It’s Not Easy Being ‘Green’ . . . Or Is It? (Part 1)
This article is the first in a pair of articles related to “Green Policies” and how to implement them. The second part in this series will be published in the coming weeks.
By Your corporate General Counsel client calls and says, “Our largest customer (or our largest institutional investor) wants to see our green renewable energy policy and we don’t have one. Draft a ‘Green Policy’ to be considered at our board meeting next week.” Or perhaps your client asks, after-the-fact, “We just passed a ‘Green Policy’ for our company; how can we implement it under applicable laws?” Your first reaction might be “It’s not easy being Green,” but on second thought, “. . . maybe it is.”
The website www.RE100.org contains a long list (over 200) of companies from A (ABInBev) to almost Z (Wells Fargo, Workday and Yoox), that have adopted corporate goals committing to use 100% renewable power. These examples of green policies are readily available; they are not confidential corporate documents. In fact, most are posted on their company websites and promoted prominently so that their customers or investors can see them. E.g. Fifth-third Bankcorp; and Johnson & Johnson.
Private-sector corporations are not the only entities adopting green policies. On October 19, 2018 Governor Cooper issued Executive Order #80, which sets forth three 2025 targets for North Carolina: 1) 40% statewide reduction in greenhouse gas emissions (in other words, using renewable resources rather than petroleum-based resources); 2) a goal of 80,000 zero-emission vehicles; and 3) 40% reduction in state building energy usage. The Executive Order contains directives for immediate action by state agencies, as well as a process for long-term planning.
Energy efficiency is often an overlooked component of green policies, but for many clients it is still the lowest hanging fruit and easiest path to achieve sustainability goals. A report from the Electric Power Research Institute published in May, 2017 calculated that energy efficiency measures can reduce retail energy consumption in North Carolina by 18.4%. Another study places the savings in North Carolina at 16.8%. Regardless of this discrepancy, anywhere from 16.8 to 18.4% translates to billions of dollars in savings, tens of thousands of jobs, and tremendous benefits to the environment (e.g. reducing 17.9 metric tons of CO2 annually). For example, the design and operations of the Proximity Hotel in Greensboro illustrate how to achieve Platinum LEED status with energy efficiency, and its CEO Dennis Quaintance is a charismatic evangelist preaching its benefits.
The North Carolina Clean Energy Technology Center (“Center”), located on the N.C. State University campus, is a leading think tank and developer of programs on energy efficiency and renewable energy utilization. They can evaluate efficiency measures as well as fuel diversity (such as renewable energy) and the benefits they can provide your client. Utility customers can request a third-party assessment which can be done by the Center (or another consultant) to evaluate how facilities can reduce energy usage and costs. In addition, through the Center’s website, one can find “DSIRE” (the Database of State Incentives for Renewables and Efficiency), which is a great search tool for programs or incentives that can help reduce energy costs and usage.
Another often overlooked way for your clients (especially if they are large commercial or industrial facilities) to reduce their energy bills is by finding the optimal rate schedule, or tariff, with their utility and possibly adjust their energy usage to benefit from “time-of-use rates.” As a general principle, electric energy is priced at the margin: i.e., at any given point in time, how much does it cost to generate the last megawatt hour (“MW”) of energy needed to keep the lights on? As one might assume, the cost is much less in the middle of a mild spring night than in the afternoon on a hot July day (or a cold January morning). Therefore, if a customer can shift its energy usage from “peak” hours to “off-peak” hours, they may be able to realize significant energy savings. “Advance Metering Infrastructure” (“AMI”) is being rapidly deployed and allows customers and utilities to measure the electric usage hour-by-hour, or even minute-by-minute. Both Duke Energy Progress and Duke Energy Carolinas are implementing new rate structures to allow customers to realize these benefits. See Duke Energy Progress Rate Schedules MGS-TOU-50, LGS-TOU-50, and LGS-RTP-50; Duke Energy Carolinas Rate Schedules OPT-E, OPT-V, and HP.
A client may assume, “if I want or need renewable energy, I can just purchase it. I’ll find a solar farm or wind turbines, and I’ll purchase it directly from them.” However, in North Carolina and most states, that is not an option. A retail energy user can only purchase electric power from utilities, as recently affirmed by the North Carolina Supreme Court. State ex rel. Utils. Comm’n v. N. Carolina Waste Awareness & Reduction Network, 805 S.E.2d 712, 714 (2017), aff’d per curiam, 812 S.E.2d 804 (2018). Although there have been legislative efforts to allow direct purchases of electric power, see e.g. House Bill 245 in the 2015 Session of the General Assembly, the Court noted that those reform efforts failed to pass, supporting its conclusion that such sales were not allowed under the current statutes. Id. at 717, citing State ex rel. Utils. Comm’n v. Lumbee River Elec. Membership Corp., 275 N.C. 250, 257, 166 S.E.2d 663, 668 (1969) (“It is for the Legislature, not for this Court or the Utilities Commission, to determine whether the policy of free competition between suppliers of electric power or the policy of territorial monopoly or an intermediate policy is in the public interest.”). Eighteen states and the District of Columbia do have – to varying degrees and with varying requirements — what is called “retail choice” of electric supplier. For information on the retail choices, see https://www.electricchoice.com/map-deregulated-energy-markets/.
Can your client generate renewable energy for itself (what is commonly referred to as “self-generation”)? The answer to that question is “yes.” Historically, self-generation in North Carolina was commonly found at textile mills that built a dam on a river to produce electricity to turn the textile machines. More recently, combined-heat-and-power (or “cogeneration”) can be found at industrial facilities needing steam for their manufacturing processes. But the future of self-generation can be seen near Maiden, North Carolina, where Apple constructed and owns a 20 MW solar farm to provide electric power to its data farm there. Such “behind-the-meter” facilities are exempt from certification requirements by the North Carolina Utilities Commission by N. C. Gen. Stat. § 62-110.1(g) (stating that the requirements “shall not apply to persons who construct an electric generating facility primarily for that person’s own use and not for the primary purpose of producing electricity, heat, or steam for sale to or for the public for compensation . . .”).
Part 2 of this article, to be published in the next edition of this newsletter, will explore whether House Bill 589, passed by the General Assembly in 2017, NC Sess Law 2017-192, by creating additional options and pathways for customers to tap into renewable energy resources, may make it “easier . . . to be Green.”
M. Gray Styers Jr. is an attorney in Raleigh and co-chair of the Energy & Natural Resources Practice Group at Fox Rothschild. He is also a Utilities Law Specialist as certified by the NC State Bar and a fan of Muppets movies.