GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	1 

HOUSE BILL 547*

Short Title:  Renewable Resource Energy.	(Public)

─────────────────────────────────────── 
Sponsors: Representatives Culp and Allred (Cosponsors).

─────────────────────────────────────── 
Referred to:  Commerce.

─────────────────────────────────────── 

March 19, 1997

A BILL TO BE ENTITLED
AN ACT TO ENHANCE, ENSURE, AND PROTECT THE PUBLIC'S RIGHT TO CONTINUED ACCESS TO RENEWABLE RESOURCE ENERGY GENERATED BY SMALL POWER PRODUCERS OF FIVE MEGAWATTS OR LESS BY PROVIDING THAT AVOIDED COSTS TO A UTILITY FROM THAT ENERGY BE CALCULATED BY THE RESIDUAL REVENUE METHOD.
Whereas, it is in the public interest to encourage small business development in the area of electric energy generation and to enhance the continued economic feasibility of the production of renewable energy at small power production facilities producing five megawatts or less of electricity; and
Whereas, the operation of such small power production  facilities helps to curtail the need for facilities operating on fossil fuels;  Now, therefore,
The General Assembly of North Carolina enacts:
Section 1.  G.S. 62-156 reads as rewritten:
"§ 62-156. Power sales by small power producers to public utilities.
(a)	In the event that a small power producer and an electric utility are unable to mutually agree to a contract for the sale of electricity or to a price for the electricity purchased by the electric utility, the commission shall require the utility to purchase the power, under rates and terms established as provided in subsection (b) of this section.
(b)	No later than March 1, 1981, and at least every two years thereafter, the commission shall determine the rates to be paid by electric utilities for power purchased from small power producers, other than those producers described in subsection (c) of this section, according to the following standards:
(1) 	Term of Contract. – Long-term contracts for the purchase of electricity by the utility from small power producers shall be encouraged in order to enhance the economic feasibility of small power production facilities.
(2) 	Avoided Cost of Energy to the Utility. – The rates paid by a utility to a small power producer shall not exceed, over the term of the purchase power contract, the incremental cost to the electric utility of the electric energy which, but for the purchase from a small power producer, the utility would generate or purchase from another source. A determination of the avoided energy costs to the utility shall include a consideration of the following factors over the term of the power contracts: the expected costs of the additional or existing generating capacity which could be displaced, the expected cost of fuel and other operating expenses of electric energy production which a utility would otherwise incur in generating or purchasing power from another source, and the expected security of the supply of fuel for the utilities' alternative power sources.
(3) 	Availability and Reliability of Power. – The rates to be paid by electric utilities for power purchased from a small power producer shall be established with consideration of the reliability and availability of the power.
(c)	The rates paid by a utility to a small power producer producing five megawatts of electricity or less at the same site and at dams in existence prior to 1997, shall be determined by using the residual revenue method as follows: by deducting from the Commission's approved residential retail rate for electricity for the applicable utility a billing and distribution charge, not to exceed ten percent (10%) of the retail rate, and a handling charge, not to exceed twelve percent (12%) of the retail rate. The result of this calculation shall be the avoided cost to the utility. The percentage deduction for the billing and distribution charge and the handling charge may be established by agreement between the small power producer and the utility for a period of up to 15 years, but the rate paid by a utility shall fluctuate as the Commission's approved residential rate for electricity for the receiving utility fluctuates.”
Section 2.  This act is effective when it becomes law and applies to contracts entered into on or before January 1, 1997.