Changes in HB 589 before the Senate

Here is a brief look at the changes to House Bill 589 now under debate before the Senate. This blog is a companion to my in-depth look at how the bill would affect consumers (in version 3 that passed the House).

Changes to competitive procurement (Part II)

Version 4 would lower the amount of renewable energy capacity Duke Energy must obtain through a competitive bidding process from 2,660 MWs to 2,200. It would introduce more competition in the bidding process and stave off some concern of renewable facilities acting like an oligopoly.

Duke would still have to get pre-existing or currently developing capacity of 3,500 MWs under contract.

This change would bring the total amount of renewable energy Duke must take on within 45 months, while maintaining dispatch (and curtailment) rights as with other generating sources, from about 6,800 MWs to 6,340 MWs.

A 2014 study prepared for Duke by the U.S. Department of Energy’s Pacific Northwest National Laboratory determined that 6,800 MWs is the maximum level of renewable energy capacity Duke’s operations in North and South Carolina could take on while still maintaining reliable operations.

So version 4 would give Duke customers a little breathing room with respect to reliability. It would bring Duke to 93 percent of its reliability breaking point rather than full up, as in version 3.

Still, the upper bound price of the avoided-cost rate would be extremely important for consumers worried about price impacts on their electricity bills. North Carolina has the highest avoided-cost rates in the Southeastern U.S. by far. They are 10–20 percent higher than the next nearest state’s (South Carolina).

Version 4 also adds a provision regarding the 20-year pro forma contracts, that compensation terms for curtailment “shall not exceed fair market value of energy at the time of curtailment.” That seems to be a fair addition.

These two changes from version 3 seem to be steps in the right direction. Still, the further away from Duke’s renewable capacity breaking point the bill would require, the better it would be for consumers.

To help consumers more, the bill should seek ways to bring North Carolina’s inordinately high avoided-cost rates more in line with avoided-cost rates across the region.

Adding decommissioning and reclamation of utility-scale solar energy projects

A new Part X in version 4 would require the owner or operator of a utility-scale (1 MW or greater) solar energy project to be responsible for proper decommissioning of the project and returning the land to its prior condition. It would require the owner or operator to provide financial assurance with the Department of Environmental Quality (DEQ) and direct DEQ to adopt rules setting proper financial assurance amounts.

Carolina Journal has reported on lawmakers’ and affected residents’ concerns about North Carolina’s lack of rules concerning solar facility cleanup and the potential long-term environmental damage.

As Dan Way reported in 2015,

North Carolina has no environmental rules for shutting down solar projects safely, state officials say, and may lack sufficient facilities to dispose of the glass, steel, industrial lubricants, and toxic elements after solar panels in the state’s expanding solar industry reach the end of their useful lives.

Taking steps to avoid foreseeable environmental damage to farmland would be prudent.

Adding a moratorium on new wind energy facilities

A new Part XIII in version 4 would establish a four-year permitting moratorium for wind energy facilities (or expansions) to allow the General Assembly to study how those facilities impact military operations.

Carolina Journal reporting over the years has shown there are serious consequences to how wind facilities affect local communities and military installations. Massive turbines can disrupt military flight paths and training and also interfere with radar surveillance capabilities, hampering the military’s tracking of aircraft and ships suspected of transporting illegal drugs to the U.S.

Taking time-out to study these issues would be sensible.

Still missing

The version before the Senate still lacks a cap and sunset the REPS mandate and, as mentioned above, a study into bringing North Carolina’s inordinately high avoided-cost rates more in line with avoided-cost rates across the region.

Jon Sanders / Director of 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...

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