Like a doddering old uncle, the Salem power plant, owned by Dominion, has been making vague pronouncements lately.
Last week, the Virginia-based company met with the Massachusetts Department of Environmental Protection (DEP) and other parties to announce its plans to further clean up its emissions to meet state regulations. This plant — one of the notorious "Filthy Five" worst-polluting power plants in the state — has thus far evaded any significant long-term capital investments, choosing instead to merely meet the letter of the law by switching to low-sulfur coal and by maximizing their use of pollution credits. At the DEP meeting, Dominion essentially announced its intention of doing more of the same, using clever Band-Aids to avoid spending real money on the plant.
Let's be clear here about what's going on. Regardless of its words, Dominion's actions indicate its intent. It plans to run this aging power plant into the ground, squeezing out every possible dime of profit and ultimately shutting it down without prior warning to the city.
Along the way, Dominion is further insulting Salem by evading its responsibility to pay its fair share in taxes. Over the last decade, while the property taxes of Salem homeowners nearly doubled, the taxes on the power plant fell by 60 percent. In 1997, the plant paid $8.9 million in property taxes. In 2008, it paid $3.5 million, plus $1.25 million as a so-called "host site fee." The company insisted this fee not be characterized as a tax so it could, in the following year, evade paying it. That's precisely what it's doing. For Fiscal Year 2009, Dominion is offering only $3.5 million.
Too poor to pay fair taxes? Dominion had 2007 revenues of $16 billion and profits of $2.5 billion. That same year, it spent an astronomical $5.8 billion on buying back its own stock. That means the company chose not to upgrade this aging and dangerous coal plant, nor to invest in renewable energy, but instead to engage in a one-time manipulative transaction designed to drive up company stock price and line the pockets of its executives. That's like a father neglecting to feed his own family or to maintain the family home, instead spending all his money on gambling.
The person who benefited most from this maneuver was Dominion CEO Thomas Farrell, whose compensation last year was more than $15 million — largely from stock options. Farrell pocketed four times more than the $3.5 million Dominion is expected to pay Salem in taxes in 2009.
Hang on. It gets worse. Under provisions of the recently enacted Massachusetts Green Communities Act (GCA), Dominion may be able to pass off even more of its tax obligations to the citizens of the state. If the Regional Greenhouse Gas Initiative (RGGI) — which requires companies that emit carbon dioxide to pay-to-pollute — has an impact on Dominion's profits, then the state under the GCA will help Dominion pay its taxes. Providing this tax relief to the highly profitable Dominion defies the intent of RGGI — forcing large greenhouse gas emitters to clean up or close down. Even worse, it takes renewable energy funds from the GCA and helps a polluter pay its taxes.
Dominion said recently, it plans to keep operating the Salem plant "for years to come." Just how many years? Regional energy coordinator ISO-NE says the plant is needed for minimal power until 2010. After that, no one knows. But we do know that Dominion's cost will be increasing under RGGI.
Dominion may intend to keep the plant open 10 more years. But at that point, the plant will be 66 years old — far beyond its intended 30-year life span. How long can this aging plant be held together with duct tape? Already the workers, the community, and the planet are paying a price.
It bears repeating: Dominion gives every indication that its aim is to run this aging power plant into the ground only to shut it down without prior warning. Consider this: Dominion is investing $1 billion in order to keep Brayton Point operating within the new regulatory requirements intended to reduce greenhouse gas emissions. Yet in its recent announcement, the company said it will invest no more than $15 million in the Salem plant. Connect the dots.
Salem deserves better. This valuable oceanfront site could be the home of any number of mixed-use developments — including safe, clean power generation — that could increase tourism, improve the property values of all Salem homes, and enhance the tax base. It's time for Dominion to tell us when it plans to shut down this plant, so we can begin planning for what comes next.
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Marjorie Kelly, a Salem resident and senior staffer at Boston's Tellus Institute, was publisher of Business Ethics magazine for 20 years. Pat Gozemba, also a Salem resident, is a director of Salem Alliance for the Environment and HealthLink.
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