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As Raleigh’s News & Observer reported this morning, a study committee at the General Assembly appears to be in the process of advancing a legislative proposal for the 2015 session that would reverse a controversial Utilities Commission decision from last fall that provided a windfall to big utility companies.

As I explained in the Weekly Briefing last October, the ruling allowed utility companies the option to keep charging consumers for income taxes that the companies no longer paid as a result of recent corporate tax cuts. The ruling was especially controversial in that it came in the form of a direct about-face from a previous 6-1 Commission decision from just months before. In the latter ruling, three new McCrory appointees joined with the Commission chair to overrule the previous decision — a move that sparked bitter dissent from three holdover Perdue appointees.

According to news reports, most companies have not actually been collecting the windfall. Only Dominion North Carolina Power — which serves a swath of northeastern North Carolina — has been pocketing the cash thus far. Nothing, however, would prevent Duke and the other big guys from following suit at some point unless the courts and/or the General Assembly step in.

This brings us back to the Revenue Laws Study Committee which included language in its draft report to the 2015 session reversing the decision yet again — see pages 4-6. This morning’s N&O story — especially the headline (“NC lawmakers to end policy letting utilities overcharge customers”) indicated that the draft report would be adopted today and that the legislature would pass the legislation into law.

A closer look, however, shows that such an optimistic take may well be premature. Read More

Commentary

2-24-14-NCPW-cartoonTry as some people might to wish North Carolina’s massive coal ash problem away, it isn’t going anywhere soon — either physically or politically. Another chapter will begin to unfold this coming Sunday evening when the CBS news magazine show 60 Minutes  examines the situation.

According to the Charlotte Business Journal, Duke CEO Lynn Good will be interviewed by Leslie Stahl. No word on whether they will discuss the intimate relationship between Duke and the McCrory administration.

The Guv. of course is a former 28-year Duke employee, who keeps hiring many of his former colleagues into state government.

The story was apparently recorded in September, but the coal ash mess hasn’t gotten any better since — with residents of Lee County balking at hosting a repository, new leaks springing up and a federal investigation of the whole situation still lurking out there somewhere.

Bottom line: Stay tuned. Neither the coal ash itself or the political fallout from the Dan River disaster will be buried anytime soon.

Commentary

It’s probably just a coincidence that the biggest donor to the state’s new sketchy economic development nonprofit is Duke Energy that ponied up $200,000 to help the nonprofit meet its first year goal of $250,000 in private contributions.

That donation surely has nothing to do with the state’s ongoing battle over regulation of the company’s leaking coal ash ponds across the state. There’s no chance that Duke officials were trying to keep Gov. Pat McCrory and his administration happy with the donation to the nonprofit that is so important to the governor.

It’s all probably above board. Nothing nefarious here. No expectations, just $200,000 out of the goodness of Duke Energy’s heart.

Commentary

UtilitiesNC Policy Watch followers will recall that last week we reported on a an recent and egregious giveaway to big utility companies in which the North Carolina Utilities Commission pulled a mysterious and unforeseen rabbit out of a hat to reverse its own previous ruling from earlier this year.

The case revolves around whether all of the 2013 tax cuts enacted by the General Assembly and Governor McCrory should be accounted for when it comes to computing the rates that regulated monopolies like Duke Energy are allowed to charge ratepayers. In May, the Commission ruled by a 6-1 vote that they must.

A few months later, however, in an abrupt and apparently unprecedented move, three McCrory appointees to the Commission changed their minds and signed on to a new opinion by the Commission chair, Ed Finley, in which the May ruling was summarily reversed and the “exceptions” (i.e. the appeal) submitted by two of the power companies upheld. Parties in the case were not even given a chance to submit arguments on the question.

According to the new majority, the cut to the state’s corporate income tax should not be factored into rates and companies should be free to keep the windfall if they like. According to the three overruled commissioners:

“The Majority’s decision, rescinding, in part, the Commission’s May 13, 2014 Order in this docket, allows the utilities to charge ratepayers in perpetuity to collect for taxes that the utilities no longer pay. The Majority’s decision errs with respect to fairness to ratepayers; errs procedurally with respect to due process and the limitations of the Commission’s right to rescind, alter, or amend an Order; and errs in its content with respect to its legal conclusions.”

As it turns out now — perhaps because of the adverse publicity here and elsewhere — most, if not all of the big utilities are now saying they will not keep the windfall.

This is good news for consumers but it should not be the end of the story. Even if the utilities are too embarrassed to keep their unearned money, the Commission majority’s heavy-handed action was and is still unacceptable and sets a terrible precedent — both with respect to substance and procedure.

Let’s hope that both the Utilities Commission Public Staff and Attorney General Roy Cooper stick to their guns, appeal the matter to the state judiciary and secure an order vindicating the rights of consumers ASAP.

News

Supreme CourtThe state Supreme Court today bypassed the Court of Appeals and took five controversial cases for direct review, exercising its rarely-used discretion and raising eyebrows over the timing, with contentious partisan elections soon getting underway.

The issues raised in the cases — school vouchers, coal ash, class certification — are hot buttons, and some of the parties involved have deep-pockets — including Duke Energy and U.S. Tobacco Cooperative

The high court took those cases despite having yet to render opinions in several high-profile cases — including the redistricting case, which has been pending since argument in January, and two cases concerning the Racial Justice Act, pending since argument in April.

Here are the cases:

Hart v. North Carolina:  This is the appeal of Superior Court Judge Robert Hobgood’s August ruling that the state’s newly-enacted school voucher program was unconstitutional because it:

1) appropriates to private schools grades K-12, by use of funds which apparently have gone to the university system budget but which should be used exclusively for establishing and maintaining the uniform system of free public schools;

2) appropriates education funds in a manner that does not accomplish a public purpose;

3) appropriates educational funds outside the supervision and administration of the state board of education;

4) creates a non-uniform system of education;

5) appropriates taxpayer funds to educational institutions that have no standards, curriculum and requirements for teachers and principals to be certified;

6) fails to guard and maintain the rights of the people who privilege the education by siphoning money from the public schools in favor of private schools; and

7) allows funding of non-public schools that discriminate on account of religion.

The case had just gotten underway in the Court of Appeals before the Supreme Court’s order today.

Cape Fear River Watch v. N.C. Environmental Management Commission:  This is Duke Energy’s appeal of Superior Court Judge Paul Ridgeway’s March ruling requiring the company to immediately eliminate the source of groundwater contamination at its coal ash pits — in advance of any clean-up plans it might later adopt.  In its opening brief in the Court of Appeals, Duke Energy argues that the Coal Ash Management Act passed by the General Assembly in August overruled the lower court’s decision.

Fisher v. Flue-Cured Tobacco Cooperative Stabilization (U.S. Tobacco Cooperative): This is an appeal of the certification of a class comprised of some 800,000 past and present tobacco farmers (per U.S. Tobacco Co-op’s brief) claiming to be entitled to and seeking payment from a $340 million reserve fund held and maintained by the cooperative.

Arnesen v. Rivers Edge Golf Club: Five cases are consolidated in this appeal, in which purchasers of vacant lots in Brunswick County sued the developer, mortgage broker, appraisers, attorneys, and BBT Bank, alleging a scheme to sell the lots at artificially inflated prices through “high-pressure, misleading sales tactics, fruadulent appraisals, unscrupulous lending practice and other conduct.”  Purchasers of the lots are appealing orders from the Business Court dismissing certain claims and defendants.

Cubbage v. N.C. State University Endowment Fund: This case concerns the pending sale of the Hofmann State Forest by the N.C. State Endowment Fund, which plaintiffs say was negotiated in secret and failed to comply with the N.C. Environmental Policy Act because the fund never obtained an Environmental Impact Statement. Wake County Superior Court Judge Shannon Joseph dismissed the case last November.