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The Efficient and Affordable Energy Rates Bill
The Canary Coalition promotes the Efficient and Affordable Energy Rates Bill. This legislation outlines a system of progressive reforms to electrical utility rate structures that will:
- Reduce energy consumption with efficiency improvements throughout the state.
- Lower energy bills for most residential, commercial and industrial ratepayers.
- Create thousands of jobs in the fields of energy efficiency and renewable energy development.
- Dramatically reduce greenhouse gas emissions.
- Eliminate the need to raise rates to finance the building of new polluting power plants.
The link to the Efficient and Affordable Energy Rates Bill, 2013 H401, is http://www.ncga.state.nc.us/Sessions/2013/Bills/House/PDF/H401v1.pdf
Elements of the Efficient and Affordable Energy Rates Bill
I. The North Carolina Utilities Commission shall perform the task of creating and implementing a set of Electric Public Utility rate structures that include the following aspects:
A. All rate structures will be “inverted” for the purpose of promoting energy conservation and investment in energy efficiency. Larger quantities of energy use will bring a higher price per kilowatt/hour. Lower usage will bring a lower price.
B. There will be a “tiered block” rate structure. When energy usage within a month exceeds one tiered-rate block, the ratepayer will begin to pay a higher price for energy use within the next, higher tiered-rate block.
C. Separate inverted rate structures will be designed for residential, commercial, public and industrial rate-payers.
D. The residential rate structure will be designed to avoid negative economic impact on low-income families and rental units.
E. The residential inverted rate structure will be scaled to achieve a 40-60% statewide reduction in electrical energy consumption from 2013 levels within a 10-year period.
F. Energy used during “peak” hours will be charged at a higher tiered rate with the purpose of leveling out peak demand and minimizing the need for excess polluting generating capacity.
G. Industrial and commercial rate-structures will be tailored on a case-by-case basis to maximize the financial benefit of investment in efficiency and job creation.
H. All rate structures will maintain the guarantee that regulated Public Utility companies receive a reasonable rate of return on all capital expenditures.
I. For all rate structures, the number of tiered-rate blocks and the cost thresholds they represent will be determined by the Utilities Commission in the course of achieving the above goals (A-H).
II. Creation of an Energy Efficiency Bank (EEB).
This bank will exist for the sole purpose of issuing low-interest loans for ratepayers to invest in energy efficiency and renewable energy projects that will result in less consumption of electrical energy produced by non-renewable and polluting sources.
A. The EEB will be administered by an independent agency that manages the finances on all utility bills.
B. Qualifying ratepayers will be issued loans through this agency.
C. Loan payments will be integrated within each monthly utility bill, reflecting the money saved as a result of the efficiency investment made by the ratepayer.
D. Only projects that can be proven to result in lower monthly utility bills, including loan payments, will qualify for loans through the EEB.
E. The EEB will issue grants to qualifying low-income households for efficiency projects, when funds are available.
F. Funds for the EEB will be derived from:
a. A 5% Avoidable Pollution Fee levied on the purchase of all non-Energy Star household electrical products.
b. Interest paid on efficiency loans.
c. Excess revenues collected from higher-tiered rates.
d. Excess revenues collected after closure of peak power plants and other excess generating sources.
III. The State shall establish a 5% Avoidable Pollution Fee levied against the purchase of all household non-Energy Star electrical products. The funds collected from this fee shall be earmarked as seed money for the creation of the Energy Efficiency Bank described in Section II.
For more information contact The Canary Coalition, PO Box 653, Sylva, NC 28779 828-631-3447, firstname.lastname@example.org, www.canarycoalition.org
Why the Efficient and Affordable Energy Rates Bill, H401/S362, is Good for Industry in North Carolina
“Those who are concerned about the cost of energy efficiency are making the same mistake as the scientists who designed the Hubble space telescope when they produced the first faulty lens. They are confusing the plus(+) and minus (-) signs.”
Inverted, tiered-block rates target the elimination of wasted energy. This system does not penalize industries for using as much energy as needed for their efficient operations.
Under the terms outlined in H401/S362, there will be separate inverted rate structure programs for residential, commercial and industrial ratepayers.
Upper tiered rates for industry will not be determined by comparison to residential or commercial ratepayer energy usage.
No industry will have to pay higher rates merely because it uses more energy than residential, commercial or other industrial ratepayers.
Clearly, each industry has different energy needs for its operations. Therefore, H401 mandates that industrial rates be determined on a case by case basis to establish lower and upper tiered rates for that specific industrial facility, based on its energy needs.
How can the Utilities Commission design an inverted, tiered-block rate structure to ensure that an industry already operating efficiently will not be subjected to higher-tiered rates? By putting these rate-determining rules in place:
If an energy audit reveals that an industry is operating at full efficiency it will benefit from lower-tiered utility rates, regardless of its quantity of energy use compared to other industries and ratepayers.
If an energy audit reveals that an industry can make considerable improvements in energy efficiency and that it would be profitable, on a monthly basis, to secure a low-interest loan to make those improvements, then the industry will benefit from lower-tiered utility rates if it makes that investment. This means the industry will profit every month from energy savings that exceed the monthly payments on the loan.
If it cannot be demonstrated that a loan for an efficiency improvement will be profitable on a monthly basis, then the industry will not qualify for the loan and is not required to make the investment to qualify for lower-tiered electrical rates. The industry still qualifies for lower-tiered rates.
The only circumstance in which an industry is subjected to upper-tiered electrical rates is when an energy audit reveals a considerable waste of energy, the industry qualifies for a profitable low-interest efficiency improvement loan, but fails to take advantage of the investment. In other words, if an industry insists on wasting energy, despite its unnecessary cost, it will pay a penalty premium, or higher-tiered rates.
Pass H401/S362 for a healthier economy in North Carolina and to address the urgent issue of climate change by reducing energy consumption and the use of fossil fuels.
This document created by the Canary Coalition, www.canarycoalition.org