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House Bill Caps Renewable Energy Mandate
Publisher's note: The author of this post is Dan Way, who is an associate editor for the Carolina Journal, John Hood Publisher.
RALEIGH Opponents of the state's preferential treatment of renewable energy sources said North Carolina ratepayers should be relieved by the passage of House Bill 760 by a 77-32 vote on Wednesday after numerous delays, repeated compromises, and contentious debate.
"The winners in this issue are the consumers of North Carolina," said Rep. Mike Hager, R-Rutherford, who has been pushing for years to wean the renewable industry, particularly solar power, from state subsidies and mandates forcing power companies to buy increasing levels of costlier renewable power.
"The incumbent utilities will not have to buy energy unless they need it. They will not have to pay a higher cost for energy unless they need it. So, therefore, at the end of the day all our power bills will be lower because of that," Hager said.
The measure incorporated parts of House Bill 681, the Ratepayers Protection Act, which in late April split the GOP and failed in the House Public Utilities Committee.
The most contentious of several amendments to the legislation — which incorporated a host of regulatory reforms — came from Hager and Rep. Charles Jeter, R-Mecklenburg. They introduced an amendment last week capping the percentage of renewables that electric utilities must buy at 6 percent in 2016, rather than allowing it to rise to 10 percent by 2018, and 12.5 percent by 2021.
As a compromise with solar industry representatives, Hager and Jeter removed a provision that would have ended a tax break for solar projects, exempting them from 80 percent of their property tax bills.
Solar lobbyist Betsy McCorkle emailed lawmakers earlier this week, claiming that ending the property tax break would spell financial doom for solar projects and, as a result, county coffers when solar operators entered foreclosure.
During Wednesday's floor debate, Rep. Jimmy Dixon, R-Duplin, countered that the property tax break was enticing owners of prime farmland to take that acreage out of production and instead use it to host solar farms. When the renewable mandate became law in 2007, advocates said only marginal land would be used for solar farms, but that has not been the case, Dixon said. He added that rural county finances have been harmed by the tax abatement.
Even so, the tax abatement remained in the version of the bill that was sent to the Senate.
The amendment also redefined a "qualifying facility" for which the state must offer a standard contract for purchase of renewable energy, Jeter said, better aligning the definition to federal standards. Now, any facility generating 5 megawatts of power, which equals 5,000 kilowatts, is entitled to the contracts. The amendment keeps that 5 mw level for swine and poultry renewable sources, but lowers it to 100 kw for solar.
In effect, the mandate to buy power would apply mostly small-scale generators rather than large operators.
The amendment also dealt with a complex, technical aspect called "avoided cost."
"Right now the utility companies have to buy what the solar companies generate regardless of whether there's a need for it or not," even as electricity use has fallen in the state since 2007, said Rep. Jeff Collins, R-Nash.
He said a Department of Environment and Natural Resources study determined "Duke [Energy] has to buy power from these solar companies and sell it at reduced or negative prices. Do you know what negative prices are? That means you've got to pay somebody to take it off your hands. That's what this amendment is striking at. It can't help but help our ratepayers."
Rep. Paul Luebke, D-Durham, instead sided with the industry. "The effect of it is to harm renewable energy resources [which are] very, very important for our state," Luebke said, adding later, "The solar industry does not really appreciate these amendments." Rep. Rick Glazier, D-Cumberland, said the amendment would cause "real long-term damage to renewables in this state."
The Hager-Jeter amendment passed 93-16.
Rep. Pricey Harrison, D-Guilford, unsuccessfully offered an amendment restoring the mandate and allowing its level to continue rising.
She said renewable energy is responsible for "about 25,000 jobs, billions of dollars of investments in every single one of our counties. It's been responsible for home-grown jobs that don't get outsourced," and costs only pennies on the dollar on consumer power bills.
Collins countered by renewable subsidies and mandates drain tax revenues. "In just three years, 2010 through 2012, in North Carolina we gave out $281 million in tax credits to renewable energy, primarily solar farms in North Carolina, and yet it creates so few jobs that we've had a new term entered into our category, something called job years," Collins said.
A job year is measurement developed by the Obama administration to sell its stimulus plan to the public. Counting each year a job will be in place as a separate "job" vastly overstates the number of jobs a project would create.
"There is no way in the world we could have spent $281 million on virtually anything else in North Carolina and not come up with far more jobs than we have in this particular field," Collins said.
Hager disputed Harrison's contention that ratepayers were hit with only a small price on their power bills to subsidize renewables. He said between $1.2 billion and $1.3 billion in tax credits have been issued overall.
"This measure here is all about protecting our ratepayers from a trajectory of bad policy," said Rep. Chris Millis, R-Pender. He said solar energy in particular is costly because of its unreliable nature of dependency on sunshine.
"If you like to admit it or not, there is a shadow grid being built by the ratepayers of this state that has to be able to back up the intermittency of this religion of renewable energy," Millis said.
Harrison's amendment failed 40-69.
The bill also creates a 12-member legislative committee to "study the long term energy needs of the state."
Donald Bryson, state director of Americans for Prosperity, called the vote "pro-consumer," and said it "put a dent in state government's culture of corporate favoritism. Lawmakers put their constituents' 'kitchen table' concerns first by stopping a monthly energy fee on residential customers from tripling under the Renewable Portfolio Standard"
Bryson said the compromise measure provides relief to families "who pay their utility bills and work hard to grow the economy without taxpayer support or government favors."
"Bureaucratic control of our economy's engine failed to deliver a net jobs or environmental benefit to the state, but it did slow commercial growth, reduce wages and kill tens of thousands of jobs," he said.
Go Back
Backers cite higher electricity rates, lost tax revenue from renewables
Backers of House Bill 760 said owners of solar farms, like this one in Wayne County, have received more than $1 billion in tax credits and other subsidies.
"The winners in this issue are the consumers of North Carolina," said Rep. Mike Hager, R-Rutherford, who has been pushing for years to wean the renewable industry, particularly solar power, from state subsidies and mandates forcing power companies to buy increasing levels of costlier renewable power.
"The incumbent utilities will not have to buy energy unless they need it. They will not have to pay a higher cost for energy unless they need it. So, therefore, at the end of the day all our power bills will be lower because of that," Hager said.
The measure incorporated parts of House Bill 681, the Ratepayers Protection Act, which in late April split the GOP and failed in the House Public Utilities Committee.
The most contentious of several amendments to the legislation — which incorporated a host of regulatory reforms — came from Hager and Rep. Charles Jeter, R-Mecklenburg. They introduced an amendment last week capping the percentage of renewables that electric utilities must buy at 6 percent in 2016, rather than allowing it to rise to 10 percent by 2018, and 12.5 percent by 2021.
As a compromise with solar industry representatives, Hager and Jeter removed a provision that would have ended a tax break for solar projects, exempting them from 80 percent of their property tax bills.
Solar lobbyist Betsy McCorkle emailed lawmakers earlier this week, claiming that ending the property tax break would spell financial doom for solar projects and, as a result, county coffers when solar operators entered foreclosure.
During Wednesday's floor debate, Rep. Jimmy Dixon, R-Duplin, countered that the property tax break was enticing owners of prime farmland to take that acreage out of production and instead use it to host solar farms. When the renewable mandate became law in 2007, advocates said only marginal land would be used for solar farms, but that has not been the case, Dixon said. He added that rural county finances have been harmed by the tax abatement.
Even so, the tax abatement remained in the version of the bill that was sent to the Senate.
The amendment also redefined a "qualifying facility" for which the state must offer a standard contract for purchase of renewable energy, Jeter said, better aligning the definition to federal standards. Now, any facility generating 5 megawatts of power, which equals 5,000 kilowatts, is entitled to the contracts. The amendment keeps that 5 mw level for swine and poultry renewable sources, but lowers it to 100 kw for solar.
In effect, the mandate to buy power would apply mostly small-scale generators rather than large operators.
The amendment also dealt with a complex, technical aspect called "avoided cost."
"Right now the utility companies have to buy what the solar companies generate regardless of whether there's a need for it or not," even as electricity use has fallen in the state since 2007, said Rep. Jeff Collins, R-Nash.
He said a Department of Environment and Natural Resources study determined "Duke [Energy] has to buy power from these solar companies and sell it at reduced or negative prices. Do you know what negative prices are? That means you've got to pay somebody to take it off your hands. That's what this amendment is striking at. It can't help but help our ratepayers."
Rep. Paul Luebke, D-Durham, instead sided with the industry. "The effect of it is to harm renewable energy resources [which are] very, very important for our state," Luebke said, adding later, "The solar industry does not really appreciate these amendments." Rep. Rick Glazier, D-Cumberland, said the amendment would cause "real long-term damage to renewables in this state."
The Hager-Jeter amendment passed 93-16.
Rep. Pricey Harrison, D-Guilford, unsuccessfully offered an amendment restoring the mandate and allowing its level to continue rising.
She said renewable energy is responsible for "about 25,000 jobs, billions of dollars of investments in every single one of our counties. It's been responsible for home-grown jobs that don't get outsourced," and costs only pennies on the dollar on consumer power bills.
Collins countered by renewable subsidies and mandates drain tax revenues. "In just three years, 2010 through 2012, in North Carolina we gave out $281 million in tax credits to renewable energy, primarily solar farms in North Carolina, and yet it creates so few jobs that we've had a new term entered into our category, something called job years," Collins said.
A job year is measurement developed by the Obama administration to sell its stimulus plan to the public. Counting each year a job will be in place as a separate "job" vastly overstates the number of jobs a project would create.
"There is no way in the world we could have spent $281 million on virtually anything else in North Carolina and not come up with far more jobs than we have in this particular field," Collins said.
Hager disputed Harrison's contention that ratepayers were hit with only a small price on their power bills to subsidize renewables. He said between $1.2 billion and $1.3 billion in tax credits have been issued overall.
"This measure here is all about protecting our ratepayers from a trajectory of bad policy," said Rep. Chris Millis, R-Pender. He said solar energy in particular is costly because of its unreliable nature of dependency on sunshine.
"If you like to admit it or not, there is a shadow grid being built by the ratepayers of this state that has to be able to back up the intermittency of this religion of renewable energy," Millis said.
Harrison's amendment failed 40-69.
The bill also creates a 12-member legislative committee to "study the long term energy needs of the state."
Donald Bryson, state director of Americans for Prosperity, called the vote "pro-consumer," and said it "put a dent in state government's culture of corporate favoritism. Lawmakers put their constituents' 'kitchen table' concerns first by stopping a monthly energy fee on residential customers from tripling under the Renewable Portfolio Standard"
Bryson said the compromise measure provides relief to families "who pay their utility bills and work hard to grow the economy without taxpayer support or government favors."
"Bureaucratic control of our economy's engine failed to deliver a net jobs or environmental benefit to the state, but it did slow commercial growth, reduce wages and kill tens of thousands of jobs," he said.
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