Bill
HB 1168
The bill limits recovery of historic fuel costs by electric utilities, requiring prudence, public hearings, and 12-month rate adjustments with interest on over/under-recoveries.
Title: Limit Electric Utilities Historic Fuel Cost Recovery
Sponsor: Representative T. Brown (with co-sponsors Lindsey Prather, Robert Reives, Dante Pittman)
Status: Filed April 30, 2026
- Referred to: Public bill
- Effective date: July 1, 2026
- Applies to rate mechanisms filed on or after July 1, 2026
Approach: The bill seeks to restore and enforce limitations on electric public utilities’ ability to recover historic (prior) fuel costs from customers, using a structured framework for fuel cost adjustments and over/under-recoveries.
Key Provisions
1) Change to fuel cost recovery framework (G.S. 62-133.2(d))
- The North Carolina Utilities Commission (the Commission) must provide notice and hold a public hearing with sufficient time for investigation and for intervenors to present evidence.
- At the hearing, evidence may be presented by:
- The utility
- The Public Staff
- Any intervenor or the public
- The Commission must consider:
- Evidence required under subsection (c) and any other competent evidence
- Changes in fuel costs and related costs occurring within a reasonable time after the test period closes
- The experienced over-recovery or under-recovery of reasonable costs incurred during the test period, determined by prudent standards (as set by subsection d1)
- The Commission may incorporate into the determination:
- Over-recovery or under-recovery of fuel and fuel-related costs prudently incurred
- The costs incurred during the test period, without including costs prior to the test period
- Upon request, the Commission may include costs through a date 30 calendar days prior to the hearing, but reasonableness and prudence of those costs are subject to review at the next annual hearing
- Deferral accounting and consecutive test periods must be used
2) Rate impact and duration
- If an increment or decrement to rates is deemed just and reasonable, that adjustment:
- Becomes effective for all sales of electricity
- Remains in effect until changed in a subsequent general rate case or annual proceeding under this section
- The over-recovery or under-recovery portion of the adjustment is reflected in rates for 12 months, regardless of changes in base fuel costs in a general rate case
3) Prudence and burden of proof
- The utility bears the burden of proving the correctness and reasonableness of the charge and that fuel costs were reasonably and prudently incurred
- The Commission will allow only the portion of the cost adjustment that is based on adjusted and reasonable fuel costs prudently incurred under efficient management and economic operations
- The evaluation of reasonableness and prudence follows the rule adopted for subsection (d1)
4) Interest on prudent costs
- Over-recovery or under-recovery of fuel costs prudently incurred during the test period accrues interest
- Interest is at the commercial paper rate identified by the Federal Reserve for A2/P2 nonfinancial issuers (or its reasonable successor)
- Interest accrues on a weighted-average basis over the applicable time period
5) Appropriation for the Commission
- A one-time appropriation of $10,000 from the General Fund to the Utilities Commission for the 2026-2027 fiscal year to be used in support of purposes consistent with this act
Effective date and applicability
- Becomes law on July 1, 2026
- Applies to rate-making mechanisms filed by electric public utilities on or after that date
Potential Impacts
Notes
- The bill emphasizes limiting the recovery of historic (pre-test-period) fuel costs and ensuring that only prudently incurred, reasonably incurred costs are rolled into current rates.
- The specific procedural details for determining prudence, the test period definition, and how adjustments interact with base rates are anchored in the revised language of G.S. 62-133.2(d) and related subsections.
Compiled from official sources — confirm details with the bill’s official record.
Sign in to ask a question.
