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House Bill 457 - "Municipal Electric Utilities/UC Oversight"

After fielding several complaints from constituents about exorbitant electric rates, Reps. Farmer-Butterfield (D-Wilson), Collins (R-Nash) and Bryant (D-Nash) presented a proposed committee substitute (PCS) to replace the original language in HB 457: Municipal Electric Utilities/UC Oversight to the House Public Utilities Committee on Wednesday.

The substitute language is entitled Municipal Electric Utilities/Rate Hearings and would:

  1. require that the North Carolina Eastern Municipal Power Agency (NCEMPA) hold a public meeting prior to changing rates and the municipal electric cities of the NCEMPA hold a public hearing before changing electric rates;
  2. require that a hearing be held before changing rates, fees or charges for power and energy and “other services” sold to customers of its services; and
  3. require that the municipal electric cities of NCEMPA and NCEMPA advertise at least once a week for two consecutive weeks in a newspaper that serves the municipality.  The newspaper announcement must state clearly the intent to change the rates, fees, or other charges for power and energy.

The bill has been sent to the House Public Utilities subcommittee that is also studying HB 117 – Electric Cities/Uses of Rate Revenue.  The subcommittee chair is Representative Mike Hager (R-Rutherford).  Subcommittee members are Representatives Jeff Collins (R-Nash) and Kelly Alexander (D-Mecklenburg).

The original bill's points are below: 

  • House Bill 457 would subject municipalities with electric distribution systems to the jurisdiction of the North Carolina Utilities Commission (the "NCUC") which would have oversight on rate-setting and service matters.
  • House Bill 457 will not lower the electric rates of any electric city customer. In fact, it will significantly increase a city's costs to operate its electric system because a city's electric rate-setting process under the jurisdiction of the NCUC will cost hundreds of thousands of dollars per rate change, costs that will ultimately be passed through to the electric city's customers. In order to prosecute its rate case, each city must at least engage its own legal counsel, rate analysis consultants, and accountants, and have performed certain cost of service and rate analysis studies to present in its rate case. A rate case would likely take six to eight months to prosecute.
  • House Bill 457 is in violation of North Carolina General Statute 159B-22, a contract between the State of North Carolina and the holders of any outstanding bonds issued by an electric city or joint agency that the State will not take any actions that will limit or alter the rights of a municipality or joint agency to fulfill its payment obligations to its bondholders. Subjecting electric city rate-setting authority to the oversight of the NCUC is in violation of that contract and an unlawful impairment of the bondholders' contract rights under the United States Constitution.
  • Such rate-setting and service matters for electric cities have historically been exercised and managed by the cities’ elected governing bodies. House Bill 457 usurps the rate-setting authority of a city’s elected governing body, and requires a city to file expensive and time-consuming rate cases with the NCUC in connection with each proposed rate change.