North Carolina legislature removes multi-year rate plans from new bill

The North Carolina legislature this week dropped provisions in a bill that would have allowed electric utility companies to establish multi-year rate plans, but included the ability for companies to recover storm-related costs.

Senate Bill 559 would have permitted the state Utilities Commission to establish electricity rates for three years for Duke Energy, the primary utility provider for North Carolina. Duke Energy normally increases electricity rates on a year-by-year basis, but multi-year plans would have allowed the utility company to better plan for infrastructure projects. Instead, the revised bill only keeps language that would allow utilities to issue bonds to finance storm recovery.

“This is a big win for North Carolina’s customers because it is a cost-saving mechanism,” said Paige Layne, spokesperson for Duke Energy, about the bonds. “We’re very pleased lawmakers from both sides of the aisle recognized that and actually passed it through and sent it to the governor’s desk.”

The bonds will act as a storm securitization tool that will minimize the costs for repairs and restorations in the wake of storms. This mechanism should save customers anywhere from 15 to 20 percent on storm expenses, Layne said.
As for multi-year rate plans, they are not completely out of the discussion. Gov. Roy Cooper’s clean energy plan contemplates the use of multi-year plans, return on equity banding, and other new rate-making tools that could enable utilities to modernize the grid and deliver on more renewable energy.

According to the Raleigh News and Observer the proposal for changing how rates can be set will come back to the legislature in upcoming months.

North Carolina needs to reassess how electricity rates are established, according to both supporters and opponents.
Duke Energy will participate next year in a diverse stakeholder engagement process that’s related to the governor’s recently released energy plan, Layne said.

The newly revised and passed SB 559 still needs the governor’s signature.