Environment, Legislature

House Finance green-lights Duke Energy ratemaking bill; would allow utility to increase annual profits

Rep. David Lewis is running the bill in the House. (Photo: NCGA)

A controversial bill that would allow Duke Energy to increase its annual profits through alternative methods of ratemaking cleared another hurdle today, despite opponents’ objections.

The House Finance Committee introduced an amended version of Senate Bill 559 to ostensibly appease the state’s industrial and retail customers, such as Walmart. But the bill still sounded several alarms among lawmakers who view part of it as a gift to the energy industry.

Rep. David Lewis, a Harnett County Republican who is running the bill in the House, said this section of the bill “has been misunderstood from the get-go. Modern needs and modern challenges require modern tools. … We need to start talking about what our power situation is going to look like in 2025, ’30 and ’50.”

The measure would allow utilities, primarily Duke, to apply for “multi-year” rate plans that the would provide flexibility for the utility. Under these plans, a variation of which are used in 35 other states, the Utilities Commission could — but is not required to — grant periodic rate changes for as long as three years without holding traditional base-rate hearings. Those hearings are lengthy quasi-judicial proceedings during which the utility, the public staff and ratepayers testify under oath about the effects of a proposed rate increase. The bill language would allow Duke to sidestep that process in lieu of a 120-day public comment period. The company would have to file a public annual report. Base-rate cases would still provide for traditional public testimony.

The Utilities Commission also would have more time to rule on Duke’s ratemaking plan. The original bill set a nine-month limit; the new version extends it to a year.

Rep. Deb Butler, a New Hanover County Democrat on the Duke Energy ratemaking legislation: “The bill seems unilateral” — for Duke. (Photo: NCGA)

The banding portion of a multi-rate plan would allow the Utilities Commission to establish a return on investment — a profit — for the utility that acts as a midpoint; from there, the commission also would set a low- and high-end range — a band — for profitability. This provision would require Duke Energy to refund to customers any profits above 1.25 percent on its rate of return.

But Rep. Graig Meyer, an Orange County Democrat, noted if that provision were law today, Duke Energy could earn an extra $425 million over three years before issuing such a refund. If Duke earned below 1.25 percent, the Utilities Commission would hold a rate case to allow Duke Energy to recover its losses.

Peter Ledford, general counsel for NC Sustainable Energy Association, told the committee that his organization is concerned with the multi-year plan and the rate-banding. “If a new tax collected $140 million a year, it would draw extreme scrutiny.”

John Burnett, deputy general counsel for Duke Energy said he’s never known the commission to call in the utility “for over-earning.” He dismissed the suggestion that a utility can “manipulate” its rate of return.  The Utilities Commission bases the profitability rates on variations beyond the utility’s control, like weather, taxes and the number of customers. Burnett said customers would benefit from the bill, in part to “avoid expensive utility commission hearings.” (Duke often deploys an armada of paid attorneys to these hearings.)

There are no environmental performance goals associated with the multi-year plans or the rate-banding. Rep. Deb Butler, a Democrat from New Hanover County, said other states incorporated such standards into these alternatives. “There are no increases in renewable energy, energy efficiencies or clean ups of environmental contamination,” Butler said. “The bill seems unilateral.”

Another contentious provision remained from the original Senate version. Duke Energy could file for alternative ratemaking and a traditional base-rate case at the same time. If the Utilities Commission rejects Duke’s proposal for the alternative version, the utility could withdraw it and merely settle for a base rate.

“We feel like the utilities have a guardrail,” said Sharon Martin, executive director of the Carolina Utilities Customer Association, which represents the state’s manufacturers. “If you trust and acknowledge the Commission experts, why do the utilities need this” — the ability to withdraw their alternative plans.

Martin asked lawmakers to split the bill between the benign Section 1, which allows for bonds to pay for storm recovery costs and the second section, which she suggested should be sent to a study committee. “Part 2 cherry-picks a rate mechanism that benefits utilities,” Martin said. “There are no quantifiable customer benefits.”

The House Finance Committee voted 16-12 to send the bill with a favorable report to the Public Utilities Committee.

The Senate version of the bill was sponsored by Sens. Dan Blue, a Wake County Democrat, and Republicans Bill Rabon and Ralph Hise, who represent several coastal and mountain counties, respectively. It passed that chamber on May 2.

Commentary, Legislature, News

Opinion: How N.C. Republicans used division to consolidate power

Senate leader Phil Berger and Speaker of the House Tim Moore

We’re now less than a week removed from a climactic veto override vote on Republicans’ “born-alive” abortion bill, one designed as much to fire up social conservatives as to make any kind of real change to abortion laws.

And the news is replete with hot-takes about its impacts on the GOP and Gov. Roy Cooper’s agenda, but Politics N.C.’s Thomas Mills has a sharp take today, scrutinizing how the state’s GOP power base has used discordant legislation to bolster their power in the past, typically at the expense of good governance, North Carolina’s reputation and, of course, general decency.

Instead of a blow-by-blow analysis of the state budget — in its chrysalis stage with a GOP hand-picked conference committee from both the House and Senate — we’re mostly left to digest a lurid clash of religion, intrusive government, and a bitterly endangered Roe v. Wade, all issues lawmakers would rather talk about than their reliably miserly budgeting.

Lawmakers should get to work on actual policymaking, beginning with Medicaid expansion, a move that could actually save lives.

Read Mills’ take below:

The so-called “Born Alive” bill that Roy Cooper vetoed is the most controversial bill of the legislative session so far. The bill and the veto override are accomplishing the goals of the GOP and continuing a tactic that’s helped them maintain power. They are energizing their base while dividing the state. It’s no way to govern and a sharp departure from the principles that helped North Carolina become the state it is today.

The bill itself would have impacted very few people. It required doctors to give medical treatment to fetuses that “survive” abortions. The bill addressed so-called late term abortions. Virtually all of them are performed either because the fetus is non-viable or the life of the mother is at risk. The bill would likely have forced mothers to carry to term babies with severe handicaps that wouldn’t survive long after birth.

Really, though, the bill is not about abortion. It’s about division. It drives a wedge between pro-choice activists who oppose the bill and less informed people who don’t understand it. The strategy follows a pattern we’ve seen since Republicans took control of the General Assembly back in 2010.

They divided the state with Amendment One in an effort to excite the right side of the GOP by casting the Democrats as the party of gay rights. They passed the most egregious voter suppression bill in the country to restrict access to the polls, narrowly targeting vulnerable, older African-Americans. In the wake of the Charleston massacre, when South Carolina was taking down Confederate memorials, the GOP in the legislature enacted legislation to protect North Carolina’s monuments to the Confederacy. They passed HB2 to fire up their base by burnishing their anti-transgender credentials. They’ve used division, not unity, as a governing strategy.

And they used division to try to consolidate power, though often unsuccessfully. They made nonpartisan judicial races partisan. They did the same thing to local school board and city council races. They redistricted municipal and county districts to give Republicans the advantage, overriding the will of local governments. They politicized the UNC Board of Governors, leaving it in turmoil that still exists today.

When Republicans won control of the legislature in 2010, their divisive tactics were new to North Carolina, even if they’ve been adopted nationally today. Modern North Carolina was built by avoiding sharp social divisions. Instead, leaders of both parties used moderation as a governing philosophy. The state was never part the vanguard of change, but, unlike their Southern neighbors, they weren’t putting up roadblocks, either.

State leaders from Democrat Jim Hunt to Republican Jim Martin tried to keep a lid on social unrest by allowing history to drag us forward, focusing instead on building a strong economic infrastructure and educational system. They believed that good jobs and good schools were the keys to our future. While the late 1960s and early 1970s saw social turbulence, the upheaval was less than other states and we became a destination for businesses and families looking for stability, progress and opportunity.

Our social evolution was too slow for some people and too fast for others, but hit the sweet spot for most North Carolinians. We may not have been a leader in the march to marriage equality, but we didn’t have an amendment fight until the GOP took control. We saw slow but steady progress on voting rights to atone for almost 100 years of Jim Crow disenfranchisement until these new, radical Republicans decided too many black people were voting for Democrats.

Republican leaders have made division a governing principle. The goal is power, not progress. They’ve cast moderation aside, hoping that a sharply divided state can keep them in power by motivating their base. It may or may not be good politics, but it’s definitely bad for North Carolina.

 

Commentary, Education, Higher Ed, Legislature

Editorial: Despite controversy, UNC system has high marks among alumni

UNC Board of Governors Chair Harry Smith

Despite a reactionary Board of Governors that’s struggled mightily in its erratic handling of Silent Sam, picked bizarre fights with its administrators, frightened its own leaders out the door, and, most recently, traipsed heedlessly over open meetings laws, a recent Gallup survey found UNC alumni overwhelmingly believe their education in the 16-campus system has been a boon.

The Winston-Salem Journal‘s editorial board applauded the poll’s results this weekend, but warned that the omnipresent controversy swirling about the system’s controlling board may soon be a hindrance.

The paper’s right. UNC leaders need a swift reappraisal of their priorities, coincidentally the priorities of an extraordinarily right-wing state legislature. North Carolina is, all things considered, a purple state, but its brain-trust on the BOG and in the legislature governs deep in the red.

Read on for the paper’s editorial:

Alumni of the University of North Carolina system are in a better position than most people to judge how good a job the system’s 16 schools are doing.

Across the state, there are always plenty of people ready to criticize this or that in the system and fret over how much it all costs. But if you want the insight of those who in a position to know, ask people who studied at one of the schools and who have drawn on that experience as they make their way through adult life.

That’s why the positive results of a recent Gallup survey of 77,695 UNC system alumni are worthy of attention.

An impressive 64% of those who responded to the survey said they strongly agreed that their undergraduate education was worth its cost. By way of comparison, that’s 11% better than among similar alumni groups from public institutions across the country, and 14% better than among graduates of all colleges.

Responses of UNC system alumni also showed why they feel so strongly that their education was worthwhile: They’ve put the education to good use. They have higher than average rates of advanced degrees after college, and their average personal and household income figures are considerably higher than those of college graduates across the nation.

So, controversies and rising costs notwithstanding, that’s pretty strong evidence that the UNC system is doing a good job and making a difference in the lives of the people who study there.

There is one cloud worth noting in this otherwise rosy report. The respondents to the survey were older and whiter than the total population of alumni, about 77% white and with an average age of 48. It would be useful to hear from more minority alums, and from younger graduates.

Gallup officials said that the skewed results were typical: those are the groups that tend to be more responsive to surveys, and it happens everywhere, so national comparisons are still valid.

In practical terms, what do these positive results mean? They should mean that taxpayers, legislators and other leaders will see how important it is to make a UNC system education accessible to as many people as possible. These results are strong arguments for working to keep tuition affordable and to offer financial aid for deserving students who might not go to college otherwise.

The positive results are also reason to continue to invest in the people and facilities that make a UNC education so worthwhile.

And this evidence that the UNC system has been doing a lot right, for a long time, makes a strong case that legislators and the UNC Board of Governors should work to attract good administrators and then let them do their jobs.

The positive survey results are definitely not a reason to be complacent and think that the university system will continue to be successful no matter what. Attempts by the board and legislators to micromanage the universities, tinker with the curriculum and demand that schools be run as businesses will take their toll on outcomes and attitudes. So will turmoil of the sort we’ve seen with three top system administrators leaving in the first three months of this year.

The Gallup survey is strong evidence that, over the last several decades, North Carolina’s university system has served its people well.

Let’s do all we can to build on that strong foundation.

Commentary, Courts & the Law, Defending Democracy, Education, Higher Ed, Legislature, News

The week’s Top Stories on NC Policy Watch

1. Proposed legislation would dramatically weaken state hog farm oversight

A sentence here, a paragraph there. A strike-through, a repeal, a new section.

Individually, the Farm Act and the House and Senate budgets chip away at the incremental yet significant progress the state has made toward regulating industrialized livestock operations.

But taken in total, a half-dozen provisions create a safe house where these operations, particularly swine farms, can clandestinely conduct their business.

“It’s a coordinated and multi-pronged attack,” on laws protecting the environment and public health, said Will Hendrick, attorney for the Waterkeeper Alliance. [Read more…]

Bonus read: The Farm Act, state budget are “erecting a fortress for the hog industry”

2. New app will allow North Carolina students to share anonymous tips about school threats

Middle-and high-school students across North Carolina will have an opportunity to download a new app next school year that allows them to anonymously report threats to school safety.

The “Say Something” reporting system will be offered to tens of thousands of students via a partnership between the N.C. Department of Public Instruction and Sandy Hook Promise, a national nonprofit based in Newtown, Connecticut that’s led by people who lost loved ones in the tragic 2012 Sandy Hook school shooting that left 28 people dead.

“Students play a critical role in helping to keep schools safe,” State Superintendent Mark Johnson said during a press conference Thursday. “They may see and hear concerns that adults need to know about but may be reluctant to report it.” [Read more…]

3. Teachers would get 3.5 percent pay raise under proposed N.C. Senate budget

Teachers would get an average 3.5 percent pay raise over the next two years under a biennium spending plan released Tuesday by state Republican leaders.

The plan calls for spending $23.9 billion during the 2019-20 fiscal year, and it increases spending on public education by $1.3 billion over the next two years.

Senate leaders told reporters the pay increase would raise the average teacher salary to $54,500 per year over the biennium.[Read more…]

4. Senate budget writers to their “Trump country” constituents: “Drop dead”

In case you missed it, there was new confirmation this week that the people being disproportionately harmed by the refusal of North Carolina Republican senators to include Medicaid expansion in the budget bill they plan to adopt today are — wait for it — their own constituents.

It’s been common knowledge for a long time that lower-income rural communities are among the areas that suffer most from having high rates of uninsured residents, but a recent news story from our neighboring state of Virginia really brings this fact home.

This is from a Tuesday story in the Virginia Mercury entitled “Trump Country sees majority of new enrollees under Va.’s Medicaid expansion”:[Read more…]

Bonus video: Senate ignores Medicaid expansion in budget; Berger says it ‘disincentivizes folks to go to work’ (video)

5. Five basic truths to remember this week about the state budget

It’s one of the great and maddening ironies of the state lawmaking process in North Carolina that the single most important piece of legislation each year is perhaps the most poorly reported and one of the least well-understood.

Every year, as the fiscal year winds down toward its June 30 conclusion, state lawmakers birth a new state budget bill that runs to hundreds of pages and includes all sorts of fundamental decisions about state funding priorities and tax policy, not to mention scores of so-called “special provisions” (i.e. law changes unrelated to the budget that may or may not have been debated previously as the subject of another bill).[Read more…]

6. Hofeller files: GOP mapmaker helped develop Trump’s citizenship Census question

The master mapmaker behind North Carolina’s most contentious and allegedly gerrymandered voting districts apparently also played a role in developing the citizenship question proposed for the 2020 Census by the Trump administration.

Thomas Hofeller’s daughter, Stephanie Hofeller Lizon recently turned over several of his hard drives and digital files to voting rights group Common Cause as part of discovery in their North Carolina state partisan gerrymandering case Common Cause v. Lewis. The news released Thursday about Hofeller’s involvement in the 2020 Census question is the first bit of data released publicly from the “Hofeller files.” [Read more…]

Bonus Read: ACLU notifies US Supreme Court of new evidence in citizenship question case

7. Not so open: Critics say UNC Board of Governors excludes the public from its “public” meetings

Hoping to hear some discussion of the future of the “Silent Sam” Confederate monument, Lindsay Ayling and a few other UNC-Chapel Hill students attempted to attend last week’s meeting of the UNC Board of Governors.

Attempted, as it turns out, was the operative word.

Before the meeting began, while most of the seats in the board room were still empty, Ayling and two other students were told there was no room for them. All the chairs in the room – even the ones that appeared to be empty – were reserved in advance, they were told by campus police.[Read more…]


8. State budget, new scientific tests shine a light on NC’s growing drinking water pollution problem

PFAS contamination found in both Jones and Orange counties

Maysville, which sits on the rim of the Croatan National Forest in Jones County, is home to 1,000 people — about half of whom rely on the town’s sole drinking water well.

And that well, according to a brief sentence in the both the House and Senate versions of the state budget, is contaminated.

But the budget doesn’t say contaminated with what, only that Maysville needs $500,000 to construct a new public supply. [Read more…]

9. Weekly Editorial Cartoon:

agriculture, Environment, Legislature

The Farm Act, state budget are “erecting a fortress for the hog industry”

Sen. Brent Jackson, R-Duplin, Johnston, Sampson: “I don’t like the term CAFO. It has negative connotations.”

Disclosure: The NC Justice Center filed a brief in support of plaintiffs suing Smithfield/Murphy-Brown for nuisance. NC Policy Watch is a project of the Justice Center, but had no role in the decision to file the brief nor its contents. In order to maintain its editorial independence, Policy Watch has not read the brief and has not communicated with anyone at the Justice Center about it.

Although the bulk of the 2019 Farm Act deals with the regulation of hemp — which Sen. Brent Jackson calls, without irony, a “budding” industry — there are more than 25 sections in the bill, many of them controversial.

As Policy Watch reported this morning, one section would dismantle portions of the Public Records law to shield swine farms from scrutiny. Records generated “by or for” the state and county Soil and Water Conservation Districts would be exempt from the statute. The Department of Agriculture and bill proponents contend this provision provides consistency with federal law, which keeps certain individual farm records confidential.

“It merely mirrors federal law,” said Sen. Brent Jackson, a Republican representing three major hog-producing counties.

But Ryke Longest, director of the Duke University Environmental Policy Clinic, told Policy Watch that is not true. Federal exemptions apply “only to federal records for federal programs. State cost-share records are not exempt. This law change would cover all documents related to the state cost-share program, whether submitted by private parties or the soil and water conservation district.”

At the committee meeting, Jackson said the “parties that need to see the records” could do so.

“Who are the parties? Who makes that decision?” asked Sen. Mike Woodard, a Democrat representing Durham, Granville and Person counties.

“The regulatory agencies would have access,” Jackson said. “It would be under the purview of the Department of Agriculture.”

“What’s to hide?” asked Sen. Harper Peterson, a New Hanover County Democrat.

No one answered the question.

Sen. Harper Peterson, a New Hanover County Democrat: “What is there to hide?”

Peterson questioned the exemption for swine farms that store manure for biogas from odor rules. The Environmental Management Commission and DEQ began rulemaking nearly a year ago, a common timeline for the complex process.

“The EMC was making rules more stringent than they should have been,” Jackson replied.

“Do we have a copy of their recommendations?” Peterson asked.

“They’ve been dragging their feet,” Jackson replied.

After a year of rulemaking — a common amount of time for the EMC — the public comment period on the odor rules ended May 14.

The Senate ANER committee is expected to vote on the bill next Wednesday.


CAFO — a four-letter word?

Semantics occasionally creep into legislative committee meetings. Several lawmakers, Rep. Jimmy Dixon among them, dislike the use of “farm” to describe solar and wind energy installations. (Merriam-Webster: pronounced färm, from Middle English, “a tract of land devoted to agricultural purposes; an area containing a number of similar structures or objects, such as radio antennas or storage tanks.”)

Today, the term “CAFOs” — short for Concentrated Animal Feeding Operations — was disparaged.

“They’re not CAFOs. They are family farms,” Sen. Brent Jackson said. “The term ‘CAFO’ has a negative connotation.”

But CAFOs is correct. And while families might indeed own the land and owe the debt, the corporations own the animals and dictate the terms of their management.

First, the EPA defines AFOs as “agricultural enterprises where animals are kept and raised in confined situations. AFOs congregate animals, feed, manure and urine, dead animals, and production operations on a small land area. Feed is brought to the animals rather than the animals grazing or otherwise seeking feed in pastures, fields, or on rangeland.”

A CAFO is another EPA term for a large, concentrated AFO. “A CAFO is an AFO with more than 1000 animal units (an animal unit is defined as an animal equivalent of 1,000 pounds live weight and equates to 1,000 head of beef cattle, 700 dairy cows, 2500 swine weighing more than 55 pounds, 125,000 broiler chickens, or 82,000 laying hens or pullets) confined on site for more than 45 days during the year. Any AFO that discharges manure or wastewater into a natural or man-made ditch, stream or other waterway is defined as a CAFO, regardless of size.”


Buried in the budget, a regulatory rollback

One of the most controversial environmental provisions in the budget bill delays for one year the implementation of general permits for swine, cattle, and a small number of poultry facilities that use a wet litter method of manure management. The permits were to go into effect on Oct. 1.

They want corporate socialism but no public scrutiny Click To Tweet

DEQ held several public hearings on the draft permit, including a stakeholder meeting that included agriculture interests. Nonetheless, the Farm Bureau was displeased with the results and earlier this month filed suit in administrative court, alleging DEQ didn’t follow proper procedure in issuing the permit.

“After a lengthy and transparent process involving discussions with numerous stakeholders from all walks of life and a review of more than 6,500 public comments, DEQ revised three permits to provide more certainty to farmers and communities,” DEQ Secretary Michael Regan said in a press release. “The changes targeted by this budget provision are not new rules or regulations. They are part of the permit-writing process, which is well within DEQ’s authority.”

Some of the new permit requirements are more stringent than the previous version, issued in 2014, and resulted from a Title VI civil rights settlement between DEQ and neighbors of hog farms. The delay means farms would continue to operate under the old permits until the matter is settled.

These include  groundwater monitoring at farms within the 100-year flood plain; additional reporting and equipment maintenance requirements; reducing the time between a National Weather Service hurricane/tropical storm warning or flood watch and when a farm must stop spraying waste on its fields.

“Industry representatives fully participated in that process,” said the NC Environmental Justice Network in a prepared statement. The NCEJN is composed of several groups and individuals, many of whom live near industrialized hog operations. “Their effort now to extend the old permit is not about a flawed process. It is their attempt to circumvent the proper process because the industry didn’t get everything it wanted.”

The Pork Council did not answer emailed questions about the budget provision.

Will Hendrick, an attorney with the Waterkeeper Alliance, said that if the bill becomes law with this language, key groundwater quality monitoring would be delayed. “It would be a lost year of data,” Hendrick said, adding that the intention “is to increase the amount of information available to the public.”

The $450,000 appropriation for swine biogas projects also has raised concerns of environmental advocates. The money was transferred from the Agriculture Farmland Preservation Trust Fund, which helps sustain smaller farms. And while methane, including that emitted by livestock, is a potent greenhouse gas worth capturing, swine biogas programs could incentivize the construction of natural gas pipelines — which in turn, leak methane.

Michelle Nowlin, supervising attorney of the Duke University Environmental Law Clinic, told Policy Watch that the federal government has identified biogas as a conservation practice. “The conundrum is that federal energy policy is pushing technology that conflicts with state law,” said Nowlin, who recently wrote a chapter for a textbook on climate change and agricultural law.

Even with significant public subsidies, biogas operations don’t have to comply with odor rules and nuisance laws. And if the Farm Act passes with the Public Records exemptions intact, and the budget giveaways to the industrialized livestock industry stand, Nowlin said, “the overall legislative context is erecting a legal fortress to protect the hog industry. They want corporate socialism but no public scrutiny.”