Rep. Mike Hager’s long-running effort to de-emphasize renewable energy as part of North Carolina’s portfolio of power resources passed the Senate Commerce Committee on Tuesday.
Hager, a Republican from Rutherfordton and a former Duke Energy employee, added a renewable energy section to an unrelated bill of his, HB332, which has to do with natural gas pipeline cost recovery for companies.
The new provision would freeze at the current rate the requirement that utilities increasingly use renewable energy. The rate would remain at 6 percent of retail sales, instead of increasing to 10 percent in 2018 and 12.5 percent from 2021 on.
It would also substantially reduce a provision in state law that guarantees a market for renewables by requiring utilities enter into a standard contract with projects that generate up to 5 megawatts. A 5 megawatt plant generates power for about 820 homes a year, while the 100 kilowatts proposed in the bill are only enough for 16 homes a year. Hager said all but three states use the 100-kilowatt standard.
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The standard contract is meant to boost the renewable industry by reducing negotiating costs. The state Utility Commission recently agreed that the standard contract for 5 megawatt plants was appropriate, not smaller or larger capacities. Environmentalists and the solar industry are concerned that the change could discourage growth.
Hager and others oppose government helping out a specific industry, saying it drives up electricity rates. Representatives of Americans for Prosperity and the John Locke Foundation spoke in favor of the bill.
HB332 would also launch a comprehensive study to determine whether to continue government support and at what rate. Hager called it a moratorium on the current rate, but other committee members said they would feel more comfortable if the bill set a timetable rather than freeze the rate forever.
Betsy McCorkle, director of the N.C. Sustainable Energy Association, say there is no such thing as a free energy market in this state, because utility companies have been granted a monopoly. She said Hager’s attempts to put the brakes on renewables sends a message to investors that North Carolina’s energy policy is unpredictable.
Asked whether the bill would lower electricity rates, Duke Energy lobbyist Kathleen Hawkins demurred but said the company has consistently been in favor of a comprehensive study. She said the utility wasn’t taking a position on the rest of the bill.
Hager’s previous efforts were rebuffed in a House committee when opponents, including some Republicans, said the renewable energy portfolio law enacted in 2007 was the result of years of discussions that shouldn’t be undone without detailed consideration. He subsequently succeeded in adding these same provisions to a regulatory bill that is awaiting a vote in the Senate.
The bill goes next to the Senate Finance Committee.