This story originally published online at N.C. Policy Watch.

For the past five months, the workings of a top secret energy group was so hush-hush that if someone was caught leaking information they would be expelled as an outcast and a pariah.

Lawmakers in the group, otherwise largely composed of business trade associations and Duke Energy, raised the curtain yesterday on their 47-page opus magnum, House Bill 951, at a meeting of the House Energy and Public Utilities Committee.

So publicly confident were they in the bill, that primary sponsors Reps. John Szoka (R-Cumberland) and Dean Arp, (R-Union) had planned to fast-track it, with a rush to the House floor before the end of the month.

“We’re minimizing environmental impacts and lowering our carbon footprint,” Arp said, at the House Energy Committee. “We’re not picking winners or losers. We’re here for the people of North Carolina.”

The measure, Szoka proclaimed, “would transform North Carolina’s energy future.”

The response from fellow lawmakers of both parties: suspicion.

Most of the major trade associations, including manufactures and textiles: skepticism, even outright opposition 

Environmental advocates: contempt.

“I believe in keeping our environment clean,” said Rep. Charles Graham (D-Robeson). “But this bill has consequences, and I’m not sure what they are for our businesses, families and farmers.”

The bill contains several controversial provisions:

  • $50 million for a modular nuclear reactor;
  • An estimated 50% rate hike over 10 years;
  • Multi-year ratemaking, so unpopular it was trounced out of a bill two years ago;
  • Language that would partially handicap the state Utilities Commission’s ability to regulate;
  • A reduction in the number of public comment periods on major utilities commission actions; and
  • A continued reliance on natural gas, a source of methane, which accelerates climate change.

Some lawmakers and lobbyists took comfort in a few upsides. More than 5,500 megawatts of solar energy would be added to the grid, enough to power 750,000 to 1 million homes—plus battery storage to dispatch that energy when the sun isn’t shining. 

A community solar garden program would allow customers to buy a portion of their energy from that source, which could be popular among those who can’t install rooftop systems on their homes or apartments.

Five coal-fired power plants would take early retirement: Allen, Marshall, Roxboro, Mayo and a unit at Cliffside. Marshall, which is in Catawba County, would convert to natural gas; Allen, in Gaston County, would use battery storage. The energy sources for the other three plants have yet to be determined, but Roxboro could rely on natural gas.

These retirements would reduce carbon dioxide emissions by 61 percent by 2030, still short of Gov. Cooper’s clean energy goal of 70 percent.

Not part of the early retirements, two other coal-fired plants, Belews Creek and Cliffside 6, which would eventually convert to natural gas.

One of the bill’s guiding themes— “performance-based regulation” —has several components. Notably, one encourages customers to use less energy by breaking the link between consumption and a utility’s revenues.

“This bill is the result of collaboration and compromise,” said Kendal Bowman, Duke Energy vice president of Regulatory Affairs and Policy. “It holds the utility accountable, provides for cleaner energy sources. Without this legislation these programs would not be available for our customers.”

How much will this cost?

Yet, for all the legalese and utility jargon contained within the 47 pages, no one could say how much all of this would cost ratepayers. Until the public staff of the Utilities Commission crunches the numbers, the full cost of the bill to North Carolinians is unknown. 

Kevin O’Donnell, represents the Carolina Utility Customers Association, a trade group for industrial ratepayers. He estimated the cost increases would add up to 50 percent over 10 years, based on the bill’s allowance of 4 percent per year. 

“As the bill stands now, we urge you to vote ‘no,’” said the association’s executive director, Kevin Martin.

Multi-year ratemaking allows the Utilities Commission to lock in customer costs for three years, rather than requiring Duke Energy and Dominion Energy to file annual rate cases. This type of ratemaking is supposed to prevent utilities from “over-earning,” by refunding customers some amount of money if the utilities’ earnings are higher than allowed by the Utilities Commission. But the converse is also true: If the utilities don’t hit their projections, they can charge ratepayers to compensate for the loss.

“There aren’t enough guardrails” on multiyear ratemaking, said Rep. Pricey Harrison (D-Guilford). “We need to slow this process down. This is a complex bill, and we haven’t had time to digest it.”

Safety and viability of new nukes

The nuclear provision raises questions about cost and viability of that technology. The bill would allow Duke Energy to incur expenses of up to $50 million for an early site permit from the Nuclear Regulatory Commission for siting of a small reactor at an undetermined location in North Carolina. 

The utility “shall make reasonable efforts” to secure federal funding to offset site permit costs, but presumably ratepayers would ultimately have to cover the rest. And the cost of reactors themselves can run into the billions of dollars.

Under an early site permit, the NRC analyzes the appropriateness of a proposed site and emergency preparedness; it is not a construction permit. 

Small nuclear reactors are about a third of the size of a typical nuclear power plant. They are housed underground and can be built more quickly and cheaply than traditional reactors. 

Arp, responding to a lawmaker’s question about the technology, said, “It’s proven and very safe.”

However, none of these small reactors currently operate in the U.S. NuScale, which builds the reactors, plans to deliver its first one to Utah in 2027. It’s not expected to go online until 2029. Even in its infancy that project has already come in well over budget — from $3 billion to $6 billion, according to a 2020 article in Scientific American.

Opponents also question their safety, especially in areas prone to flooding and earthquakes, as well as the disposal of nuclear waste.

Scientific American also reported that the NRC itself had safety concerns. One engineer discussed “boron dilution,” which means “that even if a reactor is shut down, fission reactions could restart and begin a dangerous power increase.”

The magazine cited another report from the NRC’s Advisory Committee on Reactor Safeguards which noted that “several potentially risk-significant items are not yet completed …” The NRC plans to assess those concerns when licensing applications are submitted.

Putting the reins on the Utilities Commission 

The N.C. Utilities Commission is responsible for regulating electric utilities, such as Duke Energy and Dominion Energy. In enacting rules, the commission is required to balance the needs of customers with utilities’ ability to earn a profit.

Arp contended that the commission retains “its judicial nature,” under the bill. However,  the proposal would rein in some of the commission’s authority. It allows only one public hearing per coal retirement and replacement plan. It sets a time limit of six months for the Commission to decide on a plan, which considering the complexity of the issue, is not a long time. And it requires an “expedited decision” of 90 days for the replacement energy sources.

“What is the Utilities Commission’s role?” asked Rep. Becky Carney (D-Mecklenburg). “I want to make sure we’re not tying their hands in any way.”

State law already prohibits the Utilities Commission from considering climate change or public health in its decisions. “I urge you to consider that,” Harrison said. “We’re facing a different energy future than when the statute was drafted.”

In his opening remarks, Szoka acknowledged the measure’s shortcomings, seemingly to blunt the criticism he knew was coming: “I view this as a non-hostile meeting,” he said. “…I’m not saying this bill is perfect.”

Over the two-and-half hour meeting, it became clear that House Bill 951 in its current form was dead on arrival. 

By Thursday night, the bill had been removed from the calendar of upcoming committee meetings. The fast track had been derailed.

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