Concern and opposition continue to grow in North Carolina’s business community regarding House Bill 951, which is energy legislation that emerged in June at the NC General Assembly. Below is a letter that 48 manufacturers and companies with major operations across North Carolina sent to House legislators on July 14 expressing their opposition to HB951. In June, 31 textile companies sent a similar letter of opposition to legislators. This letter is below as well.
Speaker Tim Moore, Rep. Dean Arp, Rep. Destin Hall, Rep. John Szoka
North Carolina Electric Utility Ratepayers Oppose HB 951
14 July 2021
Dear Speaker Moore and Representatives Arp, Hall and Szoka,
The undersigned organizations and companies oppose HB 951- Modernize Energy Generation. Representatives of our organizations and individual companies have participated in the House Energy Stakeholder process, and we thank you for that opportunity. We have attempted to be constructive and straightforward about our concerns with the bill as currently drafted, we have continued to explore ways to resolve the multitude of issues that have been identified by our organizations and others, and we have offered numerous edits to the bill that, if incorporated, would assuage our concerns. Since the concerns of our organizations and companies have not been addressed, we have no option other than to oppose the bill.
We respectfully request that you make the following changes to the bill:
Restore NC Utilities Commission Authorities. Many of the long-standing decision-making authorities of the NC Utilities Commission that have balanced the best interests of utilities with the best interests of ratepayers have been marginalized or altogether eliminated by this legislation.
Sustain Current Practice for Determining Need for New Generation. Preserve Current Practice and Commission Authority for Determining Need for New Generation. The bill mandates that Duke Energy and private solar developers add new solar generation to the grid regardless of whether the new generation is needed or not; thus, requiring ratepayers to pay for generation (and potentially, new transmission infrastructure) that is not needed to serve the customer base.
Securitize a Significant Portion of the Remaining Coal Unit Book Value. The bill calls for only $500 million of the remaining book value in the coal units to be recovered through securitization, which is less than half of the remaining book value. Approximately $20 million in ratepayer savings is achieved for every $100 million of the book value that is securitized.
Require Utility Shareholders to Assume Some of the Risk of New Nuclear Investments. The bill allows the utilities to invest $50 million for early site planning for an advanced nuclear unit, with no assurance that any of that ratepayer investment will be returned to ratepayers if the unit is never operational (ratepayers are still paying hundreds of millions of dollars for similar investments at the Lee site where no power ever has, or ever will be generated). There should be a shared risk between ratepayers and shareholders, or the nuclear provision should be deleted.
Strike the Rebuttable Presumption. The bill creates a dangerous new rebuttable presumption that the utility’s spending under the coal retirement plan is reasonable and prudent, bypassing current legal tests that are regularly applied by the Commission to protect ratepayers from imprudent or unreasonable spending.
Allow NCUC to Expand Capacity Limits for the Renewables Programs. The Commission should be allowed to expand the Green Source Advantage program and Shared Solar Program capacity limits to accommodate additional interest in the program so long as the overall cap on renewables generation currently included in the bill is not surpassed; and the Shared Solar Program should be available for customers of Dominion Energy, in addition to Duke Energy.
We appreciate your consideration of these concerns.
Ajinomoto Health & Nutrition NA ,INVISTA Arauco Panels USA LLC, Kimberly-Clark, Archer Daniels Midland, Kuraray America Inc, Ashley Furniture Industries, LANXESS, Carolina Stalite, Linde, The Chemours Company, Louisiana Pacific, Clariant Corporation, Mallinckrodt Pharmaceuticals, Clearwater Paper Corporation, Messer Americas, Corning Incorporated, New Belgium Brewing, Cummins Inc, Novozymes North America, DAK Americas, Nucor Steel, Domtar Corporation, Nutrien, Dow Chemical, Pfizer Inc, DuPont, Reynolds American Inc, Ecolab, Saft America Inc, EGGER Wood Products LLC, Shurtape Technologies LLC, Elementis, Silar LLC, Evergreen Packaging LLC, Smithfield Foods, Georgia-Pacific, Surry Chemicals Inc, Google, Syngenta Crop Protection Inc, Hexion, The Timken Company, Ingredion, Trinity Manufacturing Inc, International Paper, WestRock Company, Weyerhaeuser
cc: Members of the North Carolina House of Representatives
June 16, 2021
Dear Members of the North Carolina General Assembly:
We are writing on behalf of the textile industry and our workforce to express grave concern about H.B. 951 that will prove extremely harmful to North Carolina’s textile manufacturers.
North Carolina has a deep and beneficial history as a national leader in textile production. Even with the emergence of global competition, North Carolina leads the nation with over $2 billion in annual textile exports, and it ranks #1 in total textile investment in the United States. 1 With this level of investment, North Carolina employs over 33,000 people in more than 600 textile manufacturing facilities. Additionally, N.C State University is home to the nation’s only college devoted entirely to textiles.
Media reports have indicated that stakeholders are meeting behind the scenes at the General Assembly to propose “major energy legislation.” 2 At the same time, Duke Energy has presented a plan to the Utilities Commission to spend some $80 billion on new electric generation facilities and related infrastructure.3
As long-term substantial investors and employers in North Carolina, we urge the General Assembly to reject any proposal that would result in higher energy costs for the state’s industrial base. Our industry members operate in a highly competitive global environment and cannot simply pass on higher costs to captive customers. On par with raw materials, energy is a leading cost factor in textile manufacturing. Further, many countries such as China subsidize energy costs for their textile sector, giving them a substantial, unfair advantage in the global marketplace. As a result, textile manufacturers are extremely sensitive to utility rates and the unfortunate reality is that if not protected from rate increases many of our facilities will cease making investments in this state, while others will shut down entirely and move operations elsewhere.
Moreover, any energy cost increasing proposals would be devastating in light of the generational economic crisis being confronted by our industry as result of COVID-19. Over the past 15 months many U.S. textile companies were confronted with idle capacity, rampant cancellation of orders, plant closures, and workers being furloughed. Textile orders for the military also declined because of COVID restrictions. Regrettably, conditions have been so severe during the pandemic that century-old textile companies that survived the Great Depression, the onslaught of imports over the past 40 years, and the recent Great Recession have faced possible bankruptcy.
COVID-19 has created an unprecedented destruction of demand for apparel and textiles. Billions of dollars of orders for U.S. fiber, yarn, and fabric were cancelled last year as retail shopping outlets were closed for many months and then operated at reduced capacity. The Census Bureau reports that for March through May 2020, clothing sales were down $44 billion, or 66 percent, relative to the same three months in 2019. In fact, clothing sales exhibited the largest percentage decline of all major spending categories within the U.S. economy over this period. 4
While there was some improvement in the latter months of 2020 and moving into 2021, sales are still not back to pre-pandemic levels. For the full calendar year 2020, clothing sales were down $70 billion, or 26 percent, compared to 2019.5 This historic downturn in demand led to many U.S. textile manufacturers operating at barely 10 percent of existing capacity beginning in March 2020.
For all these reasons, our industry simply cannot sustain an energy rate increase. As a result, we strongly urge the General Assembly to take these circumstances into consideration as you evaluate the negative impacts of H.B. 951 on the current status and future of North Carolina manufacturing.
With that noted, one current legislative opportunity that we support is H.B. 611, the Study Electric Utilities’ Resiliency Act. This bill will study electric markets in the Carolinas to determine the need for and potential benefits of energy cost reductions. We support this legislation as means to better understand the possibility of a competitive structure that could reduce customer costs and spark a new era of industrial growth.
In closing, we urge the General Assembly to reject any energy rate increasing proposals, including those proposed in H.B 951, and to make cost controls a central component of any new energy legislation. Further, we encourage you to support studying market competition in order to better understand opportunities to ensure that energy rates in North Carolina are set at levels that allow manufacturers to remain competitive in the global marketplace.
A.B. Carter Inc
American Suessen Corporation
Coats North & Central
Gildan Activewear Inc.
Milliken & Company
Murata Machinery USA, Inc.
Wade Manufacturing Company
1 Source: https://edpnc.com/industries/textiles/. 2 Travis Fain, Secret talks underway on potential major NC energy bill, WRAL.com, March 10, 2021 (https://www.wral.com/secret-talks-underway-on-potential-major-n-c-energy-bill/19566862/). 3 Duke Energy Carolinas 2020 Integrated Resources Plan, NCUC Docket No. E-100, Sub 165, at 16 (Sept. 1, 2020).
4 U.S. Census Bureau, Monthly Retail Trade Report, Seasonally Adjusted Monthly Sales for 448: Clothing and Clothing Accessories Stores 5 Ibid.