§ 62-133.6. Environmental compliance costs recovery.
§ 62‑133.6. Environmental compliance costsrecovery.
(a) As used in this section:
(1) "Coal‑fired generating unit" means a coal‑firedgenerating unit, as defined by 40 Code of Federal Regulations § 96.2 (July 1,2001 Edition), that is located in this State and has the capacity to generate25 or more megawatts of electricity.
(2) "Environmental compliance costs" means only thosecapital costs incurred by an investor‑owned public utility to comply withthe emissions limitations set out in G.S. 143‑215.107D that exceed thecosts required to comply with 42 U.S.C. § 7410(a)(2)(D)(i)(I), as implementedby 40 Code of Federal Regulations § 51.121 (July 1, 2001 Edition), relatedfederal regulations, and the associated State or Federal Implementation Plan,or with 42 U.S.C. § 7426, as implemented by 40 Code of Federal Regulations §52.34 (July 1, 2001 Edition) and related federal regulations. The term"environmental compliance costs" does not include:
a. Costs required to comply with a final order or judgmentrendered by a state or federal court under which an investor‑owned publicutility is found liable for a failure to comply with any federal or state law,rule, or regulation for the protection of the environment or public health.
b. The net increase in costs, above those proposed by theinvestor‑owned public utility as part of its plan to achieve compliancewith the emissions limitations set out in G.S. 143‑215.107D, that arenecessary to comply with a settlement agreement, consent decree, or similarresolution of litigation arising from any alleged failure to comply with anyfederal or state law, rule, or regulation for the protection of the environmentor public health.
c. Any criminal or civil fine or penalty, including court costsimposed or assessed for a violation by an investor‑owned public utilityof any federal or state law, rule, or regulation for the protection of theenvironment or public health.
d. The net increase in costs, above those proposed by theinvestor‑owned public utility as part of its plan to achieve theemissions limitations set out in G.S. 143‑215.107D, that are necessary tocomply with any limitation on emissions of oxides of nitrogen (NOx) or sulfurdioxide (SO2) that are imposed on an individual coal‑fired generatingunit by the Environmental Management Commission or the Department ofEnvironment and Natural Resources to address any nonattainment of an airquality standard in any area of the State.
(3) "Investor‑owned public utility" means aninvestor‑owned public utility, as defined in G.S. 62‑3.
(b) The investor‑owned public utilities shall be allowedto accelerate the cost recovery of their estimated environmental compliancecosts over a seven‑year period, beginning January 1, 2003 and endingDecember 31, 2009. For purposes of this subsection, an investor‑ownedpublic utility subject to the provisions of subsections (b) and (d) of G.S. 143‑215.107Dshall amortize environmental compliance costs in the amount of one billion fivehundred million dollars ($1,500,000,000) and an investor‑owned publicutility subject to the provisions of subsections (c) and (e) of G.S. 143‑215.107Dshall amortize environmental compliance costs in the amount of eight hundredthirteen million dollars ($813,000,000). During the rate freeze periodestablished in subsection (e) of this section, the investor‑owned publicutilities shall, at a minimum, recover through amortization seventy percent(70%) of the environmental compliance costs set out in this subsection. Themaximum amount for each investor‑owned public utility's annualaccelerated cost recovery during the rate freeze period shall not exceed onehundred fifty percent (150%) of the annual levelized environmental compliancecosts set out in this subsection. The amounts to be amortized pursuant to thissubsection are estimates of the environmental compliance costs that may beadjusted as provided in this section. The General Assembly makes no judgment asto whether the actual environmental compliance costs will be greater than, lessthan, or equal to these estimated amounts. These estimated amounts do notdefine or limit the scope of the expenditures that may be necessary to complywith the emissions limitations set out in G.S. 143‑215.107D.
(c) The investor‑owned public utilities shall file theircompliance plans, including initial cost estimates, with the Commission and theDepartment of Environment and Natural Resources not later than 10 days afterthe date on which this section becomes effective. The Commission shall consultwith the Secretary of Environment and Natural Resources and shall consider theadvice of the Secretary as to whether an investor‑owned public utility'sproposed compliance plan is adequate to achieve the emissions limitations setout in G.S. 143‑215.107D.
(d) Subject to the provisions of subsection (f) of this section,the Commission shall hold a hearing to review the environmental compliancecosts set out in subsection (b) of this section. The Commission may modify andrevise those costs as necessary to ensure that they are just, reasonable, andprudent based on the most recent cost information available and determine theannual cost recovery amounts that each investor‑owned public utilityshall be required to record and recover during calendar years 2008 and 2009. Inmaking its decisions pursuant to this subsection, the Commission shall consultwith the Secretary of Environment and Natural Resources to receive advice as towhether the investor‑owned public utility's actual and proposedmodifications and permitting and construction schedule are adequate to achievethe emissions limitations set out in G.S. 143‑215.107D. The Commissionshall issue an order pursuant to this subsection no later than December 31,2007.
(e) Notwithstanding G.S. 62‑130(d) and G.S. 62‑136(a),the base rates of the investor‑owned public utilities shall remainunchanged from the date on which this section becomes effective throughDecember 31, 2007. The Commission may, however, consistent with the publicinterest:
(1) Allow adjustments to base rates, or deferral of costs orrevenues, due to one or more of the following conditions occurring during therate freeze period:
a. Governmental action resulting in significant cost reductionsor requiring major expenditures including, but not limited to, the cost ofcompliance with any law, regulation, or rule for the protection of theenvironment or public health, other than environmental compliance costs.
b. Major expenditures to restore or replace property damaged ordestroyed by force majeure.
c. A severe threat to the financial stability of the investor‑ownedpublic utility resulting from other extraordinary causes beyond the reasonablecontrol of the investor‑owned public utility.
d. The investor‑owned public utility persistently earns areturn substantially in excess of the rate of return established and foundreasonable by the Commission in the investor‑owned public utility's lastgeneral rate case.
(2) Approve any reduction in a rate or rates applicable to acustomer or class of customers during the rate freeze period, if requested todo so by an investor‑owned public utility that is subject to theemissions limitations set out in G.S. 143‑215.107D.
(f) In any general rate case initiated to adjust base rateseffective on or after January 1, 2008, the investor‑owned public utilityshall be allowed to recover its actual environmental compliance costs inaccordance with Article 7 of this Chapter less the cumulative amount ofaccelerated cost recovery recorded pursuant to subsection (b) of this section.
(g) Consistent with the public interest, the Commission isauthorized to approve proposals submitted by an investor‑owned publicutility to implement optional, market‑based rates and services, providedthe proposal does not increase base rates during the period of time referred toin subsection (e) of this section.
(h) Nothing in this section shall prohibit the Commission fromtaking any actions otherwise appropriate to enforce investor‑owned publicutility compliance with applicable statutes or Commission rules or to order anyappropriate remedy for such noncompliance allowed by law.
(i) An investor‑owned public utility that is subject tothe emissions limitations set out in G.S. 143‑215.107D shall submit tothe Commission and to the Department of Environment and Natural Resources on orbefore April 1 of each year a verified statement that contains all of thefollowing:
(1) A detailed report on the investor‑owned publicutility's plans for meeting the emissions limitations set out in G.S. 143‑215.107D.
(2) The actual environmental compliance costs incurred by theinvestor‑owned public utility in the previous calendar year, including adescription of the construction undertaken and completed during that year.
(3) The amount of the investor‑owned public utility'senvironmental compliance costs amortized in the previous calendar year.
(4) An estimate of the investor‑owned public utility'senvironmental compliance costs and the basis for any revisions of thoseestimates when compared to the estimates submitted during the previous year.
(5) A description of all permits required in order to complywith the provisions of G.S. 143‑215.107D for which the investor‑ownedpublic utility has applied and the status of those permits or permitapplications.
(6) A description of the construction related to compliance withthe provisions of G.S. 143‑215.107D that is anticipated during the following year.
(7) A description of the applications for permits required inorder to comply with the provisions of G.S. 143‑215.107D that areanticipated during the following year.
(8) The results of equipment testing related to compliance withG.S. 143‑215.107D.
(9) The number of tons of oxides of nitrogen (NOx) and sulfurdioxide (SO2) emitted during the previous calendar year from the coal‑firedgenerating units that are subject to the emissions limitations set out in G.S.143‑215.107D.
(10) The emissions allowances described in G.S. 143‑215.107D(i)that are acquired by the investor‑owned public utility that result fromcompliance with the emissions limitations set out in G.S. 143‑215.107D.
(11) Any other information requested by the Commission or theDepartment of Environment and Natural Resources.
(j) The Secretary shall review the information submittedpursuant to subsection (i) of this section and determine whether the investor‑ownedpublic utility's actual and proposed modifications and permitting andconstruction schedule are adequate to achieve the emissions limitations set outin G.S. 143‑215.107D and shall advise the Commission as to theSecretary's findings and recommendations.
(k) Any information, advice, findings, recommendations, ordeterminations provided by the Secretary pursuant to this section shall notconstitute a final agency decision within the meaning of Chapter 150B of theGeneral Statutes and shall not be subject to review under that Chapter. (2002‑4, s. 9.)