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Promote Renewable Energy/Baseload Generation
Our Position: monitor
Bill Number: S3
Sponsor: Sen.Charlie Albertson (D-Duplin)
Legislative Session: 2007
S3 creates a Renewable Portfolio Standard (RPS), making North Carolina the first state in the Southeast and the 25th in the nation to enact an RPS. This bill calls for the state's public utilities to achieve 12.5% of electrical generation through renewable sources and energy efficiency by 2021. The bill also allows for up to 40% of the standard to be met through efficiency; a specific solar requirement, equal to about 300 megawatts; simplified net metering and interconnection rules that better accommodate private renewable energy generation; and extended state tax credits for investments in renewable energy technologies to nonprofit entities such as churches.
The bill also includes provisions put in at the behest of the power companies that dramatically change power plant financing regulation so that consumers will now share in the upfront risks of new baseload investments.
Status
Once the bill emerged from the stakeholder process, it swiftly passed the Senate. Mounting pressure from environmental groups, though, slowed the bill down in the House and, ultimately, the bill was improved there.
Presented to the Governor on 8/2/07.
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Background
The General Assembly has considered RPS legislation in several previous sessions, but this session began with a clear call to arms and determination of the bills sponsors in both chambers to pass an RPS into law. The House version secured an impressive 55 co-sponsors and differed from the Senate bill by setting a higher standard of 20%.
With rapidly accelerating population growth and an ever-increasing demand for power, North Carolina found itself at an energy crossroads. An abundance of energy potential in the agricultural sector, including biomass and animal waste, as well as substantial solar and wind resources made an RPS a favorable change in policy. The state also has enormous potential to reduce energy consumption through regulatory changes that would spur investments in efficiency. That the time had come to overhaul the state’s energy policy was obvious but, unfortunately, improvements for a more clean, reliable and affordable energy future came at a price.
As is sometimes customary for complex legislation, S3 entered into a process, independent of committee, where stakeholders debated the merits of the bill and produced a refined piece of legislation. Below is our assessment:
Sierra Club is excited that North Carolina has joined the more than 20 other states that have adopted standards for alternative energy. The bill is particularly strong in that it promotes the development of the solar energy industry and accelerates investment in energy efficiency.
This bill proves that North Carolina can commit to clean energy. The renewable energy standard portion of this bill demonstrates that large scale renewable energy is possible and will be a sound investment, especially in terms of the many thousands of jobs to be created within the renewable industry.
Unfortunately, the bill includes some provisions that could undermine the development of clean energy in favor of costly new coal and nuclear.
Some significant changes to current law contained in the bill will force consumers to finance new coal or nuclear power while power plants are under construction -- and before those plants are useful to customers and are delivering power.
The federal 2005 Energy Bill already provides $13 billion in additional incentives to the nuclear industry. It is indicative of the terrible economics of nuclear that the industry still looks to ratepayers to bear an even greater share of the risky investment in new plants.
Most controversial is a provision that reverses a decade-old policy of not allowing utilities to recover costs for new nuclear facilities until they are producing energy. The ban against “construction work in progress” was put into place after consumers bore the costs of abandoned plants in the 1970’s and 1980’s. The incentive provided by CWIP for continuing the prevailing orthodoxy is a powerful one. A forward looking energy policy for North Carolina must include meaningful reductions in global warming emissions, and the change in policy to favor coal confounds that notion.
Another key area of controversy is a provision in the bill that directs that a certain portion of energy come from swine waste. Sierra Club advocated that those funds be linked to use of waste management systems that generate electricity while also reducing ammonia and odor and protecting water quality and public health.
Sierra Club applauds some of the changes that appeared in the final version of the bill including: improved air quality control measures, a rate reform study, a requirment that consumers share in the benefits of reduced risk enjoyed by the utility companies, and a codified responsibility on the part of the Utilities Commission to evaluate the cost-effectiveness of other sources, outside of coal and nuclear, during proceedings for new baseload plants.
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