North Carolina could be the first state in the Southeast to require its power companies to generate a substantial amount of electricity from renewable sources, under a measure overwhelmingly endorsed by the Senate.
The legislation – which has been pushed for years by environmental groups – would require that solar energy, animal waste and other renewable sources make up at least 12.5 percent of Progress Energy’s and Duke Energy’s energy mix by 2021. The utilities can also meet the requirement with conservation programs that encourage customers to reduce energy use.
Currently, less than 2 percent of the state’s electricity comes from renewable sources; almost all comes from coal-burning power plants and nuclear energy.
The legislation approved Thursday next goes to the state House, where critics say they want to scrutinize the bill’s provisions that would help the utilities finance multibillion-dollar power plants. The companies lobbied for the provisions in exchange for supporting the renewable programs they had long opposed.
Two dozen states already require utilities to meet a renewable energy standard. Until recently, cheap electricity rates in North Carolina have provided little incentive for utilities to invest in alternative sources. With Progress and Duke planning new power plants to meet booming energy demand and public concern growing about global warming and other environmental issues, utility officials have eased up on their opposition of alternative energy approaches.
“Our customers want us to do this,” said John McArthur, Progress’ senior vice president and general counsel.
To meet the requirement on renewables and efficiency, the utilities will have to invest in new technologies or pay financial incentives to customers who reduce energy use. The program is predicated on compensating Progress and Duke for their investment, as well as for lost revenue from reduced electricity sales.
Those costs will be paid by utility customers through rate increases, although the Senate legislation caps the annual increases. For residential customers, the increase per household is capped at $34 a year in 2015 and thereafter.
The Senate voted 46-1 in favor of the bill Thursday. The bill requires one more Senate vote before it is sent to the House, but the final Senate vote is not expected to differ from Thursday’s lopsided tally. The law would go into effect in January, giving the utilities several years to start developing programs.
Raleigh-based Progress and Charlotte-based Duke have already proposed efficiency programs to encourage customers to curtail energy use. Duke is also developing contracts with renewable energy providers, recently receiving 70 proposals from potential bidders.
The measure includes provisions making it easier for utilities to finance the construction of power plants. Now a utility must be in financial distress to begin charging customers for a power plant during construction. Utilities have lobbied to eliminate the standard, saying that they can borrow money at lower rates if they are not in financial distress, ultimately cutting the cost consumers would pay for power plants.
Renewables advocates fear the bill will promote power plant construction.
“There are a number of us in the House that challenge the legitimacy of bringing construction work rate increases into a bill on renewable energy,” said Rep. Paul Luebke, a Democrat from Durham.
In the House, the bill must clear three committees before reaching a full chamber vote. A separate House bill was introduced, but has languished as the Senate version gained compromises and add-ons.
By John Murowski
(Raleigh) News & Observer
30 June 2007
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