In North Carolina, electric and other utility rates are set by a team of regulators that answers to both the public and utilities.
That group is the N.C. Utilities Commission (NCUC). By law, the NCUC must ensure that rates are fair and appropriate for consumers and utility companies.
There are two main components that the NCUC evaluates when balancing energy planning and rates: (1) consumers should pay the least cost; and (2) utilities should ensure that rates cover capital investments and allow for a fair return for shareholders.
Utilities and stakeholders like the N.C. Sierra Club regularly engage in decisions before the NCUC by intervening in dockets (like court cases) on issues ranging from proposed rate increases to solar energy and electric vehicle programs.
How is the N.C. Utility Commission structured?
Public utility commissions (PUCs) are somewhat obscure but very important government bodies that regulate essential utility services like energy, water, and telecommunications services. These commissions' members, structur, and authority vary from state to state. Commissions usually have between three and seven commissioners, with terms ranging from four to six years.
Commissioners generally come from a diversity of backgrounds including former legislators, attorneys, politicians, commission staff, and energy experts. Utility commissioners – including those in North Carolina – are often appointed by the governor and approved by the state Senate. In 11 states, commissioners are elected by the public. In South Carolina and Virginia, commissioners are selected by the legislature.
The N.C. Utilities Commission has seven members who serve six-year terms. Currently, Gov. Roy Cooper’s appointees to the NCUC hold a majority. In addition to appointing each member, the governor designates a chairman, who holds a four-year term and is the chief executive and administrative officer of the NCUC.
The commissioners work full time in their roles and are well compensated for their service. This is different from some other states. For example, in Vermont, only the chair is a full-time position; the other two commissioners serve part-time.
When determining rates and making other decisions, the NCUC holds hearings and accepts written comments from the public and stakeholders such as utilities and groups including the N.C. Sierra Club. The commission also engages with the courts and government agencies when decisions may affect North Carolina ratepayers. For example, the NCUC has weighed in with the Federal Energy Regulatory Commission (FERC) on proposed interstate gas pipelines.
Cutting carbon emissions, setting electric rates
Recently, the N.C. legislature passed major energy legislation – HB 951, “Energy Solutions for North Carolina” – that gives the NCUC new and revised responsibilities. These include:
- Determining a plan to achieve a 70 percent reduction from 2005 levels in CO2 emissions from power plants by 2030 (basically codifying the goal of Governor Cooper’s N.C. Clean Energy Plan). The plan is due at the end of 2022.
- Reviewing proposed multi-year rate plans from Duke Energy, with the potential for yearly rate hikes of up to 4 percent.
- Establishing an on-bill repayment program for energy efficiency improvements.
- Reviewing issues such as standby service charges, net metering rates, and renewable energy credit purchase programs.
We're happy that the new law - signed last month by Governor Cooper - sets out a carbon reduction standard, the first in the Southeastern United States. Other states also have carbon policies that are being overseen by the state utility commissions. For example, the Oregon Public Utility Commission is focused on prioritizing proceedings to advance fully decarbonizing the utility sector. And earlier this year, Massachusetts enacted a next generation roadmap for state climate policy with a requirement that each five year greenhouse gas limit be accompanied by a roadmap. The law directs the Massachusetts Department of Public Utilities (DPU), in its decisions, “with respect to itself and the utilities it regulates [to] prioritize safety, security, reliability of service, affordability, equity and reductions in greenhouse gas emissions.”
On the other hand, North Carolina’s new energy law lacks provisions to protect low-income customers from being disproportionately burdened with potential increased energy costs. Multi-year ratemaking and the ownership model of Duke Energy (i.e., the ability to own any technology outside of solar and solar paired with storage), sets up a potentially expensive model for reducing carbon emissions.
We'll stay on the case. The N.C. Sierra Club will participate as needed in NCUC proceedings to ensure that the carbon emissions reduction plan prioritizes clean energy, and that low-income customers do not shoulder a disproportionately high burden for the cost of energy. We encourage you to keep an eye out for action alerts and other ways you can support this work by filling out the subscription box on this page to sign up for our enewsletter, Footnotes Online.
Want to know even more about the N.C. Utilities Commission? Check out the webinar series from N.C. Sierra Club and CleanAIRE NC: Pulling Back the Curtain: Who’s Charting Our Energy Future?
This six-part series has two episodes to go, on Nov. 23 and Dec. 14, at noon or 5:30 p.m. (choose your time). Visit this page to register and to watch previous episodes at your convenience.