North Carolina energy law adds urgency on housing, weatherization funding

By Elizabeth Ouzts, Energy News Network

With bipartisan energy compromise now law, advocates and some Democrats look to the budget to help protect the state’s poorest ratepayers.

A ceremony this month to enact a new North Carolina law to cut power plant pollution produced a rare picture in this often-polarized state: Republican leaders who control the state legislature standing together with Gov. Roy Cooper, a Democrat.

But notably absent from the event were most of the state’s leading environmental and ratepayer advocates, who say the law does little if anything to help those already struggling to pay their electric bills.

It’s a potent criticism that provoked a handful of Democrats to vote against the bipartisan compromise, and one that even some of its lead negotiators acknowledge.  

Now, both foes and champions of the new law are determined to offset the risks to the energy-burdened, starting with a huge injection of funds in the state budget to help poor residents repair and weatherize homes.

The governor and his staff have voiced support for the plan, though exactly how much money would go to exactly which programs remains murky. 

“It is critical that we get help for low- and moderate-income people with their rates,” Cooper told reporters at the bill signing. “Help has got to come from a lot of places. We’re negotiating help in this budget negotiation right now.” 

‘These things add up’

Decades of redlining and other discriminatory housing policies mean low-income people, who are disproportionately people of color, are more likely to rely on old appliances and live in drafty homes in need of major repair. These households end up paying a large share of their income on energy costs, sometimes having to choose between buying food or paying their utility bill.

“Electricity and utilities are human rights,” said Josh McClenney, a field coordinator with Appalachian Voices focused on energy democracy. “But for black and brown communities, keeping the lights on has always been a struggle.”

On average, low-income renters in North Carolina spend 21% of their income on energy costs, according to the state’s Clean Energy Plan, while low-income homeowners spend 17%. Even those making $50,000 for a family of four — twice the federal poverty rate — spend 7% on their paycheck on energy costs, above the benchmark most analysts consider affordable.

Many of the same communities live near power plants, compressor stations, and other fossil fuel infrastructure, exposing them to health-threatening pollution. Particularly in the eastern part of the state, where energy poverty is most acute, they’re also hard-hit by another consequence of the legacy energy industry: more intense extreme weather events fueled by climate change.

“If you live in a hurricane community,” McClenney said, “several months out of the year, you’re a storm away from having to drop a couple thousand dollars on a hotel room. These things add up super quick.”

A worker takes a break from installing insulation at a home in Elkin, North Carolina in a 2012 photo. Credit: Yadkin Valley Economic Development District

A huge injection of weatherization funds?

Though critics of the new carbon law laud its goals, they say the few bones it throws to low-income ratepayers will do little if anything to meaningfully reduce energy poverty— a reality even some authors of the compromise admit.

“As a climate advocate, I’m proud to have worked on this and I’m proud to support it,” Sen. Julie Mayfield, an Asheville Democrat and co-director of the nonprofit environmental advocacy group MountainTrue, told her colleagues on the Senate floor. But, she added, the bill falls far short of protecting the energy-burdened. “I challenge all of us to stay at the table.”

Sen. Don Davis, a Greenville Democrat among the six in his party to vote against the bill in the Senate, urged his fellow senators not to forget the poor in the future. “I’m standing on behalf of my constituents. I’m begging you,” he said, “to try and do something to help the least of those amongst us.”

For Mayfield, Davis, and many other Democrats, that means looking first to the state budget. Cooper and the General Assembly haven’t passed a full, two-year budget since 2018 — before the GOP lost its supermajority and with it the ability to override vetoes. But the two camps have been waxing conciliatory of late, and they maintain publicly that they’re converging toward agreement.

Earlier this month, Mayfield said she’d been assured the agreement included “over $400 million for weatherization.” The amount would be an exponential increase over that typically allotted to the state from the federal government, about $15 million per year. The House and Senate versions of the budget both include nearly $9 million a year for low-income weatherization.

“That would be tremendously helpful if it actually happened,” said Al Ripley, director of the Consumer, Housing and Energy project at the North Carolina Justice Center and an outspoken critic of the new law.

Still, added insulation, upgraded windows, and more efficient appliances — all typical energy improvements — are of little benefit for homes with leaking roofs or other major issues. That’s why other senate Democrats say the budget agreement could include funding to help low-income ratepayers make significant repairs to their homes. 

“It’s an intersectional issue,” said Sen. DeAndrea Salvador, a Charlotte Democrat who founded a nonprofit focused on low-income energy assistance and, with Mayfield and others, helped craft the new law. “What we’re talking about is housing quality as much as energy affordability. There may be different things that have to work together to get people where they need to be.”

Mary Scott Winstead, a Cooper spokesperson, said via email that the governor had proposed $300 million for low- and moderate-income housing and $25 million for low-and moderate-income weatherization. She didn’t respond to follow-up questions about whether the figure was for one or two years, and whether legislative leaders had agreed to the proposal. 

Ripley welcomed new monies to help lower the state’s energy burden, but he cautioned against robbing Peter to pay Paul. 

“We certainly appreciate any efforts to increase funding for weatherization and urgent repair,” he said. “But it’s imperative that it not come from other money that’s intended to help low-income people.”

‘Hold this promise accountable’

No matter what appears in the budget — if there is one — ratepayer advocates face other key challenges and opportunities in the next 12 months. 

For one, utility regulators must craft a plan for Duke Energy to hit the prescribed pollution reduction targets with the involvement of stakeholders. Many will be watching to make sure the plan doesn’t let Duke build a spate of natural gas plants, allowing the company to meet near-term emission limits but making the midcentury ones more difficult and more costly.

The law requires Duke to own most new generation resources including renewables like solar and wind. Since the company typically spends more money than independent power producers on renewables, experts say, ratepayer advocates also want to avoid a Virginia scenario, where Dominion Energy inflated its offshore wind costs by $2.5 billion.

“We have to be very worried about utilities overbuilding expensive generation,” Ripley said, “when there are less expensive options available.”

Another challenge will come if Duke applies for a multi-year rate increase in the next year. The law allows the utility to earn half a percentage point above its approved profit margin without refunding customers, and it caps rate increases in year two and three at 4% each. Though performance incentives could be targeted toward low-income customers, there’s no guarantee they will be.

There is one solace for customer advocates: it restores the discretion of utility regulators to modify the rate application — not simply accept or reject it as an earlier version of the law dictated. That means intervenors like the North Carolina Justice Center could reach side agreements with Duke to help poor ratepayers, as they did during the last general rate case. And it gives more leeway to the seven-member Utilities Commission, soon to be composed entirely of Cooper appointees.

A final sop to low-income families is a mandate that regulators establish an “on utility bill repayment program related to energy efficiency investments.” Such a program could help some who can ill afford the upfront cost of new, higher-efficiency appliances or added insulation. But the details are scant, with no safeguards to ensure the program will help renters or those with bad credit. Advocates say they’ll be vigilant.

“Our communities need resource assistance, not a loan or finance program that will deepen their debt,” said La’Meshia Whittington, deputy director with Advance Carolina, a nonprofit working to build power in Black communities, in a statement. “Our communities deserve the opportunity to give public input on the programs designed for them.”

Apart from the text of the new statute, utility regulators have already ordered a working group of stakeholders to report by August of next year on policies that would help low- and moderate-income ratepayers. Many are pushing for the findings to include an income-based payment plan for the state’s poorest.

“I’ll be clear that I don’t think this is a one policy, silver bullet issue,” said McClenney. But, he added, “a plan that caps the percentage of income someone would have to pay for basic service would go an extremely long way.”

Still, such a program could require more action from the General Assembly — part of why advocates say they’ll be engaged in multiple forums to fight for low-income ratepayers.  

Lawmakers, regulators, and Duke itself all made a pledge to protect the energy-burdened before the energy compromise became law, Whittington said in her statement. “We are here to hold this promise accountable,” she said.