League Bulletin

March 2, 2018

League Sees Results on Pair of Duke Energy Rate Cases
With Intergovernmental Collaboration, Business Expansions Bringing Hundreds of Jobs
State Invites Input on Development of 'Opportunity Zones'
Cities Request FCC Protect Low-Income Broadband Subsidy
Register for Congressional City Conference
State Gives Daily Air Quality Forecasts for Metro Areas

League Sees Results on Pair of Duke Energy Rate Cases

A partial settlement between the North Carolina League of Municipalities and Duke Energy Carolinas (DEC) promises substantial benefits to cities and towns in the western half of the state, both in terms of savings and as they seek to convert street lighting to new LED technology. The settlement comes as a part of the ongoing DEC rate case before the N.C. Utilities Commission and after the League intervened on behalf of its members and their interests.

Meanwhile, the Utilities Commission has issued a final order granting Duke Energy Progress (DEP) a much lower rate increase than the company had requested for customers in the eastern part of the state, and included other benefits to cities and towns in that decision. It was also a case in which the League intervened.

In the DEC case, the partial settlement should pave the way for faster, more efficient conversion to LED technology, saving money for municipal taxpayers, making communities safer and leading to more efficient energy use. The lowering of existing rates for traditional street lighting will save cities and towns $2 million, savings that can go toward conversion costs. Equally important, key disincentives to LED conversion will be removed. The streamlining of rate structures, a lower transition fee and the ability to spread payment of those transition costs will help in the transition.

Other details of the partial settlement include:

-LED prices will remain flat; DEC will not seek a rate increase. Although there will still be a transition fee to switch to LED from an existing high-pressure sodium (HPS) or metal halide light that hasn’t failed, that transition fee is reduced (from $54 to $40, though the League recommended the fee's elimination entirely) and there is opportunity for the municipal customer to spread the billing of those transition fees over four years.

-DEC will re-evaluate LED transition fees every two years between rate cases and reduce the fee if applicable. The only time the rate could rise is after a rate hearing. It could be reduced between hearings.
-The settlement closes HPS lighting technology and replaces it with LEDs upon fixture failure, with no transition fee, unless the customer requests the old technology for appearance consistency.
-DEC will continue to engage with the League and its members on lighting issues.

Separately, state regulators last Friday issued an order granting Duke Energy Progress (DEP) a much lower rate increase than the company requested for its customers. The N.C. Utilities Commission, which oversees rate cases, ultimately approved less than half of what DEP filed for. The League intervened in the case to highlight that the expenses municipalities and public authorities incur for electric service are paid by citizen taxpayers, and that they will ultimately bear any increase in rates levied upon municipalities or public authorities. The League requested that regulators ensure rate increases and associated rates of return are fair to all customer classes; take steps to eliminate disincentives or barriers to innovation; and provide a structure, oversight and timetable for constructive dialogue on these issues among the stakeholders in the interim periods between rate cases.

Among positive outcomes from the case, DEP has agreed to host a technical workshop in the second quarter of 2018 for all stakeholders to discuss the company's Power/Forward program, announced last year as an initiative to modernize the state's electric system. The League values this as a potential move toward quick installation of advanced metering infrastructure (AMI), so the utility can implement new and innovative rate designs for customers. AMI is advantageous for customers in that they will have information about their energy usage during different times of the day and will be able to make better choices about that usage to save money on their bills.

Additionally, per the state's order, DEP and the public staff of the Utilities Commission entered into an agreement that requires DEP to maintain its current differential between on- and off-peak energy rates in its time-of-use (TOU) rate. DEP had proposed TOU rate designs that narrowed the differential between on- and off-peak rates, which the League viewed as problematic for all customers as it did not provide enough incentive to shift usage from peak periods. In light of the rate increase, it is especially important that customers have incentives to conserve energy and have opportunities to reduce their bills. The DEP rate case emerged last year, asking an increase worth $419.6 million annually (revised down from a $477.5 million request), proposing that the basic monthly charge for residential customers rise from $11.13 to $19.50. The settlement orders that the charge rise only to $14. A news release from the Utilities Commission outlines the history of the rate case.

With Intergovernmental Collaboration, Business Expansions Bringing Hundreds of Jobs

Separate, recently announced corporate expansions in North Carolina are set to bring hundreds of new jobs and big investments. On Thursday, word broke that GE Aviation would create 146 full-time positions with well-above-average salaries at its facilities in Asheville and West Jefferson with the company investing $105 million. "We continue to build on a great workforce, culture and community that supports advanced manufacturing jobs in Western North Carolina," said Asheville Plant Leader Michael Meguiar in a news release. "This merging of technology and a strong, creative workforce is the foundation of our success." Partners in the project included the N.C. Department of Commerce, Economic Partnership of North Carolina, the General Assembly, the N.C. Community College System, Buncombe County, Ashe County, the City of Asheville, Ashe County Economic Development, and the Economic Development Coalition of Asheville and Buncombe County.

And last week, Ernst & Young (EY), one of the world's largest professional services companies, announced it would create 375 jobs, many of them high-salary, and invest $8.2 million in Charlotte over the next five years. An additional plus is the related development of an "EY wavespace" innovation center, which according to a news release will bring together "multi-disciplinary teams to focus on disruptive growth, improvement strategies and technologies." EY Charlotte Office Managing Partner and Carolinas Market Leader Malcomb Coley called it an exciting time for North Carolina as it sees "new and diverse skills bringing creative ideas and innovation to business leaders across the state." The Department of Commerce, the Economic Development Partnership, the General Assembly, the Community College System, Mecklenburg County and the City of Charlotte were all partners in the project. Days before, RiceWrap Foods Corporation announced 305 new jobs in Granville County in a project whose state and local government partners included the Town of Butner.

State Invites Input on Development of 'Opportunity Zones'

The state Department of Commerce continues to seek your input as it moves on a component of the recent federal tax legislation that could aid distressed parts of the state. The tax law authorizes each state to designate up to 25 percent of its total low-income census tracts as qualified "Opportunity Zones," according to a detailed news release. The program is meant to give tax incentives to qualified investors to reinvest unrealized capital gains into low-income areas. North Carolina has a little more than 1,000 qualifying low-income census tracts, and the commerce department is currently reviewing data to make a list of recommended tracts to the U.S. Department of the Treasury by the March 20 due date. A new state website provides more information on the program and invites recommendations for both its development in North Carolina and the designation of specific census tracts. Interested parties can also contact Business Link North Carolina at (800) 228-8443.

Cities Request FCC Protect Low-Income Broadband Subsidy

The National League of Cities (NLC) and partners have called on the Federal Communications Commission (FCC) to keep intact its Lifeline subsidy program that provides qualifying low-income households with monthly aid for mobile broadband. NLC in a recent federal update explained that the FCC has proposed changes to the program to limit the number of mobile providers eligible to participate and strike out a requirement that eligible phones have WiFi hotspot capabilities without extra tethering charges. NLC along with the National Association of Telecommunications Officers argued to regulators that the change could hurt low-income families in losing their only way to access high-speed Internet at home. "Millions of Lifeline consumers will lose access to their selected service provider, and perhaps their only means of making phone calls and accessing the Internet, in exchange for the hope that someday new facilities will be made available to them," the organizations said. According to NLC, the FCC is accepting comments until March 23. Cities can submit comments using docket numbers WC 17-287, 11-42, and 09-197 in the commission's Electronic Comment Filing System. NLC asks that any submitted comments also be shared with its principal associate in technology and communications, Angelina Panettieri, at panettieri@nlc.org.

The National League of Cities' (NLC) Congressional City Conference is ahead March 11-14 in Washington, D.C. Interested parties can register online. "The National League of Cities strategically and effectively positions local government priorities to key representatives in Congress," says the organization, which also at the conference provides public service tips, collaboration opportunities and training for productive meetings with federal officials. Focuses this year will include NLC's Rebuild With Us campaign calling on Congress to "invest in our vision to rebuild and reimagine America's infrastructure." Other topics at the center of it are safety and resilience, regulations and licensing, community and housing, data and technology, advocacy and communication, and opioid abuse. Learn more about the conference at http://ccc.nlc.org.

State Gives Daily Air Quality Forecasts for Metro Areas

State environmental regulators are marking the start of the 2018 ozone season with daily air quality forecasts in seven metropolitan areas across the state. They've seen dramatic improvements over the years. "Last year we recorded just four days where ozone reached levels that were unhealthy for sensitive groups," said Mike Abraczinskas, director of the N.C. Division of Air Quality. For comparison, they recorded 103 potentially unhealthy-level days in 2000. Abraczinskas credited the technological progress of the manufacturing, utility and mobile sectors for the positive trend. "We have transitioned from a time where ozone alerts were common, to the entire state being in compliance for the federal ozone standard," he said. "It’s a tremendous accomplishment.” The metro areas being monitored for daily forecasts are Asheville, Charlotte, Fayetteville, Hickory, Rocky Mount, the Triad and the Triangle, all of which were a top-quality "code green" as of Friday. The daily forecasting will run through Oct. 30. A press release from the state explains ozone and the purpose for monitoring.