N.C. renewable energy program would end under state House bill

The News & Observer (Raleigh, N.C.)March 14, 2013 

— House Republicans on Wednesday introduced legislation that would roll back a sweeping energy program that has paid financial incentives to North Carolina homeowners for buying efficient appliances, solar panels and home energy audits.

The bill, which had been anticipated for weeks, would end the state’s requirement that power companies use renewable energy and promote energy conservation programs. The legislation would stymie future development of renewables by not allowing power companies to charge customers for any extra cost associated with these resources.

The bill’s leading sponsor, Republican Rep. Mike Hager, is a former Duke Energy engineer who has repeatedly said that energy sources for generating electricity should be chosen on a least-cost basis rather than being selected by government policy. The leading nonrenewable options are natural gas, coal and nuclear.

“I don’t think you should be subsidizing businesses into longevity,” Hager said. “I’ve had one or two tell me they’ll never get off subsidies. I’ll pay for them, my children will pay for them and my grandchildren will pay for them.”

Hager said most renewables are not competitive without government support. Solar panels, for example, benefit from state tax credits and federal tax credit that reduce by more than half the cost of materials and installation.

In 2007, North Carolina became the first Southern state to require electric utilities to use renewable resources as a matter of policy. The legislation has created a fledgling industry that renewables advocates say is gaining momentum. The policy spawned a surge of large solar farms, including a planned 100-megawatt solar farm in Duplin County that would be one of the biggest in the nation. It’s not clear how many solar farms can be developed without a policy that requires the projects.

“The real impact is going to be the loss of jobs, business and investment opportunities,” said Betsy McCorkle, director of government relations for the N.C. Sustainable Energy Association, the state renewables trade group in Raleigh.

Repealing the policy may encounter resistance from Hager’s own party. Gov. Pat McCrory told reporters this week that he is discussing the future of the program with his energy policy advisers and the secretary of the Department of Environment and Natural Resources. “Do we expand it, and if so how long do we expand it?” McCrory said after an event Monday, according to a video taken by WRAL-TV. “I think it’s very important for us to send a message to existing and new potential investors exactly what our long-term plan is.”

The effort to undo that renewables requirement started almost immediately after the law passed.

The conservative John Locke Foundation in Raleigh built the case by funding a study that argued that forcing power companies to use alternative energy harms the economy. Those arguments gained traction after the recession drove up North Carolina’s jobless rate to one of the highest in the nation.

“It’s a cost-benefit problem,” said Jon Sanders, the foundation’s director of regulatory studies. “The cost of forcing investments in renewables, and forcing utilities to choose certain arbitrary percentages, outweighs the benefits.”

As the law now stands, Progress Energy and Duke Energy will have to offset 12.5 percent of retail sales with renewables and efficiency programs in 2021 and thereafter. Under efficiency programs, the companies pay customers financial incentives – up to $500 a shot – for buying energy-efficient appliances and adopting other conservation measures.

Hager’s bill freezes the requirement at 3 percent of electricity sales. It would allow Charlotte-based Duke and its subsidiary, Raleigh-based Progress, to continue charging customers for existing solar farms and other renewables projects already online. Some of the power contracts lock the utilities in for 20-year terms.

The 2007 law passed with the support of Progress and Duke, but it has failed to foster the development of all types of renewable resources. The state has made no headway in wind farms, which remain costly and controversial.

According to the N.C. Sustainable Energy Association, the state’s trade organization for the renewables industry, the 2007 energy law has created the equivalent of 21,162 one-year jobs in North Carolina, which Hager says is about 3,500 actual jobs.

In addition to Hager, who represents Burke and Rutherford counties, other sponsors of House Bill 298 are Marilyn Avila of Wake County, George Cleveland of Onslow County, and Jeff Collins of Franklin and Nash counties.

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