NC bill would ease regulatory burden on private water companies

The idea is to let companies request approval for rate increases three years at a time, allowing them to plan capital improvements further ahead and save the costs of routinely going before the North Carolina Utilities Commission, which has to approve rates for the 93 privately owned water and wastewater entities the commission regulates.

That process proceeds much like a court case. It can last days or even weeks and involve teams of attorneys and industry experts in a back and forth over whether a price change is justified under North Carolina's often complex utility regulations.

Under the proposed process, the Utilities Commission could approve a schedule of rate changes three years in advance. Annual public hearings would still be required, said bill sponsor Sen. Paul Newton, R-Cabarrus, and the commission would have the power to set other conditions as well.

The bill also would permit "banding" on allowed profits. Instead of a precise target for allowed returns approved by regulators, companies could earn within a range.

Newton gave this example Thursday as the bill moved through a key Senate committee: If the Utilities Commission approves an 8 percent return for a company, the company could earn as much as 9 percent without penalty. Over that, and the company must return money to customers, he said.

If the company earns less than the target, it wouldn't automatically recoup that money with a rate increase, he added.

This bill will likely be on the Senate floor for a vote Monday night. A House version of the measure, House bill 219, has already cleared that chamber with bipartisan support and a 74-40 vote.

The regulatory overhaul has critics, but many concede North Carolina's current procedures are outdated. Duke Energy made that argument in 2019 as it sought many of the same changes for its industry, but concerns that their proposal would allow the company to over-earn and bill supporters' refusal to compromise away key portions of the bill helped sink the proposal.

Asked Thursday whether the water and sewer bill might open the door for a new Duke Energy bill along the same lines, Newton, a former Duke executive, said he has "no idea."

Newton said the multi-year rate-making process in his bill could ultimately save people money. It might also help rebuild infrastructure, though some of the biggest problems in the state with aging water and sewer systems are with publicly owned systems that won't be affected.

"The caveat is that this is only the private systems that we’re talking about," Newton said. "But they are not immune from having to update crumbling infrastructure."