July 10, 2017

Senate adopts, House rejects N.C. Solar Reform Bill With Moratorium on Wind Power Projects

A radically altered — and largely anti-renewable energy — version of a bill to reform the state’s solar regulations passed the N.C. Senate Wednesday night. But the House refused to go along, and the bill is headed to a conference committee to work out the differences.

One of the biggest differences in the bill is a four-year moratorium on new permits for wind power projects in the state, introduced by a small group of senators during deliberations in the Senate Finance Committee. But the bill also introduced other provisions weakening the market reforms proposed for renewable energy regulation and cutting back on a commitment for new solar construction.

Sen. Harry Brown (R-Onslow) championed the wind moratorium, contending that developing wind projects in eastern North Carolina could threaten the future of the Seymour Johnson Air Force Base and the Cherry Point Marine Air Base. He inserted language from a moratorium bill he had drafted earlier in the session that had failed to move forward.

Senate debate
Opponents of the amendments argued that the military had repeatedly expressed support for wind development, saying that, done properly, it did not conflict with the mission of its air divisions. WRAL-TV reports that during the Senate floor debate, Sen. Erica Smith-Ingram (D-Northampton) pointed out that the Department of Defense had approved plans for two wind projects in her district that the moratorium would block.

“[That’s] $1 billion of impact that is lost with this wind moratorium,” the television station quotes her as saying. “To have this financial impact in my district is absolutely unconscionable.”

She contended that the military had no objections to properly reviewed wind development. But supporters of the moratorium said it was not worth risking potential conflicts in the future.

The amended bill passed the Senate 33-12 in a marathon session Wednesday evening. The House voted 114-2 against concurring with the Senate version later Wednesday night.

“Somehow the solar bill became the wind bill,” one supporter lamented privately.

House conferees

Rep. John Szoka (R-Cumberland), one of the original bill’s sponsors, has said he will fight to get the original provisions in the bill restored. Szoka, co-sponsor Rep. Dean Arp (R-Union) and Rep. Dean Lewis (R-Harnett) were appointed as the House conferees.

The Senate has not yet appointed its representatives for the conference.

Duke Energy (NYSE:DUK), representatives of the solar industry, renewable energy advocates, business representatives and others worked through 10 months of often difficult negotiations to propose a bill acceptable to all sides. That bill sailed through the House June 7, passing 108-11 on its third reading.

Compromise deal

The compromise legislation called the “Competitive Energy Solutions for NC” act was intended to encourage free markets in solar and other renewables in the state.

It would largely replace the current regulatory regime for building solar in North Carolina with a competitive-bidding process that Duke and bill proponents hoped would bring some order to new solar construction. To balance the concerns of renewable energy advocates and the solar industry, it required Duke to seek construction of 2,660 megawatts worth of new renewable projects over the 45 months following passage of the bill.

After that, the bidding system was slated to continue. The N.C. Utilities Commission was mandated to set future construction goals to encourage solar and other renewables while balancing those against the goal of reliable and affordable energy in the state.

Upended legislation

There were a number of provisions for other renewable energy advocates and Duke. But the bidding system and the large mandate for new solar construction were at the heart of the compromise worked out in the House.

The Senate unexpectedly upended that compromise. A half-dozen senators, led by Brown, inserted the wind provisions, changed the bidding process so that it ends in 2021 and reduced the solar commitment to 2,200 megawatts.

Szoka said after it was clear that the amended bill would go to the Senate floor that the only hope of restoring the balance struck by the original compromise would come in the conference committee set up to work out the differences between the two chambers.

But there is not much time. The General Assembly is expected to wrap up its business by early next week at the latest.

Supporters object

All the groups involved in the original compromise have withdrawn their support for the bill following the Senate changes. But it is not clear where things go from here or whether they might support some new compromise.

Wind power was not part of the original House bill at all. The groups involved in working out the compromise decided it was not an issue they wanted to address in the legislation.

Duke spokesman Randy Wheeless says the Charlotte-based power company still supports the House version of the bill, and would like to see that adopted. Duke has no clear position on the wind moratorium, however.

"We are a little ambivalent on that," he says. "It has not been a big issue for us in North Carolina."

Duke has 20 wind farms across the country in its commercial renewables division, none of them are in North Carolina.

PURPA rules

Wheeless says Duke still sees some good things in the legislation, even as amended, but "we prefer the language in the House bill."

For Duke, the key to the legislation has always been that it significantly reduced the role of the federal Public Utility Regulatory Policy Act (PURPA) in driving solar development in North Carolina.

The federal law, adopted in 1978 to foster competition for renewable energy development, allows states to adopt their own regulations governing how that law will be enforced. North Carolina's rules are among the most favorable in the nation to renewable developers. Projects as large as five megawatts qualify for standard 15-year power-purchase contracts from utilities, for instance.

That has led to a lot of utility-scale solar construction in North Carolina, which now ranks behind only California for solar on its state power grid. But Duke has complained in recent years that the growth has been uncontrolled, threatens the reliability of power service in some areas and results in the utility and its customers being locked into long-term contracts for solar at too high a price.

Renewable losses

The solar industry has disputed those claims. But it ultimately agreed to provisions in the bill that significantly reduce the size of projects that qualify for standard contracts and cuts the mandated length of power-purchase contracts to 10 years, eliminating utility-scale solar from PURPA coverage.

In exchange, they had a say in designing a robust competitive-bidding system with a commitment to building large amount of solar in the Carolinas.

For Duke, however, the key has always been cutting back the state's PURPA market. And the Senate version of the bill leaves that intact, while weakening almost all of the concessions won by renewable advocates.

And some commitment for solar construction remains, though at reduced levels and for just a few years.

"We still see some positive things in the legislation, although our preference is for the House version," Wheless says. "We hope we don't lose all of that in this dispute."

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