UPDATED: Bill Freezing Renewable Mandate Squeaks Through First Vote

After two hours of discussion and comment earlier this afternoon, a measure freezing the state’s renewable energy portfolio standard squeaked through a House Commerce subcommittee. House Bill 298, by Rep. Mike Hager, R-Rutherford, passed the subcommittee on energy 11-10, with Republicans Tom Murry of Wake County and Ruth Samuelson of Mecklenburg County joining eight Democrats opposing the bill.

The measure now goes to that chamber’s Environment Committee, perhaps as early as Thursday. (Please see addendum at the end of this story.)

The measure would leave in place a 2007 mandate from Senate Bill 3 requiring North Carolina utilities to purchase at least 3 percent of their energy portfolios from renewable sources, defined as solar, wind, and biomass (including energy produced from poultry and swine waste). That mandate was scheduled to increase to 12.5 percent by 2021, and Hager cited legislative research and other studies estimating the mandate would boost energy costs to consumers and businesses.

Displaying a bottle of Texas Pete hot sauce, manufactured in Winston-Salem by TW Garner Food Co., Hager said the mandate would force TW Garner to pay higher energy costs, which would be passed along at each stage of the distribution process, forcing consumers to pay more for the product on the supermarket shelves.

“There are a lot of folks in my district who are struggling,” Hager said. “This is an entitlement program [to renewable energy companies] that the folks in my district can’t afford.”

Hager had said earlier that the measure would keep the current mandate in place to allow existing energy contracts to be honored.

The bill also would allow utilities to meet their renewable requirement by purchasing hydroelectric power from facilities built before 2007; S.B. 3 did not allow those purchases to be counted.

During public comment, representatives from renewable energy companies and trade associations, farmers, and consultants for renewable producers spoke against the measure.

Members of the public supporting the bill included Wilmington resident Paige Freeman, who said the higher energy costs imposed by an ever-increasing mandate would not justify raising her home electricity bill. Dallas Woodhouse, state director of the grass-roots group Americans for Prosperity said the measure, if left in place, would impose higher energy prices to satisfy a green ideological agenda.

Ross Loomis of RTI International, which opposes H.B. 298, cited a study his organization prepared for the N.C. Sustainable Energy Association claiming since 2007 the mandate had led to the creation or retention of 21,700 “job years” and $1.7 billion in economic benefit.

Brian Balfour of the Civitas Institute countered that the RTI International study did not account for “opportunity cost” — the benefits lost to consumers and the overall economy when investment is forced to shift from more-productive to less-productive uses. He said renewables require more resources to create the same amount of energy as other sources, adding that this is not a productive use of capital or labor.

During debate over the measure, Rep. Jeff Collins, R-Nash, referred to a peer review of the RTI International study by the Beacon Hill Institute at Suffolk University produced for the John Locke Foundation. Beacon Hill researchers called the report misleading, noting that the job-years concept — that a job lasting 10 years is the same as 10 people holding one job for a single year — is intended to inflate the benefits of government spending by making temporary jobs seem permanent.

Samuelson said her opposition to the bill was based on the fact that all forms of energy receive some subsidies, and that many of the renewable energy projects were being constructed in the most economically disadvantaged areas of the state.

Rep. Becky Carney, D-Mecklenburg, asked for a delay in the vote so that representatives of Duke Energy could offer their opinion of the bill. Subcommittee Chairman Jason Saine, R-Lincoln, denied that request, saying the bill was scheduled to go through three more committees before it reaches the House floor and Duke would have an opportunity to speak during that process.

Rick Henderson is managing editor of Carolina Journal.

ADDENDUM: The version of the bill that passed April 3 was a Proposed Committe Substitute (see a PDF of the text here). The PCS, which replaces the original language of H.B. 298, was not available when this article was published initially. Among other things, the PCS would cap the renewable portfolio standard at 6 percent in 2018 rather than the original 3 percent, allow poultry and swine waste operators to continue including their waste energy in the RPS, and allow utilities to purchase hydropower from sources that weren’t included in S.B. 3.