LARRY STRICKLAND: N.C. is at mercy of utility company. It's time for change
Posted September 9, 2019 5:00 a.m. EDT
Updated September 9, 2019 6:50 a.m. EDT
EDITOR'S NOTE: Rep. Larry Strickland, a Republican from Johnston County, moved to convert a key section of Senate Bill 559 into a wide-ranging study on rate reform. His amendment passed 63-51. He is a member of the House-Senate conference committee on the bill.
Some say Senate Bill 559 is complicated, but one of my constituents really boiled it down for me recently when they told me how, as you plan your monthly budget, you can make choices that allow you to have control over the amount of your rent, your mortgage, your car payments and your groceries. But when you walk to the mailbox, open that envelope and see your power bill, you’re completely at the mercy of the utility company.
When it comes to electricity, all North Carolinians are the same - whether you’re a farmer, a family, or a senior citizen; whether you’re a large business or a small one, none of us has any choice in electric providers and we have to pay what the utility tells us to pay.
Now, the utility wants even more control than they already have. They want to lock in approval from the N.C. Utilities Commission and tell us what to pay for three years at a time. They call this concept multi-year rates. This would eliminate the annual hearings where the price the utility intends to charge customers is reviewed by the Utilities Commission. It’s a concept that’s been debated in a number of states and, in an ideal situation, it is simply a tool that regulators can use to minimize the amount of time and cost consumed by annual utility rate cases.
But it’s important that we get it right if North Carolina decides to move forward with this framework, because there are significant implications for all customers, not least of which is the amount of their monthly power bill. As written, SB559 was missing key guardrails to properly protect customers, which is why I sought to amend it.
We cannot afford to make the same mistake Virginia made a few years ago, which has led to customers being overcharged by nearly a billion dollars. But multi-year rates don’t have to be harmful. If provisions are included that ensure transparency, a full accounting of the utility’s spending, and a 100 percent ‘true-up’ of over-earning for the benefit of ratepayers, it’s possible the concept could work.
The challenge is that the way the bill was previously written might have inadvertently allowed the utilities to use multi-year rates as a tool to maintain elevated rates and avoid true-ups that would otherwise result in lowering customer bills. We need to better understand the practical applications of the rate structure and ensure we set up a system that will not allow that to happen.
Utility reform is needed, certainly, and in principle I support reforms that bring more efficiency to our regulatory process. However, imposing a new utility regulatory model is not something we should do without stakeholders involved in a careful evaluation. We need to take a step back and think about the types of reforms North Carolina needs - structures that will benefit customers, not just utility shareholders.
I’m grateful the House showed strong support for the bill which included my amendment – by a vote of 112 to 2 – assuring that any new utility rate structures be carefully considered and studied. I appreciate the thoughtfulness with which my colleagues approached this important piece of legislation.
Before we agree to allow the utility to impose multi-year rate increases, we need to take a step back and evaluate the construct of a rate structure that we can be certain doesn’t harm North Carolina ratepayers.
The amount of our monthly power bills is at stake, and I’m not willing to gamble my constituents’ money away. Urge your legislator to pass the bill with my amendment. Let’s study ratemaking concepts; working collaboratively and comprehensively to ensure we do the right thing by North Carolina’s ratepayers.
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