My Power Bill Is Too High.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 1024

Short Title: My Power Bill Is Too High. (Public)
Sponsors: Senators Murdock and Salvador (Primary Sponsors).
Referred to: Rules and Operations of the Senate
May 4, 2026
*S1024-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO REPEAL MUL TIYEAR RATE -MAKING A UTHORITY AUTHORIZED BY 2
S.L. 2021-165 AND TO DIRECT A REEXAMINAT ION OF PERFORMANCE -BASED 3
RATE MAKING TO BETTER PROTECT NORTH CAROLINA CUSTOMERS. 4
Whereas, S.L. 2021-165 (House Bill 951) authorized performance-based rate making 5
and multiyear rate plans for electric public utilities; and 6
Whereas, under current law, electric public utilities are permitted to propose multiyear 7
rate plans (MYRPs) that allow rates to increase automatically over several years without the same 8
levels of annual regulatory scrutiny; and 9
Whereas, performance -based rate making was intended to align utility financial 10
incentives with outcomes that matter to consumers, including lower costs, reliability, and 11
efficiency; and 12
Whereas, under House Bill 951, performance incentive mechanisms (PIMs) are tied 13
to utility earnings but remain limited in financial impact relative to overall utility revenues and 14
capital investment decisions; and 15
Whereas, utilities operating under tra ditional regulatory structures continue to earn 16
results based primarily on capital investment, meaning they are financially incentivized to build 17
more generation, transmission, and infrastructure, regardless of whether lower -cost alternatives 18
such as energy efficiency or demand-side management would better serve customers; and 19
Whereas, performance incentive mechanisms in North Carolina have been discussed 20
and implemented at levels that are effectively capped at approximately one percent (1%) of utility 21
earnings, which is insufficient to outweigh the financial incentives associated with large -scale 22
capital investments; and 23
Whereas, a performance incentive capped at or near one percent (1%) cannot 24
reasonably be expected to drive changes in utility decision mak ing when utilities may earn 25
significantly higher returns through capital expenditures; and 26
Whereas, as a result, current performance -based rate -making structures do not 27
meaningfully change utility behavior or adequately protect consumers from rising electr icity 28
costs; and 29
Whereas, consumers reasonably expect that energy policy will prioritize lower bills, 30
fewer unnecessary infrastructure costs, and real accountability for utility performance; and 31
Whereas, without stronger incentives or penalties tied directly to outcomes that matter 32
to customers —such as bill affordability, peak demand reduction, and avoided infrastructure 33
costs—performance-based rate making risks becoming a nominal reform rather than a 34
meaningful consumer protection tool; and 35
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 1024-First Edition
Whereas, the Ge neral Assembly finds that stronger performance incentives and 1
greater regulatory accountability are necessary to ensure that utility actions align with consumer 2
interests; Now, therefore, 3
The General Assembly of North Carolina enacts: 4
5
REPEAL OF MULTIYEAR RATE PLANS 6
SECTION 1. General Rate Case. – G.S. 62-133 is amended by adding a new 7
subsection to read: 8
"(g) Notwithstanding any other provision of law, rates for electric public utilities shall be 9
established only through a general rate case conducted pursuant to this section. The Commission 10
shall not approve or implement any form of automatic or preauthorized multiyear rate adjustment 11
mechanism." 12
SECTION 2.(a) Repeal MYRP. – G.S. 62-133.16 reads as rewritten: 13
"§ 62-133.16. Performance-based regulation authorized. 14
(a) Definitions. – For purposes of this section, the following definitions apply: 15
… 16
(4) "Earnings sharing mechanism" means an annual rate-making mechanism that 17
shares surplus earnings between the electric public utility and customers over 18
the a period of time covered by a MYRP.PBR plan. 19
(5) "Multiyear rate plan" or "MYRP" means a rate -making mechanism under 20
which the Commission sets base rates for a multiyear period that includes 21
authorized periodic changes in base rates without the need for the electric 22
public utility to file a subsequent general rate application pursuant to 23
G.S. 62-133, along with an earnings sharing mechanism. 24
… 25
(7) "Performance-based regulation" or "PBR" means an alternative rate -making 26
approach that includes decoupling, an earnings sharing mechanism, and one 27
or more performance incentive mechanisms, and a multiyear rate plan, 28
including an earnings sharing mechanism, or such other alternative regulatory 29
mechanisms as may be proposed by an electric public utility.mechanisms. 30
… 31
(9) "Rate year" means the year of the MYRP for which base rates are effective. 32
… 33
(c) Application. – An electric public utility shall be permitted to submit a PBR 34
application in a general rate case proceeding initiated pursuant to G.S. 62-133. A PBR application 35
shall include a decoupling rate-making mechanism, one or more PIMs, and a MYRP, including 36
both an earnings sharing mechanism mechanism, and proposed revenue requirements and base 37
rates for each of the years that a MYRP the year that PBR is in effect or a method for calculating 38
the same. The PBR application may also include proposed tracking metrics with or without 39
targets or benchmarks to measure electric public utility achievement. The following additional 40
requirements apply to a PBR application: 41
(1) The following shall apply to a MYRP:under PBR: 42
a. The base rates for the first rate year of a MYRP shall be fixed in the 43
manner prescribed under G.S. 62-133, including actual changes in 44
costs, revenues, or the cost of the electric public utility's property used 45
and useful, or to be used and useful within a reasonable time after the 46
test period, plus costs associated with a known and measurable set of 47
capital investments, net of operating benefits, associated with a set of 48
discrete and identifiable c apital spending projects to be placed in 49
service during the first rate year. Subsequent changes in base rates in 50
the second and third rate years of the MYRP shall be based on 51
General Assembly Of North Carolina Session 2025
Senate Bill 1024-First Edition Page 3
projected incremental Commission -authorized capital investments 1
that will be used and useful during the rate year and associated 2
expenses, net of operating benefits, including operation and 3
maintenance savings, and depreciation of rate base associated with the 4
capital investments, that are incurred or realized during each rate year 5
of the MYRP period; provided that the amount of increase in the 6
second rate year under the MYRP shall not exceed four percent (4%) 7
of the electric public utility's North Carolina retail jurisdictional 8
revenue requirement that is used to fix rates during the first year of the 9
MYRP pursuant to G.S. 62-133 excluding any revenue requirement 10
for the capital spending projects to be placed in service during the first 11
rate year. The amount of increase for the third rate year under the 12
MYRP shall not exceed four percen t (4%) of the electric public 13
utility's North Carolina retail jurisdictional revenue requirement that is 14
used to fix rates during the first year of the MYRP pursuant to 15
G.S. 62-133, excluding any revenue requirement for the capital 16
spending projects placed in service during the first rate year. The 17
revenue requirements associated with any single new generation plant 18
placed in service during the MYRP for which the total plant in service 19
balance exceeds five hundred million dollars ($500,000,000) shall not 20
be included in a MYRP, except that combustion turbine generating 21
units which are not part of a combined cycle generating unit may be 22
included in the MYRP subject to the four percent (4%) limit identified 23
in this subdivision. In the alternative, the utility m ay request and the 24
Commission may grant, if it deems appropriate, permission to 25
establish a regulatory asset and defer to such regulatory all or a portion 26
of the asset incremental costs related to such electric generation 27
investments to be considered for recovery in a future rate proceeding. 28
In setting the electric public utility's authorized rate of return on equity 29
for an MYRP period, the Commission shall consider any increased or 30
decreased risk to either the electric public utility or its ratepayers that 31
may result from having an approved MYRP. 32
b. In a proceeding authorizing a MYRP, PBR plan, the Commission shall 33
establish a rider to refund amounts related to the earnings sharing 34
mechanism, and to refund or collect amounts related to PIM rewards 35
or penalties, and decoupling adjustments. 36
… 37
d. In addition to the annual review process set forth in sub-subdivision c. 38
of this subdivision, the following shall apply: 39
1. For each quarter of a MYRP, the electric public utility shall 40
report regarding the status of the approved MYRP projects in 41
the manner directed by the Commission, including reporting 42
on any project that is canceled, along with a detailed 43
explanation regarding the reasons for such cancellation and the 44
replacement capital spending project, if any. The Commission 45
may, upon its own motion or petition by the Public Staff, open 46
a proceeding to examine any potentially unreasonable or 47
imprudent cancellations of approved capital spending projects 48
and may initiate a proceeding to adjust base rates as necessary 49
or direct further action with respect to such canceled project. 50
General Assembly Of North Carolina Session 2025
Page 4 Senate Bill 1024-First Edition
2. In any base rate case immediately following an authorized 1
MYRP, the electric public utility shall be obligated to report 2
on its execution of the approved MYRP projects with respect 3
to any rate year completed as of the date of the filing of the 4
PBR application, including by explaining any material 5
differences between the approved MYRP projects and the 6
actual executed projects. 7
(2) The proposed decoupling mechanism shall only be applied to r esidential 8
customer classes. The Commission shall establish an annual revenue 9
requirement per residential customer and an appropriate distribution of said 10
revenue requirement per customer in each month of the year. The established 11
monthly revenue requireme nts times the actual number of residential 12
customers each month shall become the target revenue for the residential 13
class. Each month, the electric public utility shall defer to a regulatory asset 14
or liability account the difference between the actual reve nue and the target 15
revenue for the residential class. The changes in revenue requirements for the 16
second and third rate years shall be allocated to the residential customer class 17
and divided by the number of residential customers to determine the 18
appropriate adjustment to the annual revenue requirement per residential 19
customer that is used to establish the target revenues for the residential class 20
in the second and third rate years of a MYRP. The electric public utility may 21
exclude rate schedules or riders for electric vehicle charging, including EV 22
charging during off -peak periods on time -of-use rates, from the decoupling 23
mechanism to preserve the electric public utility's incentive to encourage 24
electric vehicle adoption. 25
… 26
(4) Any PIM shall be structured t o ensure that, pursuant to subdivisions (1) and 27
(2) of this subsection, any penalty shall be refunded to customers and any 28
reward shall be collected from customers and shall be limited such that the 29
total of all potential and actual PIM incentives or penal ties does not exceed 30
one percent (1%) of the electric public utility's total annual revenue 31
requirement that is used to fix rates during the first year of the MYRP pursuant 32
to G.S. 62-133, excluding any revenue requirement for the capital spending 33
projects to be placed in service during the first rate year, where the PIM is 34
approved. G.S. 62-133. Any incentives related to demand -side management 35
and energy efficiency measures pursuant to G.S. 62-133.9(f) shall be excluded 36
from the limits established in this section and shall continue to be recovered 37
through the demand-side management and energy efficiency (DSM/EE) rider. 38
… 39
(f) Plan Period. – Any PBR application approved pursuant to this section shall remain in 40
effect for a plan period of not more than 36 12 months. 41
… 42
(k) Limitation. – Nothing in this section shall be construed to authorize multiyear rate 43
plans or automatic rate adjustments outside of a general rate proceeding." 44
SECTION 2.(b) Conforming Changes. – G.S. 62-133.16, as amended by subsection 45
(a) of this section, is amended by deleting "MYRP" wherever it appears and substituting "PBR." 46
47
STUDY OF PERFORMANCE-BASED RATE MAKING 48
SECTION 3.(a) PBR Study. – The Utilities Commission shall conduct a study 49
evaluating the effectiveness of performance-based rate making authorized by S.L. 2021-165. The 50
study shall include each of the following: 51
General Assembly Of North Carolina Session 2025
Senate Bill 1024-First Edition Page 5
(1) An assessment of whether any current performance incentive mechanisms 1
materially influence utility investment decisions. 2
(2) A comparison of performance incentive e arnings to returns on capital 3
investments. 4
(3) An evaluation of the impact of incentive structures that are capped at or near 5
one percent (1%) of the electric public utility's total annual revenue 6
requirement. 7
(4) A comparison of different options to increase or remove caps on performance 8
incentives. 9
(5) Any recommendations to better align utility earnings with customer 10
affordability, reduction in system costs, and avoidance of unnecessary capital 11
investments. 12
SECTION 3.(b) Reporting Requirement. – The Utilities Commission shall submit 13
the study required by subsection (a) of this section to the Joint Legislative Energy Policy 14
Commission by no later than March 1, 2027. 15
SECTION 4. Appropriation. – There is appropriated from the General Fund to the 16
Utilities Commission the sum of ten thousand dollars ($10,000) in nonrecurring funds for the 17
2026-2027 fiscal year to be used for purposes consistent with this act. 18
SECTION 5. Effective Date. – Section 4 of this act becomes effective July 1, 2026. 19
The remainder of this act is effective when it becomes law. 20