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Freeze North Carolina green-energy law, a GOP leader says

The N.C. House’s new Republican majority whip believes he has the votes to stop North Carolina’s green-energy mandate – the first in the Southeast when it was enacted in 2007 – in its tracks.

The law says electric utilities have to derive rising amounts of their retail sales from solar, wind or biomass sources, beginning at 3 percent this year and ending at 12.5 percent by 2021. Separate, smaller targets for solar energy took effect in 2010.

Senate Bill 3, as the law is commonly known, is widely credited with creating markets for renewable energy – especially solar power – that didn’t exist in North Carolina before it was adopted. Advocates say it has produced thousands of jobs despite a slumping economy.

But Rep. Mike Hager of Rutherford County views the mandate as the government unfairly “picking winners and losers” in the marketplace. As chairman of the Public Utilities committee, Hager would like to freeze it at the current 3 percent level.

“Under our scenario, you would never go to 12.5 percent,” he said.

The law has been a target of conservatives since it was adopted. A House bill to repeal it was introduced in 2011 but got no traction.

Hager, a former Duke Energy engineer beginning his second term in the House, argues the mandate unfairly forces utility customers to subsidize renewable energy, which costs more than traditional forms. He says that runs against state policy ordering utilities to provide “least cost” electricity.

“For me, that’s nothing more than a pass-through tax using ratepayers to help a sector be successful,” he said. “If we’re going to do that, why not help homebuilders, a sector that’s really been hurt?”

The green-energy law sets limits on how much of their compliance costs utilities may pass to customers. But so far, costs haven’t come close to reaching those limits.

Duke Energy Carolinas, which serves Charlotte, charges residential customers 22 cents a month to comply with the law. Progress Energy Carolinas, serving the state’s eastern half and Asheville, charges 41 cents monthly. Both are far below the state’s maximum allowable charge of $12 a year.

As prices for components have dropped, North Carolina has seen an accelerating surge of solar farms in recent years. By mid-2011, Duke Energy Carolinas reported it had fulfilled its solar requirements under the green-energy law through 2018.

State tax credits for solar-energy projects are expected to be scrutinized in 2013 as the Republican-dominated N.C. legislature takes up tax reform.

Duke Energy North Carolina President Brett Carter, in a recent interview, said Duke is “open to conversations” about Senate Bill 3.

“If the incentives for solar go away, it’s likely because solar has become competitive on its own merit and, therefore, can compete against other energy sources,” he said.

Other forms of green energy haven’t been so successful. North Carolina still has no commercial wind farms, despite its powerful offshore winds. The N.C. Utilities Commission agreed in December to delay separate compliance deadlines for utilities to get energy from swine and poultry wastes.

Still, the N.C. Sustainable Energy Association says that because of the state mandate, the green-energy industry – including jobs in energy efficiency – is among the few growing in a weak economy.

The association’s 2012 jobs census found the equivalent of 15,200 full-time employees working for 1,100 energy-related companies that pull in $3.7 billion a year.

“At a time when everyone has their attention on jobs, this industry has, essentially, created a lot of jobs,” said Betsy McCorkle, the association’s government affairs director.

Despite Hager’s confidence, McCorkle said she doesn’t sense a lot of momentum among legislators to repeal the mandate.

“Based on my conversations, most of them are seeing the jobs and the investments happening around their districts,” she said. “Most see the benefits of this highly successful energy initiative.”