House committee substitute makes the following changes to the 1st edition.

Changes the act's long and short titles and adds the following new provisions.

Part I.

Amends GS 62-3(27a) to define small power producer as the term is used in GS Chapter 62 to mean a person or corporation owning or operating an electrical power production facility that qualifies as a small power production facility under 16 USC 796 as amended (currently, sets out a detailed definition concerning the power production capacity and the primary source of energy at the facility, and expressly excludes persons primarily engaged in the generation or sale of electricity from other than small power production facilities).

Amends GS 62-156 (Power sales by small power producers to public utilities). Modifies subsection (b), providing that at least every two years, the Utilities Commission (Commission) must determine the standard contract avoided cost rates to be included within the tariffs of each electric public utility and paid by electric public utilities for power purchased from small power producers according to the specified standards for (1) standard contracts for small power producers up to 1,000 kW, (2) avoided cost of energy to the utility, and (3) availability and reliability of power. Directs the Commission to approve a standard offer power purchase agreement to be used by the electric public utility in purchasing energy and capacity from small power producers subject to subsection (b). Provides that long-term contracts up to 10 years for the purchase of electricity by the electric public utility from small power producers with a design capacity up to and including 1,000 kW must be encouraged to enhance the economic feasibility of these small power production facilities. Adds that when an electric public utility has entered into a power purchase agreement with small power producer facilities pursuant to subsection (b) with a total capacity of 100 MW or more, and which established a legally enforceable obligation after November 15, 2016, the eligibility threshold for that utility's standard offer must be reduced to 100 kW. Modifies subdivision (b)(3) to provide that the rates to be paid by electric public utilities for avoided capacity (currently, for power) purchased from a small power producer must be established with the reliability and availability of power. Adds new provisions, limiting avoiding a future capacity need to a year where the utility's most recent biennial integrated resource plan filed with the Commission pursuant to GS 62-110.1(c) has identified a projected capacity need to serve system load and the the identified need can be met by the type of small power producer resource based upon its availability and reliability of power, other than swine or poultry wastes for which a need is established consistent with GS 62-133.8(e) and (f). 

Adds new subsection (c), requiring rates to be paid by electric public utilities to small power producers not eligible for the utility's standard contract offer pursuant to subsection (b) be established through good faith negotiations between the utility and small power producer, subject to the Commission's oversight as required by law. Requires the utility to design rates consistent with the Commission-approved avoided cost methodology for a fixed five-year term, taking into account factors related to the individual small power producer, as well as factors specified in subdivisions (b)(2) and (b)(3), as amended. Clarifies that small power producers that produce electric energy solely by the use of swine or poultry waste can negotiate for a fixed term contract that exceeds five years.

Adds new subsection (d), providing that an electric public utility cannot be required to enter into a contract with or purchase power from a small power producer if the electric public utility's obligation to purchase from the these small power producers has been terminated pursuant to 18 CFR 292.309. 

Makes further clarifying and conforming changes. Applies to any standard contract rates and terms approved by the Commission or non-standard negotiated agreements entered into between a small power producer and the electric public utility on or after the date the act becomes law. 

Provides that a small power production facility that would otherwise be eligible for the standard offer rate schedules and power purchase agreement terms and conditions approved by the Commission in Docket No. E-100, Sub 140, but fails to commence delivering power to the utility on or before September 10, 2018, must remain eligible for the rate schedules and terms and conditions, unless the nameplate capacity of the generation facility when taken together with the nameplate capacity of other generation facilities connected to the same substation transformer exceeds the nameplate capacity of the substation transformer. Sets forth that the term of a power purchase agreement eligible for the rate schedules and terms and conditions under this provision commence on September 10 , 2018, and end on the date that is 15 years after the commencement date. Permits an electric public utility to have the option in its discretion of electing not to interconnect to its distribution system a solar photovoltaic facility with a nameplate capacity of 10 MW or greater that had not executed an interconnection agreement prior to July 1, 2017, and instead requiring the facility to interconnect to the utility's transmission system. Applies to small power production facilities that established a legally enforceable obligation in accordance with the Commission's then applicable requirements on or before November 15, 2016.

Part II.

Enacts GS 62-110.8 (Competitive Procurement of Renewable Energy). Directs electric utilities to file for approval with the Commission a program for the competitive procurement of new renewable energy resources with the purpose of adding renewable energy resources to the State's generation portfolio in a manner that allows the State's electric public utilities to continue to reliably and cost-effectively serve customers' future energy needs. Specifies which renewable energy resources are eligible to participate in the competitive procurement. Directs electric utilities to issue requests for proposals to procure renewable energy in specified amounts to be allocated over a term of 45 months. Requires the Commission to determine the offering of a new renewable energy resources competitive procurement and the amount to be procured at the termination of the initial 45-month procurement period. Authorizes electric utilities to jointly or individually implement the aggregate competitive procurement requirements, and specifies three ways by which implementation may proceed. Provides four limitations for procured renewable capacity, including the requirement that each public utility's procurement obligation be capped by the public utility's current forecast of its avoided cost calculated over the term of the power purchase agreement. Provides that electric utilities under this statute may determine the location and amount of annual procurement within their respective balancing authority areas, with consideration of diversification of renewable energy siting, efficiency and reliability, and potential for increased cost. Requires the competitive renewable energy procurement requirements to be independently administered by a third-party entity, as specified, to be approved by the Commission. Requires all reasonable and prudent administrative and related expenses incurred to implement the independent administration to be recovered from market participants through administrative fees levied upon those that participate in the bidding process, as approved by the Commission. Authorizes electric utilities to participate in any competitive procurement process, within its assigned service territory. Requires a public utility that uses non-publicly available information concerning its own distribution or transmission system in preparing a proposal to make that information available to third parties that have notified the public utility of their intention to submit a proposal for the same RFP. Defines balancing authority and balancing authority area. Authorizes electric public utilities to recover the costs of all purchases from third-party renewable energy resources and authorizes revenue of any utility-owned assets procured under this statute through an annual rider approved by the Commission and reviewed annually. Sets out that the annual increase in the aggregate amount of these costs that are recoverable by an electric public utility under this provision cannot exceed 1% of the electric public utility's total NC retail jurisdictional gross revenues for the preceding calendar year. Authorizes the Commission to adopt rules to implement the requirements of this statute, as specified. This statute does not apply to electric utilities serving fewer than 150,000 NC retail jurisdictional customers as of January 1, 2017.

Amends GS 62-153(b) to provide that the subsection (prohibiting public utilities from paying fees, commissions, or compensation to certain companies) does not apply to power purchase agreements entered into pursuant to the competitive renewable energy procurement process established under new GS 62-110.8.

Directs the competitive renewable energy procurement process required by GS 62-110.8 to be filed with the Commission no later than 120 days after Part II becomes effective. Directs the Commission to issue an order to approve, modify, or deny the program no later than 90 days after the submission of the program by the electric public utility.

Part III.

Enacts GS 62-159.2 (Direct Renewable Energy Procurement for Major Military Installations, Public Universities, and Large Customers). Requires each electric public utility providing retail electric service to more than 150,000 NC retail jurisdictional customers as of January 1, 2017, to file with the Commission an application requesting approval of a new program applicable to a major military installation, as defined in GS 143-215.115(1); UNC; and other new and existing non-residential customers with either a contract demand equal to or greater than 1 MW or a contract demand at multiple service locations equal to or greater than 5 MW in aggregate. Specifies the requirements of each public utility's program application, including a requirement to allow eligible customers to select the new renewable energy facility from which the electric public utility must procure energy and capacity and a requirement to provide a range of terms between two and twenty years from which the participating customer can elect. Adds that eligible customers must be allowed to negotiate with renewable energy suppliers regarding price terms. Limits each contracted amount of capacity to no more than 125% of the maximum annual peak demand of the eligible customer premises. Requires each public utility to establish reasonable credit requirements for financial assurance for eligible customers consistent with the UCC of North Carolina; however, exempts major military installations and UNC from these financial requirements. Provides that the program must be offered for a period of five years or until December 31, 2022, whichever is later, and cannot exceed a combined 600 MW of total capacity. Details capacity that must be reserved for participation by major military installations and UNC. Requires major military installations and UNC to fully subscribe to all its allocation prior to December 31, 2020, or a period of no more than three years after approval of the program, whichever is later. Provides for reallocation of specific capacity reserved that is not used by major military installations or UNC, and any capacity provided for in the statute that is not awarded prior to the expiration of the program. Provides for the payment of the total cost of any renewable energy and capacity procured or provided by the electric public utility for the benefit of the program customer to be paid by that customer in addition to the participating customer's normal retail bill. Requires the program customer to receive a bill credit for the energy as determined by the Commission, so long as the the bill credit does not exceed utility's avoided cost. Directs the Commission to ensure that all other customers are held neutral from the impact of the renewable electricity procured on behalf of the program customer. The application required to be filed with the Commission pursuant to GS 62-159.2 must be filed by the electric public utility no later than 180 days after the act becomes law. 

Part IV.

Amends GS 62-133.2 (Fuel and fuel-related charge adjustments for electric utilities). Adds to the meaning of cost of fuel and fuel-related costs set out in subsection (a1) to include (1) the total delivered costs, including capacity and noncapacity costs, associated with all purchases of electric power from qualifying cogeneration facilities and qualifying small power production facilities, as defined in 16 USC 796, that are not subject to economic dispatch or economic curtailment by the electric public utility and not otherwise recovered under existing subdivision (6) and (2) all non-administrative costs related to the renewable energy procurement pursuant to GS 62-159.2, not recovered from the program participants. Amends subsection (a2), providing that for the costs identified in subdivisions (4), (5), (6), and new (10) and (11) of subsection (a1), the annual increase in the aggregate amount of these costs recoverable by an electric public utility cannot exceed 2.5% (currently, 2%) of the utility's total NC retail jurisdictional gross revenues for the preceding calendar year. Modifies subdivision (a2)(1), providing that for the noncapacity costs described in subdivisions (4), (10), and (11) of subsection (a1), the specific component for each class of customers must be determined by allocating these costs among customers based on the method used in the electric public utility's most recently filed fuel proceeding commenced on or before January 1, 2017 (currently, based on the utility's NC energy usage for the prior year), as determined by the Commission, until the Commission determines how these costs must be allocated in a general rate case for the electric public utility commenced on or after January 1, 2017 (currently, January 1, 2008). Modifies subdivision (a2)(2), providing that for the capacity costs described in subdivisions (5), (6), (10), and (11) of subsection (a1), the specific component for each class of customers must be determined by allocating these costs among customers based on the method used in the electric public utility's most recently filed fuel proceeding commenced on or before January 1, 2017 (currently, based on the utility's NC peak demand for the prior year), as determined by the Commission, until the Commission determines how these costs must be allocated in a general rate case for the electric public utility commenced on or after January 1, 2017 (currently, January 1, 2008). Makes conforming changes. 

Part V.

Amends GS 62-133.8 (Renewable Energy and Energy Efficiency Portfolio Standard/REPS), modifying subdivision (h)(4) to decrease the annual per-account charges through which electric power suppliers can recover incremental costs incurred to comply with the statute's requirements, as specified, from $34 to $27 for residential customers for 2015 and thereafter. Effective July 1, 2017, and applies to cost recovery proceedings initiated on or after that date.

Provides for the recovery of all reasonable and prudent incremental costs incurred by an electric power supplier prior to July 1, 2017, to comply with any requirement repealed or amended by the act as provided in GS 62-133.8(h) as amended. Sets out that reasonable and prudent incremental costs include: (1) costs under purchase contracts for renewable energy entered into prior to July 1, 2017, for the purpose of complying with the renewable energy portfolio standards requirements amended by this act and (2) the costs of renewable energy facilities built or acquired by a public utility for which a certificate of public convenience and necessity has been issued by the Commission prior to July 1, 2017.

Part VI.

Enacts new GS Chapter 62, Article 6B (Distributed Resources Access Act).

New GS 62-126.1 titles the Act.

New GS 62-126.2 states that public policy encourages the leasing of solar energy facilities for retail customers, and holding harmless electric public utilities' customers that do not participate in such arrangements.

New GS-126.3 defines 15 terms as used in the new Article.

New GS 62-126.4 requires each electric public utility to file for Commission approval revised net metering rates for electric customers that own renewable energy facilities for their primary use, or are customer generator lessees (as defined). Requires rates to be nondiscriminatory and established only after investigation of the costs and benefits of customer-sited generation. Directs the Commission to establish net metering rates under all tariff designs, as specified. Provides for a metering rate that applies until rates are approved by the Commission. Authorizes retail customers that own and install an on-site renewable energy facility and interconnect to the grid prior to the date the Commission approves new metering rates to continue net metering under the net metering rate at the time of interconnection until January 1, 2027.

New GS 62-126.5 authorizes an offering utility (as defined) and its affiliates to be deemed electric generator lessors and offer leases to solar energy facilities within the utility's own assigned service area, or the service area assigned to an affiliated offering utility. Prohibits recovering costs in marketing, installing, owning, or maintaining leases from other nonparticipating utility customers. Provides that the Commission has no jurisdiction over the financial terms of such leases. Authorizes offering utilities and customer generator lessees to participate on an equal basis with other lessors and lessees, and in any approved incentive program offered by the utility to its customers. Authorizes an electric generator lessor that owns a solar energy facility within an offering utility's assigned service area that is located on a premises owned or leased by a customer generator lessee to lease that facility exclusively to a customer generator lessee under a lease, provided that the solar electric generator lessor complies with the terms, conditions, and restrictions under this statute and holds a valid certificate. Provides that an electric generator lessor is not considered a public utility if the solar energy facility is provided under a lease for the customer generator lessee's use on its premises. Prohibits lease of solar energy facilities other than under this statute, and provides that doing so deems the electric generator lessor a public utility in violation of the franchised service rights of the offering utility or any other electric power supplier authorized to provide retail electric service in the State. Does not authorize the sale of electricity from solar energy facilities directly to any customer of an offering utility or other electric power supplier by the owner of a solar energy facility. Provides that electrical output from any solar energy facility leased under this program is the sole property of the customer generator lessee. Limits the total installed capacity of all solar energy facilities on an offering utility's system leased under this statute to 1% of the previous five-year average of the NC retail contribution to the offering utility's coincident retail peak demand. Authorizes the offering utility to refuse to interconnect customers if that would result in exceeding the limitation. Directs offering utilities to establish a program for new installations of leased equipment to permit the reservation of capacity by customer generator lessees. Provides requirements for the program. Requires customer generator lessees' solar energy facilities to serve only one premises, and not serve multiple customer generator lessees or multiple premises.

New GS 62-126.6 provides 12 requirements for the form and content of a lease agreement offered by an electric generator lessor, including that it must be signed and dated by the retail electric customer. Requires the person currently obligated to maintain or warrant a leased solar energy facility to disclose the name, address, and telephone number of a person who will be assuming the maintenance or warranty of a solar energy facility, prior to transferring those obligations. Provides requirements for an electric generator lessor's marketing materials concerning a retail electric customer's estimated future utility charges.

New GS 62-126.7 prohibits a person from engaging in the leasing of a solar energy facility without having applied for and obtained a certificate authorizing those operations from the Commission. Directs the Commission, in acting upon an application for a certificate to engage in business as an electric generator lessor, to take into account the stated policy in GS 62-126.2, as well as the policy in GS 62-2(a). Directs the Commission to issue a certificate of authority to engage in business as an electric generator lessor to applicants that the Commission finds are fit, willing, and able to conduct that business in accordance with this Article. Requires an applicant to certify four things to the Commission, including that the applicant will register each leased solar energy facility with the Commission. Authorizes the Commission, upon request of listed individuals or entities, to review the certificate to determine whether the solar electric generator lessor is conducting business in compliance with this Article, and after notice, suspend the certificate and enter upon a hearing to determine whether the certificate should be revoked. Authorizes the Commission, after hearing and for good cause shown, to reinstate, continue a suspension of, or revoke a certificate. Establishes a civil penalty of up to $10,000 per occurrence for any person to solicit business as a lessor of solar energy facilities without a valid certificate, engage in unfair or deceptive practices in the leasing of renewable electric generation facilities, or operate in violation of the terms of the issued certificate.

New GS 62-126.8 directs offering utilities to file a plan with the Commission to offer a community solar energy facility (as defined) program for participation by its retail customers, which must offset the energy use of at least five subscribers, and gives no single subscriber more than a 40% interest, and which must be available on a first-come, first-served basis until the total nameplate generating capacity of those facilities equals 20 MW. Limits a community solar energy facility to a nameplate capacity of 5 MW, and sizes each subscription to represent 200 W of the facility’s generating capacity, and no more than 100% of the maximum annual peak demand of electricity of each subscriber at the subscriber’s premises. Requires community solar energy facilities to be located in the service territory of the offering utility filing the plan. Requires subscribers to be located in the State, and either in the same county or a contiguous county to where the facility is located. Authorizes an electric public utility to file a request for Commission approval for an exemption from the location requirements, and authorizes the Commission to approve the request for a facility located up to 75 miles from the county of the subscribers, if deemed to be in the public interest. Directs the offering facility to credit the subscribers to its community solar energy facility for all subscribed shares of energy generated by the facility at the avoided cost rate. Authorizes the Commission to approve, disapprove, or modify a community solar energy facility program, subject to eight listed requirements, including that it be consistent with the public interest.

New GS 62-126.9 authorizes a municipality that sells electric power to retail customers to elect to be deemed an electric generator lessor and to offer leases to solar energy facilities within its service territory. Prohibits costs from marketing, installing, owning, or maintaining leases through the municipality’s leasing program as a lessor from being recovered from other nonparticipating municipality retail customers through rates. Authorizes an electric generator lessor that owns a solar energy facility within such a municipality’s service territory, and that is located on a premises owned or leased by a customer generator lessee, to lease the facility exclusively to a customer generator lessee under terms and conditions approved by the municipality, and provides that the electric generator lessor holds a valid certificate issued by the Commission under GS 62-126.7. Provides that a municipality acting as an electric generator lessor is not required to comply with GS 62-126.7. Provides that an electric generator lessor is not considered a public utility under GS 62-3(23) if the solar energy facilities are only made available to customer generator lessees under a lease that conforms to GS 62-126.6 for the customer generator lessee’s use of its premises where the solar energy facility is located to serve the electric energy requirements of that premises, provided that the provisions of GS 62-126.4 do not apply to a municipality or other electric generator lessor that offers leases to solar energy facilities located within the municipality’s service territory. Net metering tariffs adopted by such municipality must be adopted by its governing council or commission under GS Chapter 160A, Article 16. Prohibits the lease of solar energy facilities in a municipal electric service area other than under this statute. Does not authorize the sale of electricity from solar energy facilities directly to any customer of a municipality by the owner of a solar energy facility. The electrical output of an eligible renewable electric generation facility under this statute is the sole and exclusive property of the customer generator lessee. Restricts eligible solar energy facility service to one premise per facility, and prohibits service to multiple customer generator lessees or multiple premises. Requires the customer generator lessee to enroll in the applicable rate schedule made available by the municipality, subject to this statute’s participation limits.

New GS 62-126.10 directs the Commission to adopt rules to implement the provisions of this Article.

Amends GS 62-3(23) to amend the definition of public utility. Excludes persons who construct or operate an eligible solar energy facility on the site of a customer’s property and leases the facility to that customer.

Amends GS 62-110.1. Replaces the current requirement that persons who construct an electric generating facility primarily for that person’s own use be required to report to the Utilities Commission the proposed construction of such a facility prior to beginning construction with one that requires report of proposed construction and completion of the facility to the Commission and the interconnecting public utility, for informal purposes only, and not requiring action by the Commission or Public Staff (no longer specifies that such report is required prior to beginning construction). Exempts solar energy facilities and community solar energy facilities from the certification requirements of that statute, and subjects them to the reporting requirement mentioned above. Effective when the act becomes law. The plan required to be filed with the Utilities Commission under GS 62-126.8(a) must be filed by the electric public utility no later than 180 days after the effective date of the section.

Part VII.

Amends GS 62-133.8 (Renewable Energy and Energy Efficiency Portfolio Standard). Requires standards adopted by the Commission for interconnection of renewable energy facilities to include an expedited review process for swine and poultry waste to energy projects of 2MW or less.

Part VIII.

Amends GS 62-155 by adding the following. Requires each electric public utility that serves more than 150,000 North Carolina retail jurisdictional customers as of January 1, 2017, to file an application with the Utilities Commission for approval of a program offering incentives to residential and nonresidential customers for the installation of small customer-owned or -leased solar energy facilities participating in a public utility's net metering tariff. Limits the incentive to 10 kilowatts alternating current for residential solar installations and 100 kilowatts alternating current for nonresidential solar installations. Authorizes public utilities required to offer the incentive program to recover reasonable and prudent costs of incentives and program administrative costs through amortization over a 20-year period; does not prevent the reasonable and prudent costs of a utility's programs to incentivize customer investment in or leasing of solar energy facilities from being reflected in a utility's rates to be recovered through the annual rider. Sets out requirements for the program incentive, including limiting it to 10,000 kilowatts of installed capacity annually beginning  January 1, 2018, and continuing until December 31, 2022, and limiting nonresidential installations to 5,000 kilowatts in aggregate for each of the years of the program.

Makes a conforming change to GS 62-133.8.

This Part is effective when it becomes law; the application required to be filed with the Utilities Commission must be filed by the utility no later than 180 days after the effective date.

Part IX.

Enacts new GS 62-351, which sets out a declaration of policy concerning backup or emergency generators. Requires the Department of Public Safety (DPS), by January 1, 2018, to designate a backup or emergency generator to enroll in the demand‑side management program or rate available that would allow electricity load to be shifted to its generator in response to utility‑administered programs. Requires DPS to report to the Joint Legislative Commission on Energy Policy by January 31 of each year on the status of the designated backup or emergency generator and whether it is enrolled in the utility demand‑side response program or rate. Sets the program and reporting requirements to expire on January 1, 2020.

Part X.

Includes the provisions from the 1st edition of the act and makes the following change to those provisions. Amends GS 62-300 to make the $250 fee also applicable to each application for a certificate of authority to engage in business as a solar electric generator lessor filed under GS 62-126.7.

Part XI.

Directs the Joint Legislative Commission on Energy Policy (Commission) to study the property tax exclusions for the creation of renewable energy through solar energy electric systems and energy and biogas facilities utilizing swine or poultry waste resources, including the economic impact of the property tax exclusion for solar energy electric systems, whether there should be a property tax exclusion for facilities utilizing swine or poultry waste resources to generate electricity or biogas, and how much the property tax exclusion for facilities utilizing swine or poultry waste resources to generate electricity or biogas should be. Allows the Commission to request any information necessary to complete the study created from any county tax office in this State, including specified items. Allows the Commission to request information from the Department of Revenue regarding system and nonsystem property owned by any public service company in this State. Requires the Commission to complete this study and report its findings and recommendations, including any legislative proposals, to the 2017 General Assembly by March 1, 2018.

Part XII.

Directs the North Carolina Policy Collaboratory to study energy storage technology, and to report its results by December 1, 2018, to the Energy Policy Council and the Joint Legislative Commission on Energy Policy. Provides requirements for the study.

Part XIII.

Contains a severability clause.

Retains the effective date of when the act becomes law (unless otherwise provided).