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Bill claiming to lower energy costs by reducing some NC climate goals moves through House
A bill to eliminate some of North Carolina's emission goals and change the way utilities pass on the cost of power plant construction onto customers is moving through the statehouse under a new name.
Wednesday, the House Energy and Public Utilities Committee took up the newly named 'Power Bill Reduction Act,' an amended version of Senate Bill 261, the Energy Security and Affordability Act.
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Now, Senate Bill 266, which previously focused on regulations for rebuilding homes destroyed in flooding events, the Power Bill Reduction Act includes SB 261's provision to eliminate the state's interim climate goal requiring Duke Energy reduce its carbon emissions by 70% of 2005 levels by 2030, though it maintains the requirement for the utility to reach carbon neutral by 2050. SB 266 also includes the provision that allows utilities to seek rate increases to help defray the cost of construction work in progress.
The bill's sponsor in the House, Rep. Dean Arp (R-Union), explained these provisions will lead to improved reliability and lower energy bills in the long run because they allow utilities to be more flexible with their power generation and avoid sudden price hikes which can come after the completion of large, capital expense-heavy construction.
'For instance, if you take out a credit card and you don't pay it off for 10 years, you're going to pay a huge finance charge,' he explained. 'This allows that interest rate to be paid earlier, thereby eliminating the financing cost and the compounding aspect of that the [construction work in progress].'
This provision has earned warnings and criticism from those in South Carolina, including former Public Service Commissioner Tom Ervin, who explained a similar law in their state resulted in ratepayers facing years of rate hikes to cover the construction of two new nuclear reactors that were ultimately never built.
'That's a big mistake,' he said. 'Because it may never be completed. We've learned that lesson in South Carolina already, and if you pay as you go, that's money just thrown away.'
Rep. Arp explained that SB 266's version has more guardrails than South Carolina's version, which would protect ratepayers should a similar situation arise. The legislation requires that the North Carolina Utilities Commission can only approve rate increases for construction in progress if it finds the facility is cost-effective, will save ratepayers money in the long run, and meets the state's reliability needs. It also allows the Commission to revoke approval if the project no longer meets the public interest.
Everyone who appeared for public comment spoke favorably of SB 266, including representatives from Duke Energy, Electri-Cities, and NC Electric Cooperatives, the state's largest energy providers. Economic stakeholders like the Chamber of Commerce and the NC Manufacturers' Alliance said the bill will help the state maintain its momentum in attracting new businesses and development to the state by keeping energy costs low and predictable.
Some committee members were skeptical of the savings claimed in the bill. Arp explained research from Public Staff, which represents ratepayers in negotiations with the Commission, shows Duke Energy's current plan would result in an estimated $150B in construction costs by 2050. Under this bill, those costs are expected to drop to around $137 billion. Some on the committee were not satisfied that those calculations factored in all appropriate externalities.
Other committee members expressed concerns about how quickly the bill was brought to a vote after appearing on the docket Tuesday night and requested more time to read it.
Rep. Pricey Harrison (D-Guilford) was worried about what the bill would mean for the state's commitment to reducing its emissions and fighting climate change.
'If we're thinking about the future of the state and the sustainability of the state, we would be thinking in a more sustainable fashion, and wouldn't be narrowly minded, focused on a bill that I think promotes natural gas and nuclear at the expense of cleaner energy sources,' she said.
Rep. Arp pushed back, explaining that new nuclear construction, which this bill would help facilitate, is carbon neutral and that natural gas is necessary to help maintain reliability while the state retires its coal plants.
'This is a responsible, prudent bill that understands that we're not, in fact, backing away from our commitment to responsibly look at our energy production related to our carbon plan,' he said.
The bill was approved by the Rules Committee and is expected to be on the House floor early next week.
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