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North Carolina Gov. Roy Cooper has a chance to fundamentally reshape the state’s utility board with a series of appointments in the coming days.
The state’s chief ratepayer advocate, the chair of the North Carolina Utilities Commission and two other commission members all have terms expiring June 30. Cooper has until May 1 to reappoint or replace them.
Clean energy activists say the board has failed to press the state’s utilities to aggressively pursue renewable energy, and that its chairman is too connected to utility companies. They’re asking Cooper to nominate new commissioners free of conflicts willing to exercise their authority.
If he does, six Cooper appointees will sit on the seven-member commission until at least 2023 as it navigates a thicket of controversial policy issues including coal-ash cleanup, grid modernization, and the best role for a regulated monopoly like Duke Energy in an increasingly distributed electricity market.
“If we want a green future — a just future where all have access to safe environmental conditions — we cannot remain stuck in the status quo,” Catherine Trusky, a Chapel Hill high school student and fellow with the Alliance for Climate Education, said in a written statement.
Her group, whose mission is to educate young people on the science of climate change, is part of a 14-member coalition of local, state, and national nonprofits who have urged Cooper to appoint members, “who will stand up for a sustainable North Carolina when making decisions that will affect our energy sector and climate for years to come.”
But even if Cooper, a Democrat, selects new commissioners, they can’t serve until the GOP-led General Assembly confirms them, and two years ago, lawmakers sat on two of the governor’s appointments for months. That’s why the battle over the future of utility regulation could just be beginning.
‘Who the governor appoints will make a big difference’
North Carolina has a dizzying array of citizen boards and commissions, many limited in scope by geography or mission and most unfamiliar to average Tar Heels. The governor makes appointments to more than 350, according to his website.
None has more impact on the state’s energy future than the Utilities Commission, the oldest regulatory body in North Carolina. Among other duties, it permits the construction of new power plants, sets electricity and gas rates, and enforces a 2007 law requiring utilities to sell a certain amount of renewable energy.
Though it dominates the state’s electricity sales and owns Piedmont Natural Gas, Duke isn’t the only investor-owned utility in the commission’s jurisdiction. There is also Virginia-based Dominion Energy, which serves a small corner of the state’s electricity market and recently purchased the state’s other major gas company, PSNC Energy.
As the number of regulated monopolies serving North Carolinians’ energy needs shrinks, the commission’s oversight role becomes even more important, advocates say. “When you have that much market share of the state, any decision that the utility makes can have ripple impacts far, far down the line,” said Peter Ledford, general counsel for the North Carolina Sustainable Energy Association.
While the commission has typically shied away from duties not explicitly granted to it by state lawmakers, the panel’s authority is actually quite broad, Ledford says. “Yes, the General Assembly is key in setting the policy direction for the utility sector,” he said, “but the Utilities Commission does have a major role to play in interpreting those statutes, and in implementing them.”
The panel must sign off on Duke and Dominion’s long-range generation plans, which advocates have frequently assailed for being too reliant on fossil fuels and too meager on solar and wind. The commission also presides over the biennial establishment of the “avoided cost” rate — what the utility would spend to produce electricity itself rather than buy it from an independent developer — which often serves as a proxy war between conventional gas-fired plants and renewables.
Many say the panel will play a crucial role in the success of Cooper’s executive order on climate change, aimed at cutting global warming pollution in the state 40% from 2005 levels by 2025.
“Any decisions regarding new clean energy installations, any decisions involving early retirement of coal or new natural gas construction, that’s all going to have to be decided by the Utilities Commission,” Ledford said. “I would think that’s something the governor is taking into account when he’s considering who to appoint.”
Then there are the companies’ bid to raise rates and their justification for doing so. The Cooper administration has ordered Duke to excavate all of its coal ash dumps, a decision the utility has said it will appeal. If the order stands, the company is likely to try to pass the cost of cleanup, estimated at $5 billion, to ratepayers, as it has with previous coal ash expenses.
A controversial measure moving through the General Assembly could give utility regulators even more power. The Duke-backed bill, Senate Bill 559, would allow the utility to recover some expenses through bonds and receive multi-year rate increases for up to five years, all subject to approval by the commission.
Given the importance of the upcoming decisions facing commissioners, said Molly Diggins, state director of the North Carolina Sierra Club, “who the governor appoints is going to make a big difference.”
A ‘chess match’
The state-sanctioned ratepayer advocacy organization, called the Public Staff, weighs heavily in all these orders. And though its mission is keeping rates down — not speeding the renewable energy transition — the two motives are increasingly aligned as green technologies drop in price. “Public Staff’s role is more important now than it’s ever been,” Diggins said.
Only the executive director of Public Staff is subject to political appointment, but like any CEO, the person in that role sets the tone for the rest of organization, whom advocates have praised for arguing against cost recovery for coal ash cleanup. The current director, Chris Ayers, an appointee of Cooper’s Republican predecessor, Pat McCrory, has also won plaudits for appearing before the General Assembly to voice concern over the multi-year rate increase measure. “They’ve really stepped up on this,” Diggins said of Ayers and his staff.
The chair of the Utilities Commission, Ed Finley, was first appointed by a Democratic governor in 2007 and has been reappointed as chair by subsequent governors of both parties. Politely and evenly, he has presided over increasingly raucous public hearings about Duke’s long-term generation plan and other proceedings.
But Finley has long been criticized for his professional role before joining the commission: representing in private law practice the utilities he now regulates. And he and the other two members with terms expiring June 30 — McCrory appointees Jerry Dockham and James Patterson — have often formed a four-member majority to decide cases in Duke’s favor, with Cooper’s three appointees dissenting in whole or in part.
The commission, the 14-member coalition told Cooper in a letter, “has failed to consider the risks to the environment and to the people of this state associated with continuing to build out an energy infrastructure dependent on large polluting and fossil-fuel generating power stations.”
The letter, whose signatories include Alliance for Climate Education, Appalachian Voices and NC WARN, continued, “New leadership … is needed to fulfill our common commitment to address climate change, transition to a clean energy economy, and protect the beauty, integrity, stability and health of our human and biological communities for ourselves and our posterity.”
The governor’s choice of chair is not subject to legislative approval. But because the commission members are, advocates worry that even if Cooper makes three new selections, they couldn’t join the board for some of its most consequential deliberations.
“Having a full bench is going to be critical for the issues that will be before the commission in the next year or two,” Ledford said, stressing that lawmakers should act quickly on Cooper’s picks if they are qualified to serve.
But he also acknowledged Duke’s reaction to new nominees could complicate their confirmation, as could old-fashioned partisan politics. “It’s going to be an interesting chess match the next couple of months,” he said.