House Bill 951 (HB951), Energy Solutions for North Carolina, was the major energy legislation that passed during North Carolina's 2021 legislative session and lays out a number of policy changes to how North Carolina regulates energy. Following the enactment of HB951 on Oct. 13, 2021, the NC Utilities Commission (NCUC) began opening dockets to implement the legislation. Follow along as NCSEA works to successfully implement this law, piece by piece, before the NCUC and ensure a beneficial outcome for North Carolina and its energy customers.
On October 13, 2021, shortly after HB951 was enacted into law, the NCUC opened a docket to adopt rules to implement performance-based regulation (PBR).
PBR is a form of utility regulation that seeks to align the utility’s performance with customer rates. Performance-based regulation and performance-based ratemaking are often used interchangeably, although it’s important to understand that performance-based regulation addresses more than ratemaking: it also addresses policy goals, customer needs, and performance metrics. Part II of the newly minted HB951 authorizes PBR and directs the NCUC to determine how the regulatory structure will be framed in North Carolina, provided it seeks input from stakeholders and adheres to a handful of parameters outlined in the new law and existing statutes.
In its order opening the PBR rulemaking proceeding, the Commission requested comments and proposed rules addressing the following issues:
- Procedures and requirements for a utility’s request for approval of a PBR application’
- Criteria for evaluation of a utility’s PBR application;
- Parameters for a technical conference process to examine a utility’s projected expenditures ahead of a PBR application; and
- The process by which a utility may address rejection of its PBR application.
On November 9, 2021 NCSEA filed its initial comments on the PBR rulemaking in Docket E-100 Sub 178. The 34-page filing outlines proposed rules for the NCUC to adopt in its construction of the PBR framework through which the electric utility may submit its rate plans moving forward. The PBR policies proposed by NCSEA include a focus on transparency and equity and offer a comprehensive approach to PBR proceedings that balance the interests of the utility, all stakeholders, and customers. Specifically, NCSEA’s recommends that the Commission:
- Adopt rules that require that the Commission have approved a Carbon Plan, which is required by December 31, 2022, prior to the utility filing a PBR application;
- Defer performance incentive mechanism (PIM) and policy goal decisions to a stand-alone Policy Consideration Docket which would occur before a utility files a PBR application;
- Approve the utility’s capital spending plan in the context of the Carbon Plan and before the utility files a PBR application;
- Adequately evaluate utility performance under a PBR plan via transparency requirements in the PBR application, tracking, and reporting; and
- Make clear that upon expiration of a PBR plan period, customer rates will be based on rates set in accordance with existing law during the PBR application proceeding.
Other parties to the proceeding include:
- Carolina Industrial Group for Fair Utility Rates (CIGFUR);
- Carolina Utility Customers Association (CUCA);
- Nucor Steel-Hertford, a steel recycling facility that produces steel plates;
- North Carolina Retail Merchants Association (NCRMA);
- North Carolina Electric Membership Corporation (NCEMC);
- North Carolina Attorney General’s Office (AGO);
- Fayetteville Public Works Commission;
- Carolina Clean Energy Business Alliance (CCEBA);
- Tech Customers, which includes Apple, Inc., Meta Platforms, Inc., and Google LLC;
- City of Charlotte;
- Duke Energy Progress, LLC (DEP) and Duke Energy Carolinas, LLC (DEC);
- Dominion Energy North Carolina; and
- North Carolina Justice Center (NCJC), North Carolina Housing Coalition (NCHC), Sierra Club and Southern Alliance for Clean Energy (SACE).
Comments and proposed policies made by other parties vary and represent diverse perspectives of industrial electricity customers, low- and moderate-income customers, local governments, municipal electricity providers, clean energy industry groups, and more.
Ultimately, the way PBR is constructed and implemented in North Carolina will affect utility rates and performance for years to come. Next, various parties will file reply comments in the docket on December 7, 2021. HB951 requires the Commission adopt PBR rules “no later than 120 days” after enactment of the legislation, setting a February 10th deadline for the Commission to issue an order adopting rules governing performance-based regulation for electric utilities.