A House panel on Wednesday narrowly approved an effort to scale back and ultimately repeal a 2007 law requiring North Carolina electric utilities to generate a percentage of their power through alternative sources and locate energy savings.
The House commerce subcommittee voted 11-10 in favor of the bill that would cap renewable energy and efficiency requirements by power companies, electric cooperatives, and city-owned electric utilities at roughly half the level the law ultimately demands.
The legislation also would end the requirements at the end of 2018. The current law doesn't provide an end date to the initiative, which was the first of its kind approved by a Southeastern state. It's been praised by environmental groups and the alternative energy industry for generating jobs in emerging solar, wind and animal waste energy sectors.
The close vote, which included two key Republicans voting against the measure following a stream of public speakers opposing the measure, suggests a bumpy ride for legislation that still must go through three more committees before getting to the House floor.
Rep. Mike Hager, R-Rutherford, one of the primary sponsors of the bill, said the change would end what are essentially government subsidies for renewable energy industries that are ultimately paid for by the public and the state.
"I see this as an entitlement program that is beginning to get its roots into our state," Hager said. "I don't know how long it takes to grow an industry but we've been in this six years. How much longer do we need to go?
Utilities can pass along part of the cost of complying with the law to home and industrial customers on their power bills — up to $12 a year for residential customers and increasing to $34 a year beginning in 2015. The maximum is $150 per year for commercial customers and $1,000 for manufacturing plants.
The 2007 law "was one of those horrible stakeholder bills that had big power on one side and big green energy on the other, and the rate payer was left in the cold," said Dallas Woodhouse, director of the North Carolina chapter of Americans for Prosperity, which supports the bill. "The one and sole goal of the General Assembly should be to guarantee an ample supply of electricity to the consumer at the very lowest cost possible."
Rep. Ruth Samuelson, R-Mecklenburg, who voted against the bill, said the bill still allows utilities to recover their costs for meeting the scaled back standards.
"There's no guarantee that passing this bill is going to lower your rates," Samuelson said.
The law currently requires a big electric utility such as Duke Energy Corp. to generate an amount equal to 3 percent of its retail sales from renewable energy sources or efficiency efforts, with the percentage increasing over time to 6 percent in 2015 and 12.5 percent in 2021 and following years. The bill caps the standard at 6 percent.
The law also requires that certain portions of the renewable energy production originate from solar farms and swine and poultry waste, where its methane is converted into energy. The bill would do away with the solar requirement because Hager said the industry already has become established in North Carolina and doesn't need assistance.
Business leaders and advocates for the alternative energy field warned legislators that changing the rules in midstream would hurt the industry. A study by Research Triangle International and an outside consultant for the N.C. Sustainable Energy Association said the state's clean energy and energy efficiency programs have helped spur $1.4 billion in project investments and created or retained more than 21,000 jobs over the past five years. A switch to clean energy will save ratepayers $173 million by 2026, said Ross Loomis with RTI.
With North Carolina fifth in the nation in installed solar capacity, doing away with these and other requirements would damage the industry by discouraging new outside investment, said John Morrison, chief operating officer of Strata Solar of Chapel Hill. He said his company installed 10 solar farms last year and could reach as many as 40 this year.
"If this bill were to pass, it would send a very strong message to the investment community that North Carolina is no longer open for business for solar energy," Morrison said.
A Duke Energy representative didn't address the committee, but company spokesman Jeff Brooks said later the utility didn't seek changes to the standard but would want to work with legislators to find consensus if the bill were to go forward.