Sue Sturgis Last week North Carolina Democrats held a “bill funeral” in Raleigh for proposals Republican leadership refused to advance, including a bill that would have stopped Duke Energy and other utilities from charging customers for political spending. The N.C. Consumer Protection Act would have strengthened prohibitions barring Duke Energy and other investor-owned utilities from charging customers for political influence activities, good-will advertising, and other activities tangential to delivering energy. The bill did not pass either chamber by the crossover deadline of May 8 and cannot be considered again until North Carolina’s next legislative session in 2027.
Inspired by policies adopted in other states, the act would have prevented utilities from including in their rate calculations any expenses related to political contributions, lobbying, self-promotional advertising, entertainment, legal costs for regulatory challenges, travel by directors on utilities’ corporate boards, and other expenditures not directly related to providing electric or gas service. It would have required the utilities to submit detailed annual reports to the North Carolina Utilities Commission (NCUC) documenting expenses associated with such activities.
After a petition by consumer advocates, the NCUC adopted limited reforms in 2021 barring recovery of some of these costs, but not others. For example, regulators allow utilities to recover from their customers the majority of their membership dues for trade associations like the Edison Electric Institute and American Gas Association; they must exclude an amount calculated to account for the association’s time spent on direct lobbying. EPI has documented how those calculations, which are made by the trade associations and not independently verified or audited, likely undercount their political activities. The Consumer Protection Act would have barred utilities from charging customers for such memberships, which can cost millions of dollars for a utility annually.
Creating an Energy Equity Fund
Currently the North Carolina Utilities Commission Public Staff – an independent state agency charged with representing consumers’ interest in NCUC proceedings – is responsible for combing through Duke Energy’s rate-case filings and finding instances where customers were wrongly charged. The Commission can then deny those charges, or issue refunds if they find that customers had been paying for them. In 2023, for example, the Public Staff challenged over $100,000 of Duke’s recovered aviation expenses, and another $544,000 of its recovered lobbying expenses, which included $526,000 paid improperly to the Edison Electric Institute. The NCUC agreed that those costs should be shifted to shareholders.
The Consumer Protection Act would have established substantial civil penalties for cases where utilities illegally charged customers for non-recoverable expenses, ranging from $50,000 to $150,000 per violation. The money collected would have been used to create an “Energy Equity Fund” to be spent on disaster recovery, energy assistance for low-income households, and transitioning to zero-emission appliances.
The bill was introduced in the Senate (SB 720) by primary sponsors Graig Meyer and Natalie Murdock, along with two other Democrats. It was introduced in the House (HB 922) by primary sponsors Pricey Harrison, Zack Hawkins, Julie von Haefen, and Maria Cervania, with a dozen other Democrats signing on. Republican leadership sent it to each chamber’s Rules Committee, which took no further action. The chair of House Rules is John R. Bell, whose top donor over the course of his career is Duke Energy; in the Senate it’s William Rabon, who also counts the company among his top donors.
Advocates for the legislation were swimming against a political tide that included a surprise GOP bill, SB 261, allowing Duke Energy to scrap its 2030 climate targets and making it easier for the company to charge customers for expensive construction projects like nuclear power or gas plants while they are being built, shifting the risk of project failure or abandonment away from the utilities’ investors and onto customers. That measure was passed by the Senate three days after its introduction by Republican Sen. Paul Newton, a former top Duke Energy executive; Newton has since resigned from the legislature to become the University of North Carolina’s top lawyer. SB 261 is now with the House, where it’s been referred to the Rules Committee.
States seek to curb questionable spending
Laws similar to the Consumer Protection Act, passed in other states, have saved customers money. Utility customers in Connecticut have avoided paying for up to $10 million of their utilities’ political spending on lobbying, advocacy, and advertising activities since the state passed a law prohibiting recovery of such costs, according to utilities’ transparency filings there. In Colorado, where such a policy was recently adopted, Xcel Energy’s gas customers will no longer pay for at least $775,000 in annual political expenses.
Those savings come at a time when Americans have faced a growing financial burden from their utility bills. Over the past two years, utility arrearages nationally have climbed by about 30%, from about $16.1 billion ($5.2 billion for natural gas and $10.9 billion for electricity) to $21 billion ($5.7 billion for natural gas and $15.4 billion for electricity), according to the National Energy Assistance Directors Association. NEADA says the increase is primarily due to rising electric costs as record high summer temperatures drive air conditioning demand.
The Center for Biological Diversity’s Powerless report released this year found that Duke Energy was among the utilities that disconnected the most customers for non-payment. From January through September of last year, Duke disconnected 135,000 accounts for nonpayment – a 19% increase over the same period in the previous year. In North Carolina alone, Duke’s more than 64,000 shutoffs from May to September were 22.5% higher than the same period in 2023.
California, Massachusetts, and Oregon recently introduced similar utility accountability legislation. California state Sen. Jerry McNerney, an author of the California bill, told The Sacramento Bee that he saw the legislation as a way to send a message to utility companies: “Listen, you guys need to start paying attention to how you’re using ratepayer money.”
(North Carolina Senate Democrats’ photo of the “bill funeral” used with permission.)
