North Carolina

Summary On February 29, 2008, the North Carolina Utilities Commission issued final rules implementing legislation passed in August 2007 that created North Carolina’s renewable energy and energy efficiency portfolio standard (REEPS). Beginning on September 1, 2008, electric power suppliers were required to file REEPS compliance plans that describe how the utility will meet the standard’s requirements. The energy efficiency portion of the REEPS energy savings targets will increase to 0.75% of prior-year sales in 2012, rising to 5% of prior year sales in 2021. North Carolina utilities spent $6.8 million on electric efficiency and $800,000 on natural gas efficiency in 2007, saving 1,391 MWh and 15,488 Therms.  North Carolina has natural gas efficiency programs in all sectors except the industrial sector.

Energy efficiency and renewable energy programs in North Carolina will soon be administered by individual utilities with oversight and approval from the North Carolina Utilities Commission (NCUC).  In August 2007, Session Law 2007-397 (Senate Bill 3) established the first Renewable Energy and Energy Efficiency Portfolio Standard in North Carolina. Electric power suppliers must provide electric service to retail customers with an increasing amount of renewable and energy efficiency resources.  Each utility will submit a REEPS compliance plan to the NCUC, detailing programs by which it plans to achieve the required savings. The law applies to municipal and cooperative utilities as well as investor-owned.

Duke Energy Corp. has also proposed the Save-A-Watt energy efficiency program to the NCUC. This program would pay Duke 90% of the costs it avoids by not having to build new plants or buy additional electricity.  The NCUC stated that it will hear and decide the merits of Duke’s application after the REEPS rulemaking was complete.

The residential, residential low-income, and commercial sectors are served by natural gas efficiency programs delivered by the utilities, North Carolina State Energy Office, and the Department of Health and Human Services. 

 North Carolina utilities reported efficiency program savings of 1,391 MWh and 15,488 Therms in 2007.  Duke Energy Corp did not report any program savings to the EIA for 2007.

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Utilities whose rates are regulated by the North Carolina Utilities Commission may seek to recover costs for renewable energy and energy efficiency programs through a Demand Side Management/Energy Efficiency rate rider. The law limits cost recovery for utilities so that residential customers pay no more than $10 per year per account through 2011, $12 each year through 2014, and $34 each year starting in 2015.  Annual commercial customer charges are capped at $50, rising to $150 in 2015, while industrial customer charges are capped at $500, rising to $1,000 in 2015. The rider will be trued up annually based upon the utilities' actual costs and revenues.

North Carolina electric utilities spent $6.8 million on energy efficiency in 2007. In addition, Advanced Energy spent approximately $3 million.  Advanced Energy is an non-profit corporation overseen by a board appointed by the governor of North Carolina and the member utilities.

From 2006 to 2008, utility natural gas efficiency programs were shareholder-funded.  Beginning in 2009, the program funding is embedded in rates. Spending on utility natural gas efficiency increased from $800,000 in 2007 to $1.23 million in 2008.  2007 low-income program spending was $100,000.  

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North Carolina has a combined renewable and energy efficiency portfolio standard.  On February 29, 2008, the North Carolina Utilities Commission issued final rules implementing legislation passed in August 2007 (Senate Bill 3) that created North Carolina’s renewable energy and energy efficiency portfolio standard (REEPS). Under the REEPS, public electric utilities in the state must obtain renewable energy power and energy efficiency savings of 3% of prior-year electricity sales in 2012, 6% in 2015, 10% in 2018, and 12.5% in 2021 and thereafter. Energy efficiency is capped at 25% of the 2012-2018 targets and at 40% of the 2021 target. Electric utilities submitted their first annual REEPS compliance plans by September 1, 2008.

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In Section 4(c) of Session Law 2007-397 (Senate Bill 3), the General Assembly required the commission to analyze whether rate structures, policies, and measures, including decoupling, should be implemented in North Carolina. On September 1, 2008, the North Carolina Utilities Commission issued a report stating that adopting decoupling would be premature at that time.  This decision is based upon recent issuance of the rules implementing Senate Bill 3. This bill allows utilities to recover costs associated with energy efficiency measures and to receive an additional incentive based upon shared savings, a percentage of avoided costs, or other measures as appropriate. The commission will evaluate whether these incentives serve their intended purpose and are sufficient. 

The Commission recently approved a lost revenue adjustment mechanism for Progress Energy Carolinas for a limited time as part of their cost recovery mechanism. This mechanism is set to expire in 2012. (Docket E-2, Sub 931)

For the natural gas sector, Piedmont Natural Gas and Public Service Company of North Carolina both implement revenue-per-customer decoupling with semi-annual adjustments. Public Service Company received approval for its program in October 2008 and has not yet undergone an adjustment.  Duke Energy Carolinas, LLC recently proposed an Agreement and Joint Stipulation of Settlement for their Save-a-Watt Approach, Energy Efficiency Rider and Portfolio of Energy Efficiency Programs (Docket No. E-7, Sub 831, filed June 12, 2009). This agreement is pending approval (as of July 6, 2009). 

Piedmont Natural Gas: Docket Nos. G-9, Sub 499 (November 2005) and G-9, Sub 550 (November 2008); Public Service Company of North Carolina Docket No. G-5, Sub 495 (October 2008); Report of the North Carolina Utilities Commission to the Governor of North Carolina, Environmental Review Commission, and the Joint Legislative Utility Review Committee: Docket E-100, Sub 116 (September 2008).

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If a utility wants to earn incentives for demand side management or energy efficiency programs, it must make a specific proposal to the commission for consideration. The commission is considering an avoided cost recovery mechanism submitted by Duke Energy. It is also considering incentives of 8% of net present value of benefits from DSM programs and 13% of net present value from energy efficiency programs submitted by Progress Energy Carolinas.

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Each electric power supplier must file a REEPS compliance plan as part of its Integrated Resource Planning (IRP) filing on or before September 1 of each year.  The commission reviews the utilities' REEPS compliance reports.

A utility’s IRP filing must include a comprehensive analysis of all resource options considered by the utility for satisfaction of load requirements and other system obligations over the planning period.  The plan must also include an assessment of demand-side management and energy efficiency. IRPs must be approved by the commission.

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• North Carolina State Energy Office
• North Carolina Utilities Commission
• North Carolina Utilities Commission Renewable Energy and Energy Efficiency Portfolio Standard
• North Carolina State Incentives for Renewables and Efficiency

Last Updated 10/19/2009

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