News: CJ Exclusives

House Republicans Take Another Shot At Renewable Mandate

Millis-sponsored bill would sunset green requirement, require cost study

House Republicans are taking another whack at ending subsidies attached to government-mandated purchases of renewable energy. House Bill 681 would require solar and other “green” power to compete with traditional fuel sources in the government-regulated electricity industry and determine the energy source that costs the least.

“This bill is focused solely on protecting the ratepayer. This is not a battle of renewable versus nonrenewable,” said state Rep. Chris Millis, R-Pender, a primary sponsor of the legislation.

“If members want to mandate and subsidize higher power costs, then that’s their prerogative. But I didn’t come up here to Raleigh to underwrite a certain industry, and do it on the backs of the citizens I represent,” Millis said. “To me it’s absolutely egregious.”

Titled the North Carolina Energy Ratepayers Protection Act, H.B. 681 demands a “soft sunset” to the renewable mandates in 2018. It leaves open the use of renewable energy in the state’s mix of fuel sources if renewables can be produced at the same cost as traditional power sources or less.

The legislation would place a 6 percent cap on the state’s Renewable Energy and Energy Efficiency Portfolio Standard, aka REPS. That is the name of the state program mandate requiring utilities to use renewable energy. The bill would end that requirement in 2018. Under current law, the cap would rise to 12.5 percent by 2021.

The bill also allows utilities to meet up to 50 percent of their renewable energy requirements by increasing energy efficiency until the 2018 repeal takes effect. The law now allows efficiency to satisfy 25 percent of the mandate.

“All of the contracts entered in by 2018 will be fully honored to the length of their contract,” Millis said. “Beyond 2018 our state is going to go back to the provisions of providing reliable power at least cost, with nonrenewables and renewables at the table — whoever can provide the least cost for the ratepayer.”

He believes honoring the full terms of contracts, and related language in the bill holding harmless actors now in the renewable market, will assuage concerns that House Speaker Tim Moore, R-Cleveland, expressed to Carolina Journal on the opening day of the legislative session.

House Republicans in 2014 sank a measure repealing Senate Bill 3, the 2007 legislation imposing the REPS mandate, forcing utilities to purchase increasing amounts of energy produced from solar, wind, biomass, and poultry waste sources, and providing taxpayer subsidies to offset some of the higher costs. Moore expressed doubts that the House would attempt another repeal, citing contracts in place for renewables.

“The reality is the contracts that have been signed by the energy companies are generally 10-, 20-year contracts. So if you make changes now really all you do is make people mad,” Moore said. “It almost has stirred up more of a problem than it’s doing anything else.”

Moore said the subsidies had to be viewed in context of the life span of the contracts, and focus legislation “in that direction.”

With H.B. 681, “the rug’s not being pulled out from underneath anybody,” Millis said, noting that by 2018 the renewable industry would have received a decade of subsidies and mandates.

“All we’re saying is at the end of the day as markets change, and as things move forward … the North Carolina ratepayer will be able to have affordable power at the least cost considering all things, so nonrenewables don’t have an advantage, renewables don’t have an advantage. We’re not underwriting, we’re not subsidizing,” Millis said.

House Minority Leader Larry Hall, D-Durham, said he was not aware of the bill, which was introduced on Monday.

“I’m going to read it,” he said, but reserved comment until that time.

Meanwhile, the North Carolina Sustainable Energy Association sent an email alert asking its allies to call key lawmakers and urge them to oppose the bill. Representatives of the renewable energy group did not respond to a request for comment.

The email blast said H.B. 681 “would eliminate North Carolina’s commitment to introducing advanced energy strategies into the heavily monopolized electric utility sector.” It cited a study claiming that the state’s renewable energy policies would save $651 million by 2029.

Millis said the email shows the necessity of his legislation.

“They flat out tell me that what they offer our energy ratepayers is cost-effective, and is actually affordable. If it is, why do they worry about this bill? If their studies are right, why do they worry about this bill?” Millis said.

“How individuals will distort facts for their own special interest is to me being very harmful. That’s exactly what’s going on,” he said, noting that industries routinely hire consultant to perform studies “in a way to give certain special interests what they want to hear.”

His bill calls for a study from the state Energy Policy Council, with reports to the Joint Legislative Committee on Government Operations. That study would take a thorough examination of the costs and benefits of renewable energy.

“That’s the reason why this language needs to be crafted very carefully to make sure that the ratepayers do have an accurate study, one that’s not slanted or biased towards renewables or towards nonrenewables, towards the investor-owned utility or not towards the third-party aspects,” Millis said.

“It is my view that we cannot have a trajectory of increasing power costs and expect our state to be attractive to those who call our state home who are on fixed incomes,” Millis said. “We’re on a bad trajectory as a state.”

Without reining in power costs, North Carolina would have a difficult time attracting new businesses and keeping existing ones, he said.

“To have a mandate and a subsidy of a specific industry built into our tax code and built into our actual energy policy — and to be the only state in the Southeast to do so in such an aggressive manner — definitely increases the burden upon our citizens,” Millis said.

He believes the bill is crucial to ratepayer fairness and economic development, and emphasized it is not simply “a repeat of what was done last session.”

Last year’s measure repealing the renewable mandates, sponsored by current House Majority Leader Mike Hager, R-Rutherford, was referred to four committees by then-House Speaker Thom Tillis, presumably in an attempt to kill it. Moore voted against the legislation.

Millis supported that bill, but said it was not as comprehensive as H.B. 681, for which Hager is a primary sponsor. Millis said he hopes this year’s effort is not “assigned to multiple committees to the point of death.”

Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.