Unpacking HB951

On Oct. 13, 2021, Gov. Roy Cooper signed House Bill 951 Energy Solutions for North Carolina (HB951) into law, enacting a decade’s worth of energy policy to come. This bipartisan legislation–borne of a lengthy stakeholder process initiated in the North Carolina House of Representatives and culminating last week with the release of a compromise bill negotiated between Senate leader Phil Berger and Gov. Cooper–will alter North Carolina’s energy policy landscape in a number of significant ways. Here we summarize what was signed into law and what it means for sustainable energy in North Carolina.  

Unpacking HB951 

At merely ten pages long, HB951 packs a lot of policy into a short piece of legislation. Now effectively law, HB951 lays out the following changes and directives:  

• Carbon Reduction – HB951 requires the NC Utilities Commission (NCUC) to take "all reasonable steps" to achieve 70 percent carbon emissions reductions from 2005 levels by 2030, and achieve carbon neutrality by 2050. The NCUC is also required to make a Carbon Plan by December 2022 to meet this goal using a least-cost approach, which will be developed in concert with stakeholders and utilities and will be revisited every two years. The carbon goals can be achieved via use of technologies such as power generation, transmission and distribution, grid modernization, storage and energy efficiency measures, demand-side management, and the latest technological breakthroughs that meet the least-cost criteria. 
• Clean Energy Transition – HB951 requires securitization of 50 percent of subcritical coal plant retirements, resulting in an estimated $1 billion in un-depreciated coal to be securitized. The bill also continues the Competitive Procurement of Renewable Energy (CPRE) program into 2022, and establishes an independent power producer (IPP)/utility ownership split of 45 percent/55 percent for new solar and solar plus storage generation. It also allows for procurement of other generation sources to meet the bill's carbon reduction goals, though those will be 100 percent utility-owned. The bill also allows for some IPPs to blend and extend their existing power purchase agreement contracts with the utility for up to ten years. HB951 also includes a provision mandating the NC Department of Environmental Quality (DEQ) to develop a plan to ensure "adequate financial resources" for the decommissioning of utility-scale solar projects.  
• Regulatory Reform – HB951 reforms North Carolina's longstanding regulations for privately-owned monopoly utilities to provide electricity services by establishing performance-based regulation (PBR). This PBR provision allows for the utility to file for approval of multi-year rate plans (MYRPs) that incorporate one or more performance incentive mechanisms (PIMs) in addition to a decoupling rate-making mechanism for the residential customer class. The NCUC maintains the authority to approve or modify PIMs to make sure they encourage the utility to achieve certain policy goals such as reducing low-income energy burdens, expanding energy efficiency opportunities, etc.  
• Rulemaking – HB951 tasks the NCUC with implementing most provisions of the bill and with various rule-making responsibilities, including evaluating and modifying existing standby service charges, revising the net metering rate, establishing an on-utility-bill repayment program related to energy efficiency investments, and establishing a rider for a voluntary program that will allow industrial, commercial, and residential customers to purchase renewable energy or renewable energy credits from the electric public utility. 

Next Step: Implementation 

Like any major piece of legislation, HB951 is imperfect, and implementation of the bill will be critically important, and much of the work ahead will take place before the NC Utilities Commission. NCSEA looks forward to remaining engaged in both the legislative and regulatory arenas, working with members, partners, and fellow stakeholders, to ensure the best possible outcome for North Carolina.