Revamped energy bill alleviates some concerns, but would still burden Duke Energy’s low-income ratepayers

The North Carolina General Assembly’s super-secret energy legislation, House Bill 951, has been overhauled since a group of special interests — Duke Energy, primarily — hashed out a 47-page opus six months ago.

Now at a slim 10 pages, some of the most obvious giveaways to utilities have been eliminated, including legislative mandates for new natural gas and nuclear plants. The NC Utilities Commission also has regained authority that was undercut in previous iterations of the bill. 

While these improvements have placated some detractors, the measure still contains major shortcomings, opponents say. These include higher energy costs for low- and moderate-income residential ratepayers, as well as a clause that gives Duke equal authority as the utilities commission over a carbon plan.

Two legislative committees held hearings yesterday about the bill, which now has the support of Gov. Roy Cooper. He had previously signaled that he would veto the original version.

Low-income consumers likely to be adversely impacted

The bill contains a provision for multi-year ratemaking. The controversial policy, deployed in other states, allows Duke Energy and Dominion Energy to lock in rates and increases — 4% in Years 2 and 3 — without having to go before the Utilities Commission to justify the hikes.

Based on that cumulative increase, a low-income household that currently spends an average of $125 a month on electricity would pay an extra $60 annually in Year 2. By Year 3, the household would pay an additional $122 annually over current levels.

Republican Sen. Paul Newton, a former Duke Energy executive, told his fellow lawmakers in two committee hearings Tuesday that federal funds are available to help low-income households afford their bills.

That’s not entirely true.

While North Carolina does receive more than $90 million in federal funds each year, that figure falls far short of the $125 million Duke’s residential customers owed in past-due bills as of July 31, Rory McIlmoil, senior energy analyst for Appalachian Voices, told Policy Watch. 

According to NC Utilities Commission data, 456,752 customers of Duke Energy Carolinas and Duke Energy Progress were behind on their bills.

Meanwhile, less than 20% of eligible low-income households receive federal utility assistance funds each year; those that do receive them find the payments cover only one or two payments because funding demand outstrips supply.

La’Meshia Whittington, deputy director of Advance Carolina, noted that many utility assistance programs aren’t available to renters, a third of whom in North Carolina are low-income. For these households, a lack of electricity can be a matter of life and death: Without power they can’t run their CPAP machines to alleviate their sleep apnea, operate oxygen units and nebulizers, or keep their medications, such as insulin, in the refrigerator.

Sen. Newton also touted an on-bill finance program that allows ratepayers to take out loans at below-market interest rates for energy efficiency upgrades. 

These programs, however, are not available to renters.

Many low-income households can barely afford their monthly charges, McImoil said, let alone additional loan payments. 

The bill contains no funding to supplement utility assistance programs that could help these households.

Some older homes are in poor condition, and “the amount of energy lost can’t always be earned back by energy efficiency,” said Al Ripley, director of the Consumer, Housing and Energy Project at the NC Justice Center, told lawmakers. (Note: Policy Watch is a project of the Justice Center; however neither the Center nor Ripley was involved in or influenced this article.)

Industrial customers, environmental advocates express concerns

Bill opponents generally support a provision that would break the link between the utilities’ profits and customers’ energy usage — known as “decoupling.” However, they countered Newton’s claim that it would lower utility bills. “It only breaks the link between sales and revenues,” McImoil said. “It doesn’t do anything at all to lower bills for customers on its own.”

The NC Sustainable Energy Association issued a statement cautioning that multi-year ratemaking can still allow utilities to “over earn” at the expense of customers.

The Carolina Utility Customers Association, which represents some of the state’s largest manufacturers, still opposes the bill. “We agree with its intentions but we expect to see large rate increases for residential and manufacturing customers,” said Kevin Martin, the association’s executive director. “Every 30 days we’ll all see the bill’s effects.”

Newton touted that the bill requires the Utilities Commission to consider “least-cost” energy mixes and to ensure the “reliability” of the grid, the latter of which will assure “we don’t have blackouts like Texas or California.”

But this is not new. State law already requires the commission to “promote least cost energy planning” and to “provide just and reasonable rates and charges for public utility services …”

The analogy to Texas is also not relevant to North Carolina. Texas experienced blackouts during severe weather in part because most of the state is not connected to the national electric grid. The lights stayed on in areas like El Paso, the upper Panhandle and parts of East Texas, because they can rely on other producers for power, according to the Texas Tribune.

North Carolina can also obtain power from out-of-state sources during an emergency.

California’s woes stemmed from poor planning that failed to account for an unprecedented heat wave, caused by climate change.

No longer merely a long-term possibility, but an immediate threat, climate change was the impetus for the governor’s Clean Energy Plan. It established a goal of 70% reduction in carbon emissions by 2030, based on 2005 levels, and set a date of 2050 for carbon neutrality.

The original version of the HB 951 called for just a 61% reduction in carbon emissions, but the new version matches the governor’s targets. 

Nonetheless, that provision, too, contains wiggle room. Duke Energy would be required to submit a carbon plan to the Utilities Commission every two years for review. However, the bill language gives Duke, and presumably Dominion, equal authority on changes to the carbon plan, even delaying it beyond the deadlines. The plan could be adjusted “as necessary, in the determination of the Commission and the electric public utilities,” the bill reads.

The Sierra Club, Environmental Defense Fund, NC League of Conservation Voters, the Southern Environmental Law Center, Vote Solar and NC WARN all issued statements either expressing reservations about the bill or outright opposing it.

Both the House Agriculture, Energy and Environment Committee and Senate Finance Committee approved and advanced the bill Tuesday. It’s scheduled to be heard in Senate Rules today at 9:30 a.m.