House committee substitute to the 3rd edition removes the content of that edition and replaces it with the following. Makes conforming changes to the act’s titles.

Sections 1 and 2.

Removes the State Utility Commission (Commission)'s goal to reduce the State’s carbon emissions from electric generating facilities owned or operated by public utilities by 70% from 2005 levels by 2030 in GS 62-110.9, now just requiring the Commission to take all reasonable steps to achieve a reduction in carbon dioxide emissions emitted in the State from electric generating facilities owned or operated by electric public utilities that result in carbon neutrality by 2050. Pushes the deadline for developing a plan to achieve the goal of carbon neutrality to December 31, 2026 (was, December 31, 2022). Makes conforming changes to GS 62-110.9 and GS 62-110.1.

Amends GS 62-110.1 as follows. Amends the conditions that must be met in order for the Commission to grant a certificate for the construction of a generating facility by an electric public utility, to require that the other resources listed in GS 62-110.9(1) (which requires the Commission and electric public utilities to develop plan by December 31, 2026, to achieve the authorized reduction goal of carbon neutrality by 2050 that may consider the listed items to achieve the least cost path to achieve compliance with the goal) would not establish or maintain a more cost-effective and reliable generation system. Under current law, the Commission is to conduct an ongoing review of construction of the facility, upon the request of the utility or upon its own motion. Adds that in that ongoing review process, the public utility must submit an application showing that it’s construction and related costs and expenditures incurred during the review period were reasonable and prudently incurred and, if necessary, request a modification to the certificate. States that the purpose of each ongoing review hearing is to determine the reasonableness and prudence of the costs incurred by the public utility during the period under review, and to determine whether the certificate should remain in effect, be modified, or be revoked. Places the burden of proof of demonstrating that costs and expenditures were reasonable and prudently incurred on the utility. Requires the Commission to hold a hearing on each review period and requires it to allow intervention in the proceeding. Sets the duration of the review period for each proceeding at approximately 12 months of construction and related costs and expenditures. Requires, once the ongoing review process has started, for the utility to submit quarterly status reports and allows the Public Staff to submit discovery with respect to the quarterly reports. Requires the Commission to start the hearing with respect to each review period within 120 days of the public utility's application and requires a decision to be issued within 60 days of the close of the hearing, or waiver of the hearing if there are no disputed issues.

Amends GS 62-133 by broadening the circumstances under which construction work in progress can be included in the Commission’s calculation of the public utility’s property in GS 62-133(b)(1) (calculation pertaining to the reasonable original cost or fair value of a public utility’s property in fixing rates) to include, for baseload electric generating facilities, when the Commission determines there is an overall cost-savings for customers over the life of the generating facility and a baseload electric generating facility has been subject to an annual ongoing review process, the Commission must, upon determining through the ongoing review process that the expenditures were reasonably and prudently incurred, allow an increase in base rates outside of the rate-making processes established under the statute or GS 62-133.16 to reflect solely the financing costs on the reasonable and prudent expenditures, with the increase being effective 30 days after the Commission's order finding that the expenditures were reasonable and prudent and allocated on a demand basis among customer classes. Sets out limitations on the amount that may be recovered under this provision. Provides that, if applicable, the revenues received from customers participating in a Commission-approved customer program must be used to reduce the construction costs of the baseload electric generating facility and thereby proportionately reduce the amount of financing costs that are recovered. Sets out steps that must be taken when the Commission approves cancellation of a generating facility for which financing costs have been recovered under this provision. Sunsets the authorization to recover financing costs under this provision for natural gas baseload electric generating facilities as of December 31, 2023, for all construction costs incurred after that date, but allows continued recovery of financing costs on construction costs for natural gas baseload electric generating facilities incurred before that date. Amends provisions related to the test period used to determine costs.

Section 3.

Amends GS 62-133.2, which requires the Commission to allow an electric public utility generating electricity by fossil fuel or nuclear fuel to charge an increment or decrement as a rider to its rates for changers in the cost of fuel and fuel-related costs used in providing in-State customers with electricity from the cost of fuel and fuel-related cost established in the utility’s previous general rate case, as follows. Amends what is included under cost of fuel and fuel-related costs, so that it also includes (1) the cost of ammonia, lime, limestone, urea, dibasic acid, sorbents, and catalysts consumed in reducing or treating emissions, including emissions allowances (previously did not specify that emissions allowances were included); and (2) the total delivered costs, including capacity and noncapacity related costs, fuel costs, and related transmission charges, of all purchases of electric power and capacity by the electric public utility (was, total delivered noncapacity related costs, including all related transmission charges, of all purchases of electric power by the electric public utility that are subject to economic dispatch or economic curtailment). Makes conforming changes. Provides that for the costs involving power purchase agreements from renewable generating facilities (including the specified costs), the annual increase in the aggregate amount of those costs that are recoverable by an election public utility is capped at 2.5% of the electric public utility’s total North Carolina retail jurisdictional gross revenues for the preceding calendar year.  Allows the costs of the total delivered costs, including capacity and noncapacity related costs, fuel costs, and related transmission charges, of all purchases of electric power and capacity by the electric public utility to be recoverable from each class of customers allocated on a demand basis among customer classes. Requires the electric public utility to make appropriate adjustments to its fuel and fuel-related costs to reflect costs already being recovered in bas rates in order to avoid double recover and requires the Commission to approve any accounting adjustments in a future fuel proceeding or general rate case to avoid double recovery. Amends provisions related to an over-recovery or under-recovery of reasonable fuel and fuel-related costs that are prudently incurred, by adding how they are to accrue interest. Adds a quarterly reporting requirement on the utility’s actual over- and under-recovered amounts and updated projections of those amounts, including needed adjustments when updated projections are greater than 10% of the total revenue requirement approved by the Commission in the most recent fuel proceeding; sets out additional provisions related to such adjustments.

Section 4.

Amends GS 62-133.16, concerning the use of performance-based regulation (PBR) for electric public utilities in a general rate case proceeding. Amends the provision that apply to a multi-year rate plan (MYRP) by amending the provision prohibiting revenue requirements associated with any single new generation plant placed in service during the MYRP for which the total plant in service balance exceeds $5 million from being included in the MYRP, by adding that combustion turbine generating units that are not a part of a combined cycle generating unit may be included in the MYRP subject to the specified 4% limitation. Adds the following requirements: (1) requires the utility, for each quarter of a MYRP, to report on the status of the approved MYRP projects and allows the Commission, upon its own motion or petition by the Public Staff, to open a proceeding to examine any potentially unreasonable or imprudent cancellations of approved capital spending projects and initiate a proceeding to adjust base rates as necessary or direct further action with respect to such cancelled project; and (2) requires the utility, in any base rate case immediately following an authorized MYRP, to report on its execution of the approved MYRP projects with respect to any rate year completed as of the date of the filing of the PBR application. Amends the issues that the Commission may consider when reviewing a PBR application, to include considering whether the application maintains adequate elves power quality. Amends the matters that must be addressed by the Commission’s rules to require a technical conference process to occur after the utility submits its application but no later than 90 days after it is filed and at least 30 days before the Commission's deadline for any interested parties to intervene. 

Section 5.

Amends GS 62-172, which concerns financing for certain storm recovery costs, so that it now also includes financing for coal plant retirement recovery costs. Allows a public utility to petition the Commission for a financing order to finance securitization costs. Makes changes throughout the statute by replacing the term storm recovery costs with securitization costs, which is defined as storm recovery costs or coal plant retirement costs. Also refers to securitization bonds instead of storm recovery bonds, to securitization charges instead of storm recovery charges, and to securitization property instead of storm recovery property. Specifies that the terms storm recovery bonds, storm recovery changes, and storm recovery property in any financing order issued by the Commission before the date the act becomes effective, mean securitization bonds, securitization charges, or securitization property as now defined in the statute.

Defines securitization bonds as bonds, debentures, notes, certificates of participation, certificates of beneficial interest, certificates of ownership, or other evidence of indebtedness or ownership that are issued by a public utility or an assignee pursuant to a financing order, the proceeds of which are used directly or indirectly to recover, finance, or refinance Commission-approved coal plant retirement costs or storm recovery costs, or both, and financing costs, and that are secured by or payable from securitization property. Defines securitization charges as storm recovery charges, or coal plant retirement charges, or both, as the case may be. Defines securitization property as: (1) all rights and interests of a public utility or successor or assignee of the public utility under a financing order, including the right to impose, bill, charge, collect, and receive coal plant recovery charges, storm recovery charges, or both, as authorized under the financing order and to obtain periodic adjustments to such charges as provided in the financing order; and (2) all revenues, collections, claims, rights to payments, payments, money, or proceeds arising from the rights and interests specified in the financing order, regardless of whether such revenues, collections, claims, rights to payment, payments, money, or proceeds are imposed, billed, received, collected, or maintained together with or commingled with other revenues, collections, rights to payment, payments, money, or proceeds. Makes conforming changes to existing definitions and adds definitions of coal plant retirement activity, coal plant retirement charge, coal plant retirement costs, securitization activities, subcritical coal-fired generating facility, and traditional method of recovery. Amends the definition of storm recovery costs by: (1) no longer requiring that incremental costs be appropriate for recovery from existing and future retail customers receiving transmission or distribution service from the public utility; (2) no longer includes ratemaking adjustments appropriate to fairly and reasonably assign or allocate storm cost recovery to customers over time among those that must be addressed in a future general rate proceeding; and (3) adds that storm recovery costs that are deemed reasonable and prudent by the Commission must be fully recoverable in a financing order for securitization bonds and must not be removed, reduced, or disallowed on the basis of storm cost-related treatment in any prior regulator orders or by application of the required quantifiable benefits comparison.

Also amends the statute as follows. Prohibits the Commission from ordering or requiring a public utility to use securitization bonds to finance early retirement. Amends the requirements that apply to the electric bills of a public utility that has obtained a financing order and caused securitization bonds to be issued, to require that they: (1) explicitly reflect on the bill the portions representing the storm recovery charge or the portions represented  the coal plant retirement charge and requires the applicable tariff to indicate those charges as well; and (2) include the storm recovery charge and the coal plant retirement charge as separate line items, to be consolidated by the type of charge with supporting detail included on each bill, in a bill attachment or by way of a reference to a tariff or explanation of the bill prepared by the utility and approved by the Commission, as long as each charge is not commingled with the charges of a different type.

Makes additional conforming and technical changes.

Section 6.

Includes a severability clause.

Senate committee substitute to the 1st edition adds the following content.

Requires the Department of Insurance (DOI), by August 1, 2025, to prepare and submit to FEMA for its approval, the proposed changes set out in the act. Changes the effective date of the changes to GS 143-138 and GS 143-215.54 so that they are now effective on the later of (1) October 1, 2025, or (2) the first day of the month that is 30 days after the Commissioner of Insurance certifies that FEMA has approved the proposed changes (requires the Commissioner to provide this notice and the act’s effective date on its website). Requires DOI to report to the specified NCGA commission on the status of their activities related to the above on a quarterly basis beginning September 1, 2025, until the changes to the statutes become law.

Requires the Department of Environmental Quality, Department of Agriculture and Consumer Services, and a unit of local government (as applicable), to waive the following requirements, to the extent the requirements are State or local in origin and not otherwise required to meet federal law, as they apply to activities to process tree stumps and vegetative debris into mulch or soil amendments in the counties designated before, on, or after the act’s effective date under a major disaster declaration by the President as a result of Hurricane Helene: (1) solid waste composing rules for Type 1 facilities under the specified rule, (2) stormwater, sedimentation, and erosion control requirements; (3) air quality permit requirements for vegetative debris processing equipment under the specified rule, (4) soil amendment or compost product registration required by the Department of Agriculture and Consumer Services, and (5) State Fire Code limitations on mulch pile storage. Expires July 1, 2027.

Makes conforming changes to the act's long title.