House Bill 589: Key takeaways

Note: For more information, please see my in-depth discussion, “What Would House Bill 589 Mean for Energy Consumers?

Part I. Reform PURPA contracts

Reduces NC’s exorbitant contract lengths and lowers the size of renewable energy facilities from which federal law dictates utilities must buy all their energy regardless of system need, and at high rates (avoided-cost rates).

It’s a very necessary reform to make energy prices more competitive for consumers

Part II. Have Duke field bids from renewable-energy facilities to get a large set-aside of renewable capacity under 20-year contracts

Sets up a competitive bidding process so that Duke can get basically all expected renewable energy capacity in the near future under 20-year, fixed-rate contracts. Bids could not exceed avoided-cost rates. Importantly, Duke would be able to dispatch and control the renewable capacity according to system needs.

It gives renewable energy facilities a very cushioned landing from Part I. But how will it affect consumers? That depends on how far below current avoided-cost rates the bids are. NC’s avoided-cost rates are the highest in the region, by far.

Part III. Let military bases, UNC schools, and other big users contract with renewable energy facilities

Sets aside 600 MWs (100 for the military, 250 for UNC) for this purpose. They’d pay normal retail plus the cost of the renewable energy purchased, then get bill credits, not above avoided-cost rates for renewable energy used. Utilities would see their fuel rider increase faster to pay part of it, too. Any of the 600 MWs leftover gets added to the capacity amount Duke must field bids for in Part II.

Its effect is to promote renewable energy interests and would not make energy prices more competitive for consumers.

Part V. Cut the Renewable Energy Portfolio Standards rider for households by $7/year

Drops this nominal cost from $34/year to $27/year but leave in place commercial customers’ REPS rider ($150/year) and industrial customers’ REPS rider ($1,000/year). The costs of compliance with the REPS mandate far exceeds the rider.

Though welcome, it’s more of a gesture than a reform. This section is a symptom of the need to cap and sunset the REPS mandate.

Part VI. Open up third-party sales and net metering

Allows consumers to contract with solar developers (or the utility, with certain limitations) for leasing eligible solar facilities to offset no more than 100 percent of their electricity consumption.

This opens up some choice and competition. Revised net metering rates and consumer protections helps avoid problems some other states’ programs have had.

Part VII. Fast-track contracts for utilities to take pork and poultry waste energy

Makes the Utilities Commission expedite the process of reviewing pork and poultry waste energy facilities for interconnection with utilities. It is to address the REPS mandate’s unprecedented, unworkable pork and poultry waste energy requirement.

This section promotes renewable energy interests and is a symptom of the need to cap and sunset the REPS mandate.

Part VIII. Pay consumers to participate in net metering

Requires Duke to offer rebates to induce consumers to install or lease solar facilities and participate in net metering. Duke gets to recover those costs through the REPS rider. So, consumers who don’t participate — or can’t — are who’ll have to pay for it.

Missing Piece I

Why isn’t there a cap and sunset of the Renewable Energy Portfolio Standard mandate?

A bill that offers “competitive energy solutions” for North Carolina should cap and sunset the REPS mandate. Trying to work around problems with the REPS mandate affects some of this bill’s sections.

Missing Piece II

How can we get North Carolina’s avoided-cost rates more in line with surrounding states’?

Several parts of this bill hinge on the state’s avoided-cost rates. They are the highest in the region by far. It would help consumers a lot in general, and with this bill, if North Carolina’s avoided-cost rates were brought more in line with other states’.

Jon Sanders / Research Editor and Senior Fellow, Regulatory Studies

Jon Sanders studies regulatory policy, a veritable kudzu of invasive government and unintended consequences. As director of regulatory studies at the John Locke Foundation, Jo...