Environmental exposures in the US electric utility industry

Quantitative analysis of 47 US investor-owned electric utilities’ environmental exposures to impending air quality and climate policies shows potentially material and highly differentiated financial impacts. For many companies the minimized compliance costs of a four-pollutant cap-and-trade regulatory regime would be less than those of a three-pollutant regime that omitted controls on carbon dioxide emissions. Fragmented regulatory requirements would have the highest compliance costs. The companies studied vary considerably in the adequacy of their financial reporting of these potential impacts. Greater transparency would benefit investors and the most favorably positioned companies.