On July 29, 2025, the North Carolina General Assembly enacted the Power Bill Reduction Act, overriding Gov. Josh Stein’s veto. This landmark legislation introduces significant reforms to North Carolina’s electric utility regulatory framework. Perhaps most notably, the act eliminates the interim resource planning goal of achieving a 70% reduction in carbon dioxide emissions by 2030 while maintaining the target of reaching carbon neutrality by 2050. The act also provides new mechanisms for cost recovery and securitization of utility capital investments and fuel costs.
Elimination of the 2030 Interim Target for Carbon Reduction
The act amends N.C.G.S. § 62-110.9 by eliminating the statutory requirement that the North Carolina Utilities Commission (NCUC) and electric public utilities must, in preparing their biennial Carbon Plan, plan to reduce the utilities’ carbon emissions by 70% from 2005 levels by 2030 (Interim Target), while retaining the long-term goal of carbon neutrality by 2050. Under the law, the NCUC must still biennially review the Carbon Plan to achieve this goal, considering least-cost planning principles and ensuring the continued reliability of the system. Duke Energy will file its 2025 Carbon Plan and Integrated Resource Plan on Oct. 1, 2025, with an NCUC decision required by Dec. 31, 2026.
Construction Work-in-Progress Cost Recovery for Baseload Generation Facilities
The act amends N.C.G.S. §§ 62-110.1 and 62-133 to authorize an alternative cost recovery mechanism for financing costs associated with construction work-in-progress (CWIP) for baseload electric generating facilities. Utilities may now seek recovery of financing costs on reasonable and prudent expenditures for CWIP through yearly applications, including detailed documentation and supporting testimony, submitted to the NCUC for review as part of enhanced progress reporting and annual review proceedings after a certificate of public convenience and necessity to construct a generating facility has been issued. If the NCUC determines after a hearing that the expenditures were reasonably and prudently incurred, the NCUC may allow an increase in base rates authorizing recovery of financing costs outside of the normal rate-making process. For natural gas baseload facilities, this alternative cost-recovery mechanism sunsets for construction costs incurred after Dec. 31, 2033, but permits continued recovery of financing costs incurred prior to that date. The NCUC must consider the overall cost savings for customers over the life of the facility when approving such recovery.
Refinements to Cost Recovery of Fuel and Fuel-Related Charges
The act substantially revises N.C.G.S § 62-133.2 governing cost recovery for fuel and fuel-related charges. Notably, the amendments expand and clarify the process for annual rider recovery of purchased power expenses and require utilities to make appropriate adjustments to their fuel riders to reflect costs already being recovered in base rates, avoiding the potential for double recovery of any fuel or fuel-related costs. The amendments also require utilities to file quarterly reports with the NCUC detailing any actual over- or under-recovery of incurred fuel costs they observe and projecting the cumulative over- or under-recovery for the 12-month recovery period. If the projected amount is greater than 10% of the total revenue requirement approved by the NCUC in the most recent fuel proceeding, the utility must adjust the increment or decrement rider and file an updated tariff to go into effect at the start of the month that is approximately 45 days from the report filing. Finally, any over- or under-recovery of reasonable and prudently incurred fuel costs will accrue interest on a weighted average basis over the applicable time period.
Performance-Based Regulation and Multi-Year Rate Plan (MYRP) Adjustments
The act amends N.C.G.S. § 62-133.16 to allow for inclusion of the revenue requirement associated with certain new combustion turbine units in excess of $500 million provided that the amount of increase for the third rate year does not exceed 4%. In addition, the act introduces new requirements for quarterly reporting on MYRP project status and cancellations and mandates post-MYRP reporting on project execution and differences from approved plans.
Securitization for Coal Plant Retirement Costs
The act amends N.C.G.S. § 62-133.16 to authorize securitization of costs related to the retirement of subcritical coal-fired generating units. The act provides that utilities may petition the NCUC for a financing order to issue securitization bonds related to their coal plant retirement costs using the same procedures previously available to utilities for securitization of storm recovery costs. The act defines the types of coal-retirement activities and costs that are eligible for securitization and ensures such costs are non-bypassable and must be paid by all retail customers.
