How Republicans and Democrats reached a deal on NC energy reform
A bipartisan bill to overhaul North Carolina's electric power system to deal with climate change passed both chambers of the state legislature this week, and now awaits the governor's signature. It took a lot of haggling between Republicans and Democrats to get it there. WFAE climate reporter David Boraks talked with WFAE Weekend Edition host Nick de la Canal about the final deal and what it means.
De la Canal: Some in Raleigh are calling this bill "historic." Why is it such a big deal ?
Boraks: A couple of reasons. The bill changes the way electric rates are set. Duke (Energy) and other utilities now will be able to seek rate increases over multiple years, instead of year by year. And it allows regulators to set up new financial incentives, where utilities would get paid for meeting certain goals.
More importantly from a climate change perspective, it puts the state on course to meet Gov. Roy Cooper's goals for reducing carbon emissions from electric generating plants. If you remember in 2019, the governor's Clean Energy Plan set a goal of cutting those emissions by 70% from 2005 levels by 2030 and reaching net-zero emissions by 2050. To get there, utilities will have to replace coal and gas-fired power plants with renewable energy. This could speed that up.
De la Canal: We hear about greenhouse gas emissions all the time? Why do they matter?
Boraks: Energy production is the largest source of carbon emissions that contribute to global warming in North Carolina. This is all part of a worldwide push to reduce the human causes of climate change. Remember the Paris Climate Agreement of 2015? The goal is to keep global average temperatures from rising more than a couple of degrees Celsius. Science increasingly confirms that global warming factors into deadly heat waves and intensifies the effects of hurricanes and other big storms, such as rainfall and flooding. It's bringing sea level rise and higher average temperatures, which threaten the way we live.
De la Canal: So back to our North Carolina bill: The House passed a version in July. This replaces it. Why did they start over?
Boraks: First, there were lots of complaints from Democrats and environmental groups who said they were shut out of the process when the first bill was written. Business and consumer groups worried it could lead to big rate increases, and could weaken the regulatory powers of the North Carolina Utilities Commission. Environmental groups said it didn't go far enough to reduce carbon emissions from fossil-fuel energy plants. The original bill would have required Duke Energy to retire some — but not all — of its coal-fired units. And they would have been replaced not with solar or wind, but with gas-fired plants and battery storage.
I should note, the new bill has prompted some of the same concerns, especially about higher rates. But it sailed through approvals this week.
De la Canal: So, with all the horse trading on the Senate version of the bill, who got what?
Boraks: Great question. This was a deal between Republican and Democratic legislative leaders and Cooper, who's also a Democrat.
The governor got his climate goals written into law. And it creates a process to achieve them, by requiring the utilities commission to write a carbon-reduction plan by the end of 2022. So, instead of weakening their power, it's basically all on them now.
Duke Energy gets something it's been after for years — the right to seek multi-year rate plans. And the bill allows what's called "performance based regulation." Utilities could get bonuses for meeting performance targets set by regulators.
Business and consumer groups worry these changes still could lead to big price increases. They say the bill has no limit and lacks protection for low-income ratepayers
Republicans skeptical of solar and wind energy got some strong language in here, too. It says when regulators decide to close coal-fired power plants, they have to use the cheapest and most reliable method. That leaves the door open for Duke (Energy) to expand its natural gas-fired plants. Although they're cleaner-burning than coal, they're still fossil fuel.
And the bill also gives regulators leeway to push back deadlines in Cooper's Clean Energy Plan.
De la Canal: So, what if this doesn't meet the governor's goals?
Boraks: North Carolina still has one other avenue of regulation. The compromise deletes a section in the original bill that would have banned Cooper's executive branch from considering other greenhouse gas rules. That means environmental regulators can go forward with rulemaking to set limits on carbon emissions and have the state join the Regional Greenhouse Gas Initiative. That's a group of 11 states from Maine to Virginia that operates the nation's first carbon marketplace. Companies that exceed carbon limits have to pay a fee for polluting, and those below the limits are rewarded.
Environmental groups hope putting a price on carbon will do the trick.
De la Canal: Thank you, David
Boraks: You're welcome.
De la Canal: That's WFAE climate reporter David Boraks, with a recap of this week's debate over energy reforms in North Carolina.
Climate coverage on WFAE is supported by the 1earth and Salamander Funds.