August 5, 2021

The Honorable Roy Cooper The Honorable Phil Berger The Honorable Tim Moore of Senate President Pro Tempore Speaker of the House 20301 Mail Service Center 16 W. Jones Street, Rm 2007 16 W. Jones Street, Rm 2304 Raleigh, NC 27699 Raleigh, NC 27601 Raleigh, NC 27601

Re: Business and Electricity Customer Requests for HB 951, “Modernize Energy Generation”

Dear Governor Cooper, Senator Berger, and Speaker Moore:

As major employers and large energy consumers with significant operations and business interests in North Carolina, we have a substantial interest in the discussions surrounding comprehensive energy legislation this session, including House Bill 951 (“Modernize Energy Generation”).

To position ourselves for long-term economic success, our companies have made significant commitments to reduce carbon emissions, become more energy efficient, scale up our use of renewable energy,1 and electrify our transportation fleets. We also strongly support the goals of North Carolina to achieve a 70% reduction in electric-sector greenhouse gas emissions by 2030 and a carbon-free electricity grid by 2050. We expect our utility service providers to do the same.

While we appreciate lawmakers’ intent to modernize the state’s electricity system and expand customer access to renewable energy, we have a number of serious concerns with HB 951. We respectfully urge lawmakers to go back to the drawing board to develop a bill that will build a more affordable, reliable, and clean electricity grid that prioritizes emissions reductions, invests in the future of the state’s energy industry, and reflects the input of broad, diverse stakeholders.

Specifically, we recommend that any comprehensive energy bill:

1. Above all, prioritize the swift transition to a clean, modern, affordable and flexible electricity grid. Utilities should embrace competitively-procured clean energy and demand- side management technologies to cut carbon emissions, reduce peak demand, and help customers save money and energy. These investments can and should be made while also ensuring the reliability and affordability of the electricity grid. To procure these resources, we recommend the use of competitive, all-source requests for proposals that are independently monitored and based upon an independent assessment of need that is

1 More than 66 North Carolina businesses have made public commitments to power their operations with 100% renewable energy. 1

evaluated by the North Carolina Utilities Commission.

2. Preserve the existing authority of the North Carolina Utilities Commission (NCUC) to protect ratepayers. The NCUC is best positioned to balance the interests of the state's electric utilities and its people. Allowing utilities to over-earn and spend ratepayer money without proper checks and balances could harm North Carolina businesses, burden low- and moderate-income consumers, and prove extremely costly for all North Carolinians and our economy.

3. Support and continue to use established, proven processes at the NCUC to determine whether new utility investments in natural gas are reasonable, prudent, and cost- effective. It is the job of the NCUC to solicit, document, and evaluate evidence to determine which, if any, new generating resources are reasonable and prudent for maintaining the reliability and affordability of the electricity grid. Natural gas facilities constructed today are likely to become uneconomic in the future as the country rapidly decarbonizes. Mandating the construction of new, expensive gas plants through legislation is not in the best interest of ratepayers, as it could force businesses and residents to pay for expensive, stranded assets well into the future.

4. Include provisions that prioritize energy efficiency first. Reducing electricity use, particularly during times of peak demand, is the most effective way to cut emissions and reduce electricity costs. Utilities and customers should be appropriately incentivized to reduce both their energy use and peak demand.

5. Strengthen and improve the accessibility of customer renewable energy programs. Lawmakers should support a broad array of utility-offered renewable energy programs so that customers can access and benefit from them, including businesses of all sizes and low- income customers. It is currently difficult to purchase cost-competitive renewable energy in the state, and strict program eligibility requirements and arbitrary program caps further reduce accessibility and should be immediately addressed.

6. Allow utilities to securitize as much of their coal assets as is feasible. With appropriate guardrails, securitization can be an effective tool for utilities to finance coal plant closures while delivering substantial ratepayer savings.2 Arbitrary caps on securitization should be avoided. Instead, the NCUC should be permitted to work with utilities to determine how much of their coal assets can be securitized.

7. Authorize a study of electricity market reforms to cut costs and emissions. Other states, including South Carolina, are actively investigating and implementing utility market modernizations to save ratepayers money, cut emissions, and increase market competition and customer choice. Market reforms could include, but not limited to, performance-based ratemaking, reserve margin sharing, and voluntary markets for dispatching real-time energy across utility service territories. The NC General Assembly should study these tools for

2 The benefits of securitization for storm costs were demonstrated by the implementation of Senate Bill 559 in 2019. 2

potential implementation. Additionally, lawmakers should not preemptively bar our state’s Environmental Management Commission, which is appointed by the Governor and Republican legislative leaders, from considering whether North Carolina should join the Regional Greenhouse Gas Initiative (RGGI); this topic should be studied and should be open to consideration and public comment.

While we appreciate the efforts of the HB 951 bill sponsors to modernize and bolster the electricity grid, we cannot support energy legislation that fails to prioritize affordability and decarbonization. Energy is critical to North Carolina’s economic vitality. It is crucial that lawmakers make smart energy-related decisions today in order to protect our economy and meet the needs of citizens and businesses for many years to come.

Thank you for your consideration. Please feel free to reach out with any questions.

Sincerely,

Biogen DSM North America Gaia Herbs Google JLL Mars, Incorporated Nestlé New Belgium Brewing Sierra Nevada Brewing Co. Unilever

CC: All members of the North Carolina General Assembly Duke Energy North Carolina President Stephen DeMay

For more information, please contact Brianna Esteves at [email protected].

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