to be completely carbon-free.
Madison, Middleton, Fitchburg and Monona, which constitute most of MGE’s service territory, have established even more aggressive zero-carbon goals for municipal and communitywide energy use.
“For them to resist their shareholders who say we want to see your path forward just seems disingenuous,” Esser said. “Really they’re just trying to resist having to do what not only shareholders but the communities around them want them to do.”