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House | March 25, 2015 | Committee Room | Public Utilities

Full MP3 Audio File

At this time I'd like to call the meeting of the March 25th, meeting of the public utilities to order. We'd like to thank our Sergeant at Arms, Reggie Seals, Marvin Lee, Terry McGraw, and Chris McKracken. Thank you guys for being with us. I'd also like to acknowledge our pages today, Jaden Cheese, with us, thank you very much, Kristen Judkins, and Caroline Norton, thank you for being with us today. First item on the agenda is House Bill 86, Representative McNeill. [SPEAKER CHANGES] Thank you for the opportunity to present the House Bill 86 to this committee today. Basically what I want to do is just take you all the way to the end of the bill, go all the way down. You'll see I've only added four words to the existing law, a local board of education. So everything else that is in House Bill 86 has been there. It is existing law, it's been there for a long time. So we're just adding a local board of education to already existing law. Now, basically what the existing law did is it exempted those entities that are already listed in there from having to pay the non-betterment cost to relocation water and sewer lines in a state project, transportation project, in a state transportation project. The word non-betterment is a key word here, is it means it's not an improvement. Let me give you an example of what this would do, a local board of education or any of these kind of entities already listed has a water and a sewer line that is on a bridge, lines are perfectly fine, there's no problems with them, the state wants to replace the bridge, at the state's discretion, for whatever reason, the bridge needs to be replaced. Under the existing law, if the state comes in and replaces that bridge, they would pay for the relocation of the water and sewer line for all the counties and all cities under population of 5,500. So what we're wanting to do with this bill is add local boards of education on to those exempt organizations or entities that are listed in state law and that's pretty much an explanation of the bill. If anyone's got any questions? [SPEAKER CHANGES] Members, do you have any questions? Representative Hager. [SPEAKER CHANGES] Mr. Chairman, I'd like to make a motion at the proper, whenever you see it reasonable. [SPEAKER CHANGES] Thank you very much, any other questions. None hearing, now's the appropriate time. [SPEAKER CHANGES] Thank you, Mr. Chairman. I make a move for a favorable for House Bill 86 to favorable and I think it's got transportation next, for transportation? [SPEAKER CHANGES] That's right. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] The motion before us is for favorable report with a referral to transportation. All those in favor please say aye. All those opposed? Motion carries, bill passes. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Thank you. Next item we have on the agenda is House Bill 265. Is there a motion to have the PCS before us? Motion by Representative Rodney Moore. Is there a second? All those in favor say aye, all opposed, motion before us. Go ahead. [SPEAKER CHANGES] I'm going to let Representative Stam go first because he needs to be in another meeting. [SPEAKER CHANGES] Thank you, Representative Collins. I support this bill. About 1/5 of the voters in my district in Southern Wake County receive power from the town of Apex, which is an ElectriCities, and it's a big win for them but since the rest of my voters do not receive power from the town of Apex I had to consider whether there was any harm to them and I came to the conclusion, after looking at all the figures, that this is a win-win situation. The voters, the residents in my district, like Holly Springs, Fuquay-Varina, they'll get a better fuel mix in the future. They'll get cheaper energy ultimately in the long term. I hope you'll pass the bill. [SPEAKER CHANGES] I'm going to give just a little more amplification to what he just said. This is a very exciting day for me. I've been anticipating this day for at least five years because it was five years ago at about this time of year

Speaker changes: finally told that Representative stamp that i would run for the district 25 c and i was going round with the fellow who was running for the first time and we would right ?? together and walk round north together county we would talk about counties which would accomplish if we talk round when we got here and it was one thing that came up over and over and over again that we would ?? electricity ,i don't have time you don't wanna her whole history about this electricity group was craving together back in 970's in what time they got organized ?? they found themselves in immediate found large depth you can still see the page up here outside of the bill summary that bill combined lot of history in north Carolina we have a smaller base great paying customer base when we back here at 970 has lot of plans lot of textile plans ?? that larger depth is paid by smaller and smaller mount of rate payers as if ?? it various from one electricity and other 30% of electricity bills that i pay goes nothing but to electricity requirements so we are worth dollars ?? and has been for over 30 years ?? but trying to recruit industry in any type of large industry virtually impossible in these 32 % of electricity this is big economic power of northern electricity bills for eastern north Carolina and I'm like him ?? but i represent people's in the duke progress rest as well ?? for those people's they are also going to get large mount of electricity on this and the reason is most of the generation assets that the camp owns but they are basically ?? i several plans and for the most part it's nuclear plans couple of parts and it's nuclear plans so for most operate of these assets ?? for fewer costs because most of them would be do with nuclear power that's the cheapest part in the north Carolina ?? actually duke is expecting a 70 million dollar fuel savings ?? as well as the electricity rest themselves there gonna questions in how much the electricity savings is bout to question ?? is different for every single one of them ?? he house is ?? for any class of customer that's duke progress but not anything like 26 cents per month ?? will be incurring as cost savings and i will be constructing own the duke progress of the life setting assets as far as 30 years out so as far as 25 of the 30 years everybody is gonna saving money as far as the duke body of the result ?? duke customer owe them the fact that this is economic customer bills ?? for eastern part of the state and that will be an economic engine which will help the part of the state rather than ?? we are very excited bout this someone at the other primary sponsor just have minute ?? take you technically through the bill Speaker changes:thank you ??

—looking at coming up here. When I ran for office, this was the biggest issue for my campaign, and I'm in the same district with Senator Newton. So that region in Eastern North Carolina— we pay thirty to forty percent more. At least thirty cents on our electric bills, per dollar, goes just to the debt. So it was not a simple to solve, and I've been working since I got up here with folks at Duke Energy and with folks at ElectriCities to try to come up with where we are, and the work that Representative Collins and Senator Newton did in their study committee, to say that this is the one way that we could really relieve some of the debt. But it was not easy to structure and we were just thrilled that we were able to come up with a proposal that so quickly went through the federal regulatory environment and the reason— I mean it was almost unprecedented when they called and said, "You'll never believe this but the federal group has given us an answer!" So the next piece IS the state legislation; we thought this could take, still, years. And the reason that it was approved so quickly was because it was structured in such a way that it really was a win-win, and a fair deal, and the price that we're paying for the assets is appropriate and will benefit all of the payers across the whole state. So I really appreciate your support and I turn it over to Representative Pierce. [SPEAKER CHANGES to Representative Pierce] Excuse me, colleagues, for being late. I was in another meeting. But I'm just glad to be here today. I represent Scotland County, Hoke County, Robeson County, and Richmond County in the General Assembly, and three of those cities: the cities of Lumberton, Red Springs, and Lawrenceburg would definitely benefit. As a community person in my community, I know that the effects that the higher bills have on a lot of our seniors, our working families, and this would just be a win-win not only for our citizens, but also for the power company. It's just a great day and I'm just delighted— I've been here five terms, this is a piece of legislation that just really just blows my socks off, you might say, because it's a piece of legislation that's just gonna have a positive effect on people's life, day in and day out. Some people—and, colleagues, I know that you know—sometimes have to choose between paying light bills, food, and other issues. You'd be surprised in some areas, particularly like in Red Springs, I was amazed at the amount of the bills in some of those areas— and Lumberton, and Lawrenceburg. So this is a great day in our state, and going forward, so I hope we can all partner together and work together and this would definitely make a difference. I'm just delighted, I'm just excited, because I know these people personally, they're in my district like your district, so I'm just excited to be here, and thank y'all for just allowing me to share that. Mr. Chairman, thank you. [SPEAKER CHANGES to Chairman] Thank you very much. If we would, just a— We're gonna have —ah, Ms. Fennell, you've got three minutes. Explain the Bill. [SPEAKER CHANGES to Ms. Fennell] Yes, sir. Section 1 of the Bill provides for the cost recovery for a public utility that purchases the assets of [??] Joint Municipal Power Agency. It allows that the cost will be recovered in a rider, rather than through a rate case. It provides that the rider will allow recovery of the acquisition cost, which includes any amount paid above book value for the assets, it will also include any financing costs, and any operating costs of the assets that are purchased. The rider will include adjustments to adjust for the allocation between wholesale and retail customers, and it will also utilize the customer allocation methodology that was adopted in the last general rate case of the utility. The rider will be adjusted every year to provide [unintelligible] any over- or under-recovery from the prior year, and it will last for the useful life of the assets. The useful life of the assets are actually provided in your summary, but it lasts, basically, from twenty to thirty-one years. The remaining sections of the Bill provide the bonding authority for the Joint Municipal Power Agencies to issue new bonds for the shortage— the difference between the acquisition price and the amount of the bonds that are outstanding. Section 2 simply amends the purpose of Chapter 159B, which is the authorizing chapter for the Municipal Power Agencies. Section 3 amends their powers and duties to provide that they may issue support contracts to pay these bonds back. Section 4 provides for the support contracts, and this is how the Joint Municipal Power Agencies will actually pay for the bonds— and the support contracts are allowed to be used to raise funds to refinance the bonds, to finance any collateral posting requirements from the power supply arrangements, and to finance any reserves that are required for the sale of the assets. Section 5 of the Bill provides the bonding language. And this does allow the Joint Municipal Power Agencies to issue bonds, and the new bonds can only be used to pay for the cost of a project that's being sold—so the difference of the acquisition price and the amount owed on the bonds—and the bonds can be issued to finance any collateral posting requirements of replacement power supply arrangements. These bonds can be paid back with a pledge of the revenues of the electric systems, from the sale of power from these electric systems, and from the payments that are received from the support contracts. The remaining sections of the Bill are simply conforming changes that make other changes to the statu—

To allow these new bonds to be paid with the revenues of the electric system. And also to make it clear that the bonds can be paid with the support contracts that are basically being used to pay for these bonds. I'm happy to answer any questions. [SPEAKER CHANGES] Thank you Miss Fennel. Representative ?? [SPEAKER CHANGES] I'd like just a couple comments just to maybe anticipate a couple of questions that usually come up. Number one is, do you have any opposition to this bill? This bill's been vetted through the local government commission. It's been vetted by the public staff at the utilities commission. It's been looked at by everybody who's an electric customer. Whether you're an electric cities, Duke progress, or Duke. And to the best of our knowledge, there's no opposition to this bill that we've been able to find anywhere. Another thing is I'd just like to. One other thing, one other question that comes up is, will this call savings be passed on to the rate holders? Well as a result of a study committee that Senator Newton and I co-chaired three years ago, we passed legislation in 2012, if you remember, that codified the council's government's long time recommendation on these municipalities that they not divert more than 3% of revenue or 5% of assets from their electricity phone over to the general phone for other uses. So there really is not an opportunity for that to be done anymore. So the savings will have to go directly to the rate payers. We kind of anticipated and put the cart before the horse, hoping and praying that this day would come one day and that law would actually mean something. I'd also be remiss if didn't thank people at Electric City's and the people at Duke for the negotiations they've been doing over the last several years. There have been some interruptions and some hiccups and things that have put it on hold for a while from time to time. But they are the only people that have worked harder than Senator Newton and I have, I think, to bring this day to pass. And I certainly would be remiss if I didn't thank them for it. And now we're open for questions. [SPEAKER CHANGES] Representative Hager. [SPEAKER CHANGES] Thank you Mr. Chairman. Couple comments. Representative Pierce and I share a constituency ?? Her name is Miss McQueen. Miss McQueen calls me about every two or three months. And she talks to me about this issue. She's in the ETJ of Red Springs. And she pays, she has about a thousand square foot house, and she pays in excess of $600 a month for her electric bill. Now she can't afford that. This is an example of where people are struggling to pay their rent, pay their mortgage. They're struggling to put food on the table for their kids. They're struggling to find jobs this year because of this issue. And I'd be remiss of I didn't mention who I think has been a good corporate in this and Duke Energy. This company has put it out there. They didn't have to do this. Nobody told 'em to do it. Nobody held a gun to their heads, said you've got to do this. But I think it's an example of how these representatives in this company came together for the good of these people that could least afford it to do it for themselves. This is a great example of how government ought to work. And with that Mr. Chairman, I'd like to make a motion at the right time. [SPEAKER CHANGES] Any other questions? We tend to take a vote on this at 1:25. Representative Bungardner. [SPEAKER CHANGES] Thank you Mr. Chairman. Do we have somebody here from Duke Power that could speak about what Duke Power is gonna gain out of these arrangement and explain a little bit about how this is gonna work out? [SPEAKER CHANGES] We would. If you would please announce your name and tell us who you're with. And unfortunately, you've got one minute. [SPEAKER CHANGES] Thank you Mr. Chairman. Members of the committee. My name's Kent Fondle. I'm a director with Duke Energy. And I have been working on this for quite a while. The benefit, I think the question was, how will it benefit Duke Energy progress as customers? And I think it was stated fairly eloquently and fairly simply. Is it the vast majority of this energy, and these assets that ?? currently owns, is nuclear energy. And it's the cheapest energy source on our system today. So when you bring that energy into our system for our existing customers, you average down the rate for our existing customers. And with that I'll be glad to take additional questions. [SPEAKER CHANGES] Thank you very much, Mr. Fondle. Representative Dalla. [SPEAKER CHANGES] Thank you Mr. Chairman. Just very briefly. I was down here during Governor Martin's administration. And this was a big issue back then. And it may have been mentioned by, I'm sure it was, by Representative Collins before I got here. There were a lot of battles, actually, over the years at different times. There were quite a number of vary significant pushes back and forth on how to resolve this. And so, as Representative Collins and others have said, this may well be one of the most important, maybe the most important issue that

That this general assembly deals with in this session. And it comes after, literally, decades of struggling with the issue to finally arrive at the solution today. So I just, congratulate, echo what Representative Hager said. Congratulate the energy companies do. The electric cities, the municipalities. Everybody that's been involved in this. And appreciate greatly the sponsors, I'm sure they're very very pleased to be able to bring this to the forum and resolve something that's been an outstanding issue for several decades. [SPEAKER CHANGES] Thank you Representative ?? Any other questions? Representative ?? [SPEAKER CHANGES] Real quick. And If I understood you, it doesn't affect us on the Duke power side. Just the progress side. ?? affect us at all. [SPEAKER CHANGES] Right. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Any other questions? Representative Bumgard. [SPEAKER CHANGES] Thank you, I did have one other question I wanted to ask, then I'll. Did I hear Miss Fennel say the rider, that's really the basis of this deal, is gonna last the life of assets. And that those or some of 'em are gonna be 30 years. Is that what I heard? [SPEAKER CHANGES] Representative. [SPEAKER CHANGES] Yes, sir. That is correct. The rider will last for the life of the assets, which is 31 years. It would be up to 31 years. [SPEAKER CHANGES] Representative Hager. Uh, Representative. [SPEAKER CHANGES] Which is a good thing. That's how long they have to advertise the cost of this purchase. So that's, rather than front-loading all that expense in the first year of raising Duke progress, customer's rates, they have been nice enough to say yes we will advertise the cost of ours over a very long period of time. Which, therefore, makes it easier on all the customers, to start with. [SPEAKER CHANGES] Representative Hager. [SPEAKER CHANGES] Thank you Mr. Chairman. I move for a favorable report to the PCSF Bill 265 and in favor to the original. [SPEAKER CHANGES] And with a serial to finance? [SPEAKER CHANGES] Serial to finance. If we have to. [SPEAKER CHANGES] You've heard the motion seconded by Representative Moore. All those in favor of the motion to give a favorable report, unfavorable to the original bill with a serial referral to finance, please signify by saying aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] All opposed. Motion carries. [SPEAKER CHANGES] Thank you Mr. Chair and thank you. [SPEAKER CHANGES] We're adjourned.