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State Energy Efficiency Policy Database

North Carolina

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Summary

North Carolina utilities have expanded energy efficiency programs in recent years, however their levels of investment and performance still remain below the national average. Utility efficiency programs are likely to continue expanding given the recent efforts by utilities and stakeholders.  In 2011, the newly-merged Duke Energy Progress (formed by two operating companies, Duke Energy Carolinas and Progress Energy Carolinas) reached a settlement agreement with clean energy groups that, among other things, sets an annual energy efficiency savings target of 1% of retail sales starting in 2015, and a 7% cumulative target from 2014 to 2018.  Achievement of the target will require successful development, regulatory approval and implementation of energy efficiency programs. North Carolina also allows energy efficiency to count toward its statewide renewable and efficiency standard. On February 29, 2008, the North Carolina Utilities Commission (NCUC) issued final rules implementing legislation passed in August 2007 that created North Carolina’s renewable energy and energy efficiency portfolio standard (REPS). The energy efficiency portion of the REPS energy savings targets increased to 0.75% of prior-year sales in 2012, rising to 5% of prior-year sales in 2021.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

For further reading, in March 2010, as part of the State Clean Energy Resource Project, ACEEE completed the report North Carolina's Energy Future: Electricity, Water, and Transportation Efficiency.

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November 8, 2013


Customer Energy Efficiency Programs

Individual utilities now administer energy efficiency and renewable energy programs in North Carolina with oversight and approval from the North Carolina Utilities Commission (NCUC).  In a 2011 settlement agreement brokered between energy efficiency advocates and two merging utilities, Progress Energy Carolinas and Duke Energy Carolinas, the merging utilities agreed to new energy efficiency programs and targets between 2014 and 2018. The Settlement Agreement, signed in December 2011, sets an annual energy efficiency savings target of 1% of retail sales starting in 2015 and a 7% cumulative target from 2014 to 2018 for each utility. Achievement of the target will require successful development, regulatory approval and implementation of energy efficiency programs. 

Several municipal and cooperative utilities in North Carolina also administer customer energy efficiency programs.

In 2009, the NCUC approved Duke Energy Corp.’s Save-A-Watt program, which established energy efficiency goals and rate recovery for the utility over the past few years.  In August 2007, Session Law 2007-397 (Senate Bill 3) established the state’s first Renewable Energy and Energy Efficiency Portfolio Standard. This sets renewable energy and energy efficiency objectives for utilities. Each utility will submit a REEPS compliance plan to the NCUC, detailing its plans to achieve the required savings. The law applies to investor-owned, municipal and cooperative utilities.

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

Rate-regulated utilities may seek to recover the costs for energy efficiency programs through a Demand Side Management/Energy Efficiency rate rider. Statute also allows the Commission to approve incentives for public utilities adopting and implementing new programs. Industrial customers may opt-out of paying the energy efficiency rider if it demonstrates that it has implemented or will implement energy efficiency measures at their own expense. 

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

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November 8, 2013


Energy Efficiency Resource Standards

Summary: Renewable Energy and Energy Efficiency Portfolio Standard (REPS). Investor-owned: 12.5% by 2021 and thereafter. Energy efficiency is capped at 25% of the 2012-2018 targets and at 40% of the 2021 target.

North Carolina Senate Bill 3 was finalized in 2008, introducing the state’s combined Renewable Energy and Energy Efficiency Portfolio Standard (REPS).  Under the REPS, 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. For IOUs, energy efficiency is capped at 25% of the 2012-2018 targets and at 40% of the 2021 target. Co-operative and municipal utilities may satisfy their all of their REPS requirement of 10% savings by 2018 with energy efficiency, excluding small set-asides for solar and other resources. Utilities demonstrate compliance by procuring renewable energy credits (RECs) earned after January 1, 2008. Under North Carolina Utility Commission rules, an REC is equivalent to 1 MWh of electricity generated by a renewable energy facility or avoided through an efficiency measure.

Since the REPS goals are cumulative, the 12.5% target in 2021 will require 5% of its sales in 2021 to be met with energy efficiency over the entire 13-year period in which energy efficiency savings may be counted. Averaged over three years, each target period until 2018 requires annual savings of 0.25%. The final period from 2018 to 2020 will allow annual energy savings of 0.83%. Utilities plan to employ more than the full quarter allowable over the next ten years. Industrial customers may opt-out of utility energy efficiency programs and not bear the costs of new programs if they implement their own programs. 

Each electric power supplier must file a REPS compliance plan for Commission review as part of its Integrated Resource Planning (IRP) filing on or before September 1 of each year.  A utility’s IRP filing must include a comprehensive analysis of all resource options considered by the utility, including demand-side management and energy efficiency, which must result in “the least cost mix of generation and demand reduction measures achievable….”(N.C. Gen. Stat. §62-2(3a)). According to Commission Rule R8-60, IRP filings must include a 15-year forecast of demand-side resources, among other requirements for the assessment and characterization of the demand-side resource.

North Carolina has no Natural Gas& EERS.


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August 9, 2013


Alternative Business Models

The commission approved lost revenue adjustment (with annual true-ups) for Duke Energy Progress (NC Docket E-2, Sub 931, NC Docket E-7, Sub 831).

In the natural gas sector, Piedmont Natural Gas and Public Service Company of North Carolina both have revenue-per-customer decoupling with semi-annual adjustments. Public Service Company received approval for its program in October 2008. Duke Energy Progress’ program covers natural gas as well as electricity (See 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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September 16, 2013


Reward Structures for Successful Energy Efficiency Programs

Duke Energy Progress has an incentive mechanism in place. The Duke mechanism permits the utility to earn a percentage of avoided costs which are capped as a percentage of actual program costs. The cap ranges from 5-15%. The Progress mechanism allows the utility to earn 8-13% of the net present value of the net savings from DSM programs.


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September 16, 2013


Energy Efficiency as a Resource

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.  The plan must also include an assessment of demand-side management and energy efficiency. IRPs must be approved by the commission.

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.  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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August 11, 2013


Evaluation, Measurement & Verification
  • Cost-effectiveness test(s) used: TRC, UCT, PCT, RIM
  • Uses a deemed savings database: no

The evaluation of ratepayer-funded energy efficiency programs in North Carolina relies on regulatory orders (Rule 8-68 and Rule 8-69). Evaluations are mainly administered by the utilities. There are no specific legal requirements for these evaluations in North Carolina. Evaluations for each of the utilities are conducted. North Carolina uses four of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Total Resource Cost (TRC), Utility/Program Administrator (UCT), Participant (PCT), and Ratepayer Impact Measure (RIM). North Carolina specifies the TRC to be its primary test for decision making. The benefit-cost tests are required for portfolio and total program level programs screening. The rules for benefit-cost tests are stated in SB 3—NC GA session law (SL 2007-397), Rule 8-68 and Rule 8-69.


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August 21, 2013