Bill
SB 1024
The bill repeals multiyear rate plans and limits incentives under performance-based regulation, returning rate setting to general rate cases plus a mandatory study on PBR effective
Title: My Power Bill Is Too High
Purpose and intent
- The bill aims to repeal the multiyear rate plan (MYRP) authority established by S.L. 2021-165 (House Bill 951) and to direct a reexamination of performance-based rate making (PBR) to better protect electric utility customers in North Carolina.
- It argues that current PBR/MYRPs create incentives for utilities to pursue capital investments over cost-saving alternatives (like energy efficiency) and that incentives are effectively capped at about 1% of earnings, limiting their impact on consumer bills and affordability.
Key provisions and changes
1) Repeal of Multiyear Rate Plans
- Section 1: Adds a G.S. 62-133(g) stating that electric utility rates must be established through a general rate case. Prohibits any automatic or preauthorized multiyear rate adjustment mechanisms.
- Section 2: Rewrites G.S. 62-133.16 to repeal MYRPs and replace with restrictions/definitions for performance-based regulation (PBR) as the framework moving forward.
2) Performance-Based Regulation framework (PBR) under current and future review
- Section 2(a) defines terms related to PBR, such as earnings sharing mechanisms, multiyear rate plans (to be repealed), and performance incentive mechanisms (PIMs).
- In a PBR application, utilities would be permitted to propose: decoupling, one or more PIMs, and a MYRP (though the MYRP component would be subject to repeal under this bill). The section specifies detailed requirements for base rates, capital investments, and the structure of rate years.
- Base rate adjustments under a MYRP/PBR would be subject to annual reporting, an earnings-sharing mechanism, and a proposed revenue requirement for each year of the plan.
- PBR provisions include:
- A decoupling mechanism primarily for residential customers, with a monthly target revenue per residential customer and a mechanism to defer differences to a regulatory asset or liability.
- A cap on PIM incentives/penalties at 1% of the utility’s total annual revenue requirement used to fix first-year rates (with DSM/EE incentives excluded from this cap and continuing to be recovered via the DSM/EE rider).
- A rider to refund or collect funds related to the earnings-sharing mechanism and PIM rewards/penalties.
- Quarterly reporting on approved projects, execution vs. plan, and explanations for cancellations, with potential adjustments if imprudent cancellations occur.
- A yearly report following an MYRP noting differences between approved and actual projects.
- Limitations: The legislation explicitly states that it does not authorize multiyear rate plans outside of a general rate proceeding.
3) Study and reporting on PBR effectiveness
- Section 3(a): Requires the North Carolina Utilities Commission to conduct a study evaluating the effectiveness of performance-based rate making authorized by S.L. 2021-165, including:
- Whether current PIMs influence utility investment decisions.
- Comparison of PBR earnings to returns on capital investments.
- Impacts of 1% cap on incentives.
- Options to increase or remove caps on incentives.
- Recommendations to better align earnings with customer affordability, system cost reduction, and avoidance of unnecessary capital investments.
- Section 3(b): Requires the Utilities Commission to submit the study to the Joint Legislative Energy Policy Committee by March 1, 2027.
4) Appropriations
- Section 4: A nonrecurring $10,000 appropriation from the General Fund to the Utilities Commission for 2026-2027 to support act purposes.
5) Effective dates
- Section 5: The appropriation provision becomes effective July 1, 2026. The remainder of the act becomes effective upon becoming law.
Who is affected
- Electric public utilities operating in North Carolina, their rate-making processes, and regulatory compliance requirements.
- Consumers, particularly residential customers, who would see changes in rate-setting processes, potential decoupling, and any changes in how earnings and incentives are recovered or refunded.
- The North Carolina Utilities Commission, which would oversee the new study, enforce general rate case requirements, and administer any decoupling and incentive mechanisms.
Timeline and procedural notes
- If enacted, no automatic or preauthorized multiyear rate adjustments would be approved; a general rate case would be the sole mechanism for setting rates.
- A formal study evaluating PBR effectiveness is due to the Joint Legislative Energy Policy Commission by March 1, 2027.
- A one-time appropriation is provided for 2026-2027; broader regulatory changes would take effect as the act becomes law.
Bottom line
- SB 1024 would repeal NC’s MYRP authority, curtail or reframe performance-based regulation, cap performance incentives at 1% of annual revenue (with DSM/EE incentives exempt), and require ongoing evaluation of PBRs’ impact on consumer bills and utility behavior. It emphasizes returning to or strengthening general rate cases as the primary mechanism for setting electric rates and directs a formal study to guide future policy.
Compiled from official sources — confirm details with the bill’s official record.
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