After months of secret negotiations between Duke Energy, House Republican leaders, and other select stakeholders in North Carolina, sweeping energy legislation has been unveiled at last.
But the 47-page bill (pdf) is no grand compromise. Duke and other groups involved in the closed-door talks were seeing the proposal for the first time Tuesday afternoon, and one — the state’s leading clean energy nonprofit — announced its opposition hours later.
The North Carolina Sustainable Energy Association took particular issue with the bill’s initial pages, which call for shuttering five of Duke’s coal-fired power plants but ushering mostly new gas plants in their place. While only 900 megawatts of new gas infrastructure is spelled out in one provision, another section requires state regulators to approve coal-replacement units that meet criteria only natural gas could satisfy. This “mandate to replace costly coal with risky natural gas” must be “eliminated,” the association said.
Environmental advocates, excluded from the last several months of talks, agreed.
“This legislation appears to bind the hands of the commission by mandating new fossil-fuel power plant construction, irrespective of how those projects stack up against alternatives,” David Kelly, director of North Carolina political affairs for the Environmental Defense Fund, said in a statement. As a result, the measure would push the state “perilously close to trading one fossil-fueled future for another.”
Duke is also limited to retiring only $200 million of its coal assets using securitization, a tool that allows it to repay its debt to investors using ratepayer-backed bonds that bring a lower interest rate.
“Duke has control over what they propose to securitize, so why do we need a cap?” asked David Rogers, Southeast deputy campaign director for the Sierra Club’s Beyond Coal campaign. “They’ve got $6 billion in plant balances remaining.”
The legislation curbs utility-sector carbon emissions by 61% from 2005 levels by 2030, while the administration of Gov. Roy Cooper has set a 70% reduction target in the same time frame. By mandating new gas and leaving several coal units online, the bill could actually prevent further pollution cuts, Rogers said. “This bill will make it harder to hit the governor’s 70% goal,” he said, “not easier.”
Rep. John Szoka, a Fayetteville Republican and lead author of the proposal, stressed that it wasn’t a “final product,” part of the reason he plans to offer it up for discussion, but not a vote, on Thursday in the House energy committee he co-chairs.
“Everybody is not in complete agreement on the bill,” Szoka acknowledged. By airing it in committee and hearing from a broad array of stakeholders — not just those in the room during the talks, he said, “hopefully we’ll drive out any potential game-stoppers.”
‘Problematic provisions’
For clean energy advocates, deal-breakers in the bill also include $50 million Duke can recoup from ratepayers for pursuing small modular nuclear reactors. The company believes such “advanced nuclear” is crucial to meeting its climate goals while skeptics say the technology is too untested and expensive.
Though the bill would allow upfront multi-year ratemaking for up to three years — a proposal that fell to bipartisan opposition in the House two years ago — it also includes some ratepayer protections such as decoupling the utility profit utility motive from the quantity of energy it sells. Still, the sustainable energy association said in its statement, the legislation lacks “reasonable guardrails to prevent utility over-earning at customer expense.”
In addition to these “problematic provisions,” the bill amends a wide-ranging 2017 energy law that Szoka also wrote, refining the terms of a Duke program that allows large customers to buy green energy and one letting residential customers purchase shares of a community solar farm.
It mandates the building of another 4.6 gigawatts of solar capacity — enough to power over a half million homes — over the next six years, increasing the state’s supply of the resource by about two-thirds. Duke would own over half of it.
And it would change the way rooftop solar owners sell their excess energy back to Duke, implementing a “solar choice tariff” that Szoka’s office said mirrors an agreement Duke made with several clean energy groups in South Carolina last year.
Guarded optimism?
Through a spokesperson, Duke said it was still reviewing the bill.
Despite his group’s clear disapproval, the sustainable energy association’s director, Ward Lenz, called the proposal “an important starting point as we continue to work toward an affordable, cleaner energy future for all North Carolinians.”
For his part, Szoka says he’s “guardedly optimistic,” about his bill’s prospects, despite kinks that may need working out.
But he’s also well aware that even if he can get the bill passed in the GOP-controlled General Assembly, he still must get approval from Cooper, a Democrat who has made the clean energy transition a priority.
Noting the gap between his bill’s 61% reductions and Cooper’s 70% target, Szoka said, “Does that mean it’s an automatic veto? I don’t know.”
The governor’s office didn’t reply to a request Tuesday afternoon for a comment about the legislation. But in a recent clean energy-focused podcast, Cooper offered a few clues, anticipating “tough negotiations,” in the legislature, where, “there seems to be a lot of concern about wanting more and more natural gas when the clean energy economy is pushing us away from that.”
“I want to be able to sign legislation,” Cooper added later, “but I’m not going to sign it if it doesn’t do what we need to do to get us toward clean energy in our state.”