From the outset, North Carolina utilities law has required electricity provision to be least-cost and reliable. Consumers have expected nothing less. In recent years, legislators passed the Carbon Plan law (House Bill 951) to set a new expectation for electricity provision in North Carolina: zero carbon dioxide (CO2) emissions (i.e., carbon neutrality) by 2050. That law retained the former expectations with a slight twist. In determining the future mix of generating resources to attain carbon neutrality, the Carbon Plan — which will result in closing all coal power plants in North Carolina in the coming years — must take the “least cost path” that maintains or increases grid reliability.
Though it has higher CO2 emissions than other generating sources, coal is a reliable source of electricity that provides baseload power. The baseload is the ongoing, ever-present power demand on the grid — the power generation that cannot be intermittent or unreliable. Replacing it in any way that maintains grid reliability requires either lower-emissions natural gas–fired generation or zero-emissions nuclear power, the only other baseload-capable resources. Since permitting and constructing nuclear facilities takes so long, it means that the least-cost and reliable path to carbon-neutral electricity absolutely must rely a great deal upon natural gas. (If the Carbon Plan is amended or repealed, then North Carolina energy will rely all the more on natural gas.)
North Carolina is not alone. In its “2021 Long-Term Energy Assessment,” the North American Electric Reliability Corporation (NERC) stated: “Natural gas is the reliability ‘fuel that keeps the lights on,’ and natural gas policy must reflect this reality.” The reality is that new natural gas pipeline infrastructure and new gas-fired power plants are critical to reliable energy generation in North Carolina in the near term as well as over the longer term.
Nevertheless, natural gas faces political opposition from environmental lobbies and activists, renewable energy interests, and the politicians they support. This opposition has sometimes gone beyond political preferences. North Carolina has seen an activist or opportunistic executive branch either take advantage of gaps in the law or find ways around it to stymie pipeline projects and natural gas–fired power plants.
For example, under Section 401 of the federal Clean Water Act (CWA), a pipeline project needs Water Quality Certification (WQC) from the state whose navigable waters it might affect in order to proceed. Nevertheless, the CWA gives such broad discretion to the states in determining whether a violation would be possible that this 401 WQC process is uniquely vulnerable to exploitation. Many observers have independently used the term “weaponized” to describe how the 401 WQC process has been used against pipeline projects. One of those is North Carolina Congressman David Rouzer, who has filed legislation to streamline and reform the process.
North Carolina is currently served by only one interstate natural gas pipeline. In June 2017, the Atlantic Coast Pipeline (ACP) partners, including Duke Energy, sought 401 WQC approval from the North Carolina Department of Environmental Quality under Gov. Roy Cooper. The ACP needed approval by year’s end 2017 in order to begin tree clearing or else it would have to wait another full year. The project suffered a series of delays not resolved until late January 2018, when certification was announced the same day as a $57.8 million mitigation fund to be controlled by the governor and four days before the news that a dispute between Duke and solar facilities had been settled in the solar facilities’ favor. An investigative report for the legislature found it reasonable to conclude that the governor had improperly used his authority and influence to bring about the mitigation fund and resolve the solar dispute. In 2020, citing ongoing delays and uncertainty, the ACP project was canceled.
In 2020, the Mountain Valley Pipeline (MVP) Southgate project faced a 401 WQC denial from the North Carolina Department of Environmental Quality (DEQ) based on no other rationale than that of uncertainty surrounding the main pipeline project from which it would extend. The main MVP project was facing lawsuits and permit suspensions and delays. Even so, the Hearing Officer had primarily suggested that the MVP Southgate project receive a conditional approval on its 401 WQC so that it could go forward if and when the main MVP project was approved. DEQ denied the permit. The 4th Circuit Court of Appeals overturned the denial, saying DEQ should have explained the reason for not taking the Hearing Officer’s suggested conditional approval. DEQ issued a second denial, this time stating a rationale. Since then, the main MVP project has come online, and the General Assembly passed House Bill 600 in 2023, which created statutory requirements for 401 WQCs and instituting time limits (i.e., “shot clocks”) for permitting actions. But MVP Southgate still lacks certification.
In the meantime, Cooper used an executive order to create an “Environmental Justice Mapping Tool” and “Environmental Justice Hub” that would, among other things, aid state regulators in using “environmental justice” (EJ) in permitting decisions. Even though EJ is not an evaluative criterion, let alone objectively defined, nothing states definitively that agencies cannot use it in making permitting decisions.
Beyond new pipeline projects, the North Carolina Utilities Commission’s Carbon Plan orders have been surprisingly heavy on intermittent renewables and relatively light on new natural gas–fired generation despite the Carbon Plan law’s least-cost and reliable guardrails. It turned out that the modeling being used had several constraints, including prioritizing achieving the Carbon Plan law’s interim goal of 70 percent reduction in CO2 emissions by 2030 and even, despite no provision in law for doing so, essentially implementing a carbon tax on natural gas–fired generation after 2034.
This paper offers the following recommendations to help buttress and improve the laws for the benefit of North Carolina’s energy consumers:
- Repeal the Carbon Plan — or at least its interim goal
- Pass an “Only Pay for What You Get” Act
- Forbid overly vague permitting criteria
- Maintain vigilance over successful reforms
- Urge Congress to pass permitting reforms
