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Environment North Carolina and the N.C. Public Interest Research Group told the Senate committee last week that the bill contains too many provisions favoring the utilities.

Committee passes energy bill 

Groups say utilities' influence weakens proposed law

Two groups involved in negotiating the Senate version of the Renewable Energy Portfolio Standard have withdrawn their support for the bill, at least in its current form.

Nonetheless, the Senate Committee on Agriculture, Environment and Natural Resources gave Senate Bill 3 (MS Word, 165 KB) a favorable report June 26. It advances to the Senate Finance Committee.

Environment North Carolina and the N.C. Public Interest Research Group told the committee last week that the bill contains too many provisions favoring the utilities.

"The bill is not ready yet," said Shana Becker, staff attorney and lobbyist at NC PIRG. "We can't support baseload financing; the ratepayers will bear all the risk."

In its 28th version, SB 3 would allow electric public utilities to pass along to ratepayers the costs of building new coal or nuclear plants—before those facilities are finished and delivering power. Currently, in most cases, utilities are responsible for paying for construction until the facility is finished, and can raise rates afterward, with approval from the N.C. Utilities Commission.

Utilities favor the provision because it shields them and their investors from the sole financial risk of building the plants. Nuclear facilities are particularly risky because of the lengthy permitting process and general public opposition to those plants. Nationwide, several nuclear plants have been scrapped before being completed.

The proposed bill reinforces the Utilities Commission's power to oversee construction and costs, and to modify or revoke a utility's permit (also known as a certificate of necessity); however, ratepayers are still on the hook for approved costs, even if the project is canceled.

As for renewable energy standards—the original intent of the bill—electric public utilities would be required to provide 12.5 percent of their power from renewables or energy efficiency sources by 2021; electric co-ops and municipal-owned utilities would have a benchmark of 10 percent.

Elizabeth Ouzts, state director of Environment North Carolina, said the renewables and energy efficiency requirements are "a compromise from what's achievable but are a step forward. But that is overshadowed by sections that make it easier to build new coal and nuclear plants. We regret we are not able to support the bill at this time."

However, Sen. Daniel Clodfelter later told his fellow committee members that North Carolina needs renewables, energy efficiency and new plants to meet demand. "We're going to need all three. To put one at war with the other isn't goinig to solve anybody's problems."

During negotiations, defining "renewable energy" has been a sticky wicket. Swine and poultry waste count as renewable sources, but some environmental groups are concerned that SB 3 could be used as leverage to erode controls on hog lagoons and spray fields, which are pending in other legislation.

Christa Wagner, lobbyist for the N.C. Sierra Club, which supports SB 3 with reservations, told the committee that for swine waste to count as renewable energy, it should also be linked to stricter environmental standards for lagoons and spray fields.

The Energy Issues Working Group—composed of more than 70 members representing utilities, government agencies, consumer advocates and environmentalists—has convened more than a dozen times since February to hash out the bill. Known informally as a 605 because the group historically met in Room 605 of the Legislative Office Building, the meetings are public, but until recent media scrutiny, weren't widely advertised. The meetings are now listed on the legislative calendar.

"Everyone has been heard," said Sen. Charlie Albertson, who chairs the committee. "I would have to say all in all, we have a good bill here."

Since the bill has financial implications—it would phase out sales tax on electricity, piped natural gas and fuels for manufacturers and farmers totaling millions of dollars in lost state revenue—it must go to the Senate Finance Committee for further consideration.

The House version of the Renewable Portfolio Standard sets more aggressive benchmarks and isn't saddled with unrelated provisions.

If either version passes, North Carolina would be the first southeastern state to implement a renewable portfolio standard.

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