The Power Bill Reduction Act.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025

SESSION LAW 2025-78
SENATE BILL 266

*S266-v-7*
AN ACT TO ELIMINATE THE INTERIM DATE FOR CARBON REDUCTION BY
CERTAIN ELECTRIC PUB LIC UTILITIES, TO AL LOW AN ALTERNATIVE C OST
RECOVERY MECHANISM F OR THE FINANCING COS TS OF CONSTRUCTION
WORK IN PROGRESS FOR BASELOAD ELECTRIC GENERATING FACILITIES, TO
MODIFY THE STATUTES GOVERN ING COST RECOVERY FO R FUEL -RELATED
CHARGES AND PERFORMA NCE-BASED RATEMAKING , AND TO CODIFY A
PROVISION AUTHORIZING SECURITIZATION OF COSTS FOR RETIREMENT OF
COAL-FIRED GENERATING UNITS.

The General Assembly of North Carolina enacts:

ELIMINATE THE INTERIM DATE FOR CARBON REDUCTION BY CERTAIN
ELECTRIC PUBLIC UTILITIES
SECTION 1. G.S. 62-110.9 reads as rewritten:
"§ 62 -110.9. Requirements concerning reductions in emissions of carbon dioxide from
electric public utilities.
The Utilities Commission shall take all reasonable steps to achieve a seventy percent (70%)
reduction in emissions of carbon dioxide (CO2) emitted in the State from electric generating
facilities owned or operated by electric public utilities from 2005 levels by the year 2030 and that
result in carbon neutrality by the year 2050. For purposes of this section, (i) "electric public
utility" means any electric public utility as defined in G.S. 62-3(23) serving at least 150,000
North Carolina retail jurisdictional customers as of January 1, 2021, and (ii) "carbon neutrality"
means for every ton of CO2 emitted in the State from electric generating facilities owned or
operated by or on behalf of electric public utilities, an equivalent amount of CO2 is reduced,
removed, prevented, or offset, provided that the offsets are verifiable and do not exceed five
percent (5%) of the authorized reduction goal. In achieving the authorized carbon reduction
goals, goal, the Utilities Commission shall:
(1) Develop a plan, no later than December 31, 2022, 2026, with the electric
public utilities, including stakeholder input, for the utilities to achieve the
authorized reduction goals, goal of carbon neutrality by the year 2050, which
may, at a minimum, consider power generation, transmission and distribution,
grid modernization, storage, energy efficiency measures, demand -side
management, and the latest technological breakthroughs to achieve the least
cost path consistent with this section to achieve complianc e with the
authorized carbon reduction goals goal (the "Carbon Plan"). The Carbon Plan
shall be reviewed every two years and may be adjusted as necessary in the
determination of the Commission and the electric public utilities.
(2) Comply with current law and practice with respect to the least cost planning
for generation, pursuant to G.S. 62-2(a)(3a), in achieving the authorized
carbon reduction goals goal and determining generation and resource mix for
the future. Any new generation facilities or other resources selected by the
Commission in order to achieve the authorized reduction goals goal for

Page 2 Session Law 2025-78 Senate Bill 266
electric public utilities shall be owned and recovered on a cost of service basis
by the applicable electric public utility except that:
a. Existing law shall apply with respect to energy efficiency measures
and demand-side management.
b. To the extent that new solar generation is selected by the Commission,
in adherence with least cost requirements, the solar generation selected
shall be subject to the following: (i) forty -five percent (45%) of the
total megawatts alternating current (MW AC) of any solar energy
facilities established pursuant to this section shall be supplied through
the execution of power purchase agreements with third parties
pursuant to which the electric public utility purchases solar energy,
capacity, and environmental and renewable attributes from solar
energy facilities owned and operated by third parties that are 80 MW
AC or less that commit to allow the procuring electric public utility
rights to dispatch, operate, and control the solicited solar energy
facilities in the same manner as the utility's own generating resources
and (ii) fifty -five percent (55%) of the total MW AC of any solar
energy facilities established pursuant to this section shall be supplied
from solar energy facilities that are utility -built or purchased by the
utility from third parties and owned and operated and recovere d on a
cost of service basis by the soliciting electric public utility. These
ownership requirements shall be applicable to solar energy facilities
(i) paired with energy storage and (ii) procured in connection with any
voluntary customer program.
(3) Ensure any generation and resource changes maintain or improve upon the
adequacy and reliability of the existing grid.
(4) Retain discretion to determine optimal timing and generation and
resource-mix to achieve the least cost path to compliance with the authorized
carbon reduction goals, goal, including discretion in achieving the authorized
carbon reduction goals goal by the dates date specified in order to allow for
implementation of solutions that would have a more significant and material
impact on carbon reduction; provided, however, the Commission shall not
exceed the dates date specified to achieve the authorized carbon reduction
goals goal by more than two years, except in the event the Commission
authorizes construction of a nuclear facility or wind energy facility that would
require additional time for completion due to technical, legal, logistical, or
other factors beyond the control of the electric public utility, or in the event
necessary to maintain the adequacy and reliability of the existing grid . In
making such determinations, the Utilities Commission shall receive and
consider stakeholder input."

MODIFY CONSTRUCTION WORK IN PROGRESS FOR BASELOAD ELECTRIC
GENERATING FACILITIES
SECTION 2.(a) G.S. 62-110.1 reads as rewritten:
"§ 62-110.1. Certificate for construction of generating facility; analysis of long-range needs
for expansion of facilities; ongoing review of construction costs; inclusion of
approved construction costs in rates.
…
(e) As a condition for receiving a certificate, the ap plicant shall file an estimate of
construction costs in such detail as the Commission may require. The Commission shall hold a
public hearing on each application and no certificate shall be granted unless the Commission has

Senate Bill 266 Session Law 2025-78 Page 3
approved the estimated construction costs and made a finding that construction will be consistent
with the Commission's plan for expansion of electric generating capacity. A certificate for the
construction of generating facility by an electric public utility, as that term is defined by
G.S. 62-110.9, shall be granted only if the applicant demonstrates and the Commission finds that
the facility is part of the least cost path to achieve compliance with the authorized carbon
reduction goals goal in G.S. 62-110.9, will maintain or improve upon the adequacy and reliability
of the existing grid, and that the construction and operation of the facility is in the public interest.
interest, and that the other resources listed in G.S. 62-110.9(1) would not establish or maintain a
more cost-effective and reliable generation system consistent with G.S. 62-110.9. In making its
determination, the Commission shall consider resource and fuel diversity and reasonably
anticipated future operating costs. Once the Commission grants a certificate, no public uti lity
shall cancel construction of a generating unit or facility without approval from the Commission
based upon a finding that the construction is no longer in the public interest.
(e1) Upon the request of the public utility or upon its own motion, the Com mission may
review the certificate to determine whether changes in the probable future growth of the use of
electricity indicate that the public convenience and necessity require modification or revocation
of the certificate. If the Commission finds that completion of the generating facility is no longer
in the public interest, the Commission may modify or revoke the certificate.
(f) The public utility shall submit a progress report and any revision in the cost estimate
for the construction approved under s ubsection (e) of this section during each year of
construction. Upon the request of the public utility or upon its own motion, the Commission may
shall conduct an ongoing review of construction of the facility as the construction proceeds. In
any such ongoing review process, the public utility shall submit an application, including detailed
documentation and supporting testimony, demonstrating that the public utility's construction and
related costs and expenditures incurred during the review period in connection with such certified
generating facility were reasonable and prudently incurred and, if necessary, requesting a
modification of the certificate. The purpose of each ongoing review hearing is to determine the
reasonableness and prudence of the cos ts incurred by the public utility during the period under
review and to determine whether the certificate should remain in effect or be modified or revoked.
The public utility shall have the burden of proof to demonstrate that all costs and expenditures
were reasonable and prudently incurred. The Commission shall conduct a hearing regarding each
such review period and shall allow intervention in such proceeding. Subject to any variation
needed at the start or completion of construction, the review period for each proceeding shall be
approximately 12 months of construction and related costs and expenditures. In addition, once
the ongoing review process has been initiated, the public utility shall be required to submit
quarterly status reports and the Public Staff shall be entitled to submit discovery with respect to
such quarterly status reports. The Commission shall commence the hearing with respect to each
review period within 120 days of the public utility 's application and issue a decision within 60
days of the close of the hearing , or waiver thereof if no disputed issues have been identified. If
the Commission approves any revised construction cost estimate estimate, if applicable, and finds
that incurrence of the cost of that portion of the construction o f the facility under review was
reasonable and prudent, the certificate shall remain in effect. If the Commission disapproves any
part of the revised cost estimate or finds that the incurrence of the cost of that portion of the
construction of the facility then under review was unreasonable or imprudent, the Commission
may modify or revoke the certificate.
…."
SECTION 2.(b) G.S. 62-133 reads as rewritten:
"§ 62-133. How rates fixed.
(a) In fixing the rates for any public utility subject to the provisions of this Chapter, other
than bus companies, motor carriers and certain water and sewer utilities, the Commission shall
fix such rates as shall be fair both to the public utilities and to the consumer.

Page 4 Session Law 2025-78 Senate Bill 266
(b) In fixing such rates, the Commission shall:
(1) Ascertain the reasonable original cost or the fair value under G.S. 62-133.1A
of the public utility's property used and useful, or to be used and useful within
a reasonable time after the test period, in providing the service rendered to the
public within the State, less that portion of the cost that has been consumed
by previous use recovered by depreciation expense. In addition, construction
work in progress may be included in the cost of the public utility's property
under any of the following circumstances:
a. To the extent the Commission considers inclusion in the public interest
and necessary to the financial stability of the utility in question,
reasonable and prudent expenditures for construction work in progress
may be included, subject to the provision s of subdivision (4a) of this
subsection.
b. For baseload electric generating facilities, reasonable and prudent
expenditures shall be included pursuant to subdivisions (2) or (3) of
G.S. 62-110.1(f1), whichever applies, subject to the provisions of
subdivision (4a) of this subsection.
c. For baseload electric generating facilities, if the Commission
determines there is an overall cost-savings for customers over the life
of the generating facility and a baseload electric generating facility has
been subject to an annual ongoing review process pursuant to
G.S. 62-110.1(f), the Commission shall, upon determining through the
ongoing review process that the expenditures were reasonably and
prudently incurred, allow an increase in base rates outside of the
rate-making processes established under this section or
G.S. 62-133.16 to reflect solely the financing costs on such reasonable
and prudent expenditures, with the increase being effective 30 days
after the Commission 's order finding that the expenditures were
reasonable and prudent and allocated on a demand basis among
customer classes . Any recovery authorized pursuant to this
sub-subdivision shall be limited to those financing costs accrued on
actual, reasonable, and prudent construction costs , after taking into
account any direct customer contributions actually received that offset
such construction costs, up to the estimated construction cost estimate
approved by the Commission or later amended by the Commission
pursuant to G.S. 62-110.1(e). If applicable, any revenues actually
received from customers participating in a Commission -approved
customer program shall be used to reduce the construction costs of the
baseload electric generating facility and thereby proportionately
reduce the amount of financing costs recovered hereunder. In the event
the Commission approves cancellation of a generating facility for
which financing costs have been re covered pursuant to this
sub-subdivision, then: (i) as of the date the Commission approves
cancellation of the construction of the generating facility, the electric
public utility shall cease recovery of such financing costs pursuant to
this sub-subdivision; and (ii) all costs determined by the Commission
pursuant to G.S. 62-110.1(f) to have been imprudently incurred shall
be disallowed and shall not be recovered from customers. With respect
to natural gas baseload electric generating facilities, the authorization
to recover financing costs pursuant to this sub-subdivision shall sunset
as of December 31, 2033, for all construction costs incurred after

Senate Bill 266 Session Law 2025-78 Page 5
December 31, 2033, but continued recovery of financing cost s on
construction costs for natural gas baseload electric generating facilities
incurred prior to December 31, 2033, shall be permitted subject to all
conditions of this sub-subdivision.
…
(c) The original cost of the public utility's property, including its construction work in
progress, shall be determined as of the end of the test period used in the hearing and the probable
future revenues and expenses shall be based on the plant and equipment in operation at that time.
If the public utility elects to establish rate base using fair value, the fair value determination of
the public utility's property shall be made as provided in G.S. 62-133.1A, and the probable future
revenues and expenses shall be based on the plant and equipment in operation at the end of the
test period. The test period shall consist of 12 months' historical operating experience prior to the
date the rates are proposed to become effective, but the Commission shall consider such relevant,
material and competent evidence as may be offered by any party to the proceeding tending to
show actual changes in costs, revenues or the cost of the public utility's property used and useful,
or to be used and useful within a reasonable time after the test period, in providing the service
rendered to the public within this State, including it s construction work in progress, which is
based upon circumstances and events occurring up to the time the hearing is closed.closed,
provided that the public utility has provided notice of the potential for such change at least 60
days prior to the start of the hearing. In setting the electric public utility's authorized rate of return
on equity, the Commission shall consider any increased or decreased risk to either the electric
public utility or its ratepayers that may result from recovery of financing co sts pursuant to
subdivision (1) of subsection (b) of this section.
…."

FUEL COST RECOVERY MODIFICATIONS
SECTION 3. G.S. 62-133.2 reads as rewritten:
"§ 62-133.2. Fuel and fuel-related charge adjustments for electric utilities.
(a) The Commission shall p ermit an electric public utility that generates electric power
by fossil fuel or nuclear fuel to charge an increment or decrement as a rider to its rates for changes
in the cost of fuel and fuel -related costs used in providing its North Carolina customers with
electricity from the cost of fuel and fuel -related costs established in the electric public utility's
previous general rate case on the basis of cost per kilowatt hour.
(a1) As used in this section, "cost of fuel and fuel-related costs" means all of the following:
(1) The cost of fuel burned.
(2) The cost of fuel transportation.
(3) The cost of ammonia, lime, limestone, urea, dibasic acid, sorbents, and
catalysts consumed in reducing or treating emissions.emissions, including
emissions allowances.
(4) The total delivered costs, including capacity and noncapacity related costs,
including fuel costs, and all related transmission charges, of all purchases of
electric power and capacity by the electric public utility that are subject to
economic dispatch or economic curtailment.
(5) The capacity costs associated with all purchases of electric power from
qualifying cogeneration facilities and qualifying small power production
facilities, as defined in 16 U.S.C. § 796, that are subject to economic dispatch
by the electric public utility.
(6) Except utility, except for those costs recovered pursuant to G.S. 62-133.8(h),
the total delivered costs of all purchases of power from renewable energy
facilities and new renewable energy facilities pursuant to G.S. 62-133.8 or
G.S. 62-133.8(h).

Page 6 Session Law 2025-78 Senate Bill 266
(6a) Any other costs required to comply with any federal mandate that is similar to
the requirements of subsections (b), (c), (d), (e), and (f) of G.S. 62-133.8.
(7) The fuel cost component of other purchased power.
(8) Cost of fuel and fuel-related costs shall be adjusted for any net gains or losses
resulting from any sales by the electric public utility of fuel and other
fuel-related costs components.
(9) Cost of fuel and fuel-related costs shall be adjusted for any net gains or losses
resulting from any sales by the electric public utility of by-products produced
in the generation process to the extent the costs of the inputs leading to that
by-product are costs of fuel or fuel-related costs.
(10) The total delivered costs, including capacity and noncapacity costs, associated
with all purchases of electric power from qualifying cogeneration facilities
and qualifying small power production facilities, as defined in 16 U.S.C. §
796, that are not subject to economic dispatch or economic curtailment by the
electric public utility and not otherwise recovered under subdivision (6) of this
subsection.
(11) All nonadministrative costs related to the renewable energy procurement
pursuant to G.S. 62-159.2 not recovered from the program participants.
(a2) For those costs identified in subdivisions (4), (5), (6), (10), and (11) of subsection (a1)
of this section, that involve power purchase agreements from renewable generating facilities
(including qualifying cogeneration facilities and qualifying small power production facilities, as
defined in 16 U.S.C. § 796, costs related to G.S. 62-133.8(h) or any other costs required to
comply with any federal mandate that is similar to the requirements of subsections (b), (c), (d),
(e), and (f) of G.S. 62-133.8), and nonadministrative costs related to the renewable energy
procurement pursuant to G.S. 62-159.2 not recovered from the program participants, the annual
increase in the aggregate amount of these costs that are recoverable by an electric pu blic utility
pursuant to this section shall not exceed two and one -half percent (2.5%) of the electric public
utility's total North Carolina retail jurisdictional gross revenues for the preceding calendar year.
The costs described in subdivisions (4), (5), (6), (10), and (11) subdivision (4) of subsection (a1)
of this section shall be recoverable from each class of customers as a separate component of the
rider as follows:
(1) For the noncapacity costs described in subdivisions (4), (10), and (11) of
subsection (a1) of this section, the specific component for each class of
customers shall be determined by allocating these costs allocated on a demand
basis among customer classes based on the method used in the electric public
utility's most recently filed fuel proceeding commenced on or before January
1, 2017, as determined by the Commission, until the Commission determines
how these costs shall be allocated in a general rate case for the electric public
utility commenced on or after January 1, 2017.
(2) For the capacity costs described in subdivisions (5), (6), (10), and (11) of
subsection (a1) of this section, the specific component for each class of
customers shall be determined by allocating these costs among customer
classes based on the method used in the electric public utility's most recently
filed fuel proceeding commenced on or before January 1, 2017, as determined
by the Commission, until the Commission determines how these costs shall
be allocated in a general rate case for the electric public utility commenced on
or after January 1, 2017.classes.
(a3) Notwithstanding subsections (a1) and (a2) of this section, for an electric public utility
that has fewer than 150,000 North Carolina retail jurisdictional customers as of December 31,
2006, the costs identified in subdivisions (1), (2), (4), and (6a) (6), (7), and (10) of subsection
(a1) of this section and the fuel cost component, as may be modified by the Commission, of

Senate Bill 266 Session Law 2025-78 Page 7
electric power purchases identified in subdivision (4) of subsection (a1) of thi s section shall be
recovered through the increment or decrement rider approved by the Commission pursuant to
this section. For those costs that involve power purchase agreements from renewable generating
facilities (including qualifying cogeneration facili ties and qualifying small power production
facilities, as defined in 16 U.S.C. § 796, costs related to G.S. 62-133.8(h) or any other costs
required to comply with any federal mandate that is similar to the requirements of subsections
(b), (c), (d), (e), an d (f) of G.S. 62-133.8), the costs identified in subdivisions (6) and (10) of
subsection (a1) of this section that are incurred on or after January 1, 2008, the annual increase
in the amount of these costs shall not exceed one percent (1%) of the electric public utility's total
North Carolina retail jurisdictional gross revenues for the preceding calendar year. These costs
described in subdivisions (6) and (10) of subsection (a1) of this section shall be recoverable from
each class of customers as a separate component of the rider. For the costs described in
subdivisions (6) and (10)subdivision (4) of subsection (a1) of this section, the specific component
for each class of customers shall be determined by allocating these costs among customer classes
based on the electric public utility's North Carolina peak demand for the prior year, as determined
by the Commission, until the Commission determines how these co sts shall be allocated in a
general rate case for the electric public utility commenced on or after January 1, 2008.
(a4) The electric public utility shall make appropriate adjustments to its fuel and
fuel-related costs to reflect costs already being recov ered in base rates so as to avoid double
recovery of any fuel and fuel -related costs and the Commission shall approve any accounting
adjustments necessary in a future fuel proceeding or general rate case to avoid such double
recovery.
(b) The Commission sh all conduct a hearing within 12 months of each electric public
utility's last general rate case order to determine whether an increment or decrement rider is
required to reflect actual changes in the cost of fuel and fuel-related costs over or under the cost
of fuel and fuel -related costs on a kilowatt -hour basis in base rates established in the electric
public utility's last preceding general rate case. Additional hearings shall be held on an annual
basis but only one hearing for each electric public utili ty may be held within 12 months of the
last general rate case.
(c) Each For purposes of the annual hearing, each electric public utility shall submit to
the Commission for the hearing verified annualized information and data in such form and detail
as the Commission may require, for an historic 12-month test period, relating to:
(1) Cost of fuel and fuel -related costs used in each generating facility owned in
whole or in part by the utility.
(2) Fuel procurement practices and fuel inventories for each facility.
(3) Burned cost of fuel used in each generating facility.
(4) Plant capacity factor for each generating facility.
(5) Plant availability factor for each generating plant.
(6) Generation mix by types of fuel used.
(7) Sources and fuel cost component of purchased power used.
(8) Recipients of and revenues received for power sales and times of power sales.
(9) Test period kilowatt -hour sales for the utility's total system and on the total
system separated for North Carolina jurisdictional sales.
(10) Procurement practices and inventories for: fuel burned and for ammonia, lime,
limestone, urea, dibasic acid, sorbents, and catalysts consumed in reducing or
treating emissions.
(11) The cost incurred at each generating facility of fuel burned and of ammonia,
lime, limestone, urea, dibasic acid, sorbents, and catalysts consumed in
reducing or treating emissions.
(12) Any net gains or losses resulting from any sales by the electric public utility
of fuel or other fuel-related costs components.

Page 8 Session Law 2025-78 Senate Bill 266
(13) Any net gains or losses resulting from any sales by the electric public utility
of by-products produced in the generation process to the extent the costs of
the inputs leading to that by-product are costs of fuel or fuel-related costs.
(d) The Commission shall provide f or notice of a public hearing with reasonable and
adequate time for investigation and for all intervenors to prepare for hearing. At the hearing the
Commission shall receive evidence from the utility, the Public Staff, and any intervenor desiring
to submit evidence, and from the public generally. In reaching its decision, the Commission shall
consider all evidence required under subsection (c) of this section as well as any and all other
competent evidence that may assist the Commission in reaching its deci sion including changes
in the cost of fuel consumed and fuel -related costs that occur within a reasonable time, as
determined by the Commission, after the test period is closed. The Commission shall incorporate
in its cost of fuel and fuel -related costs de termination under this subsection the experienced
over-recovery or under -recovery of reasonable costs of fuel and fuel -related costs prudently
incurred during by the test period, electric public utility, based upon the prudent standards set
pursuant to sub section (d1) of this section, in fixing an increment or decrement rider. Upon
request of the electric public utility, the Commission shall also incorporate in this determination
the experienced over-recovery or under-recovery of costs of fuel and fuel -related costs through
the date that is 30 calendar days prior to the date of the hearing, provided that the reasonableness
and prudence of these costs shall be subject to review in the utility's next annual hearing pursuant
to this section. The Commission shal l use deferral accounting, and consecutive test periods, in
complying with this subsection, and the over-recovery or under-recovery portion of the increment
or decrement shall be reflected in rates for 12 months, notwithstanding any changes in the base
fuel cost in a general rate case. Any experienced over-recovery or under-recovery of reasonable
fuel and fuel-related costs prudently incurred shall accrue interest at the commercial paper rate
as identified by the Federal Reserve for A2/P2 nonfinancial issue rs, or reasonable successor
thereto, on a weighted average basis over the applicable time period. The burden of proof as to
the correctness and reasonableness of the charge and as to whether the cost of fuel and
fuel-related costs were reasonably and prudently incurred shall be on the utility. The Commission
shall allow only that portion, if any, of a requested cost of fuel and fuel-related costs adjustment
that is based on adjusted and reasonable cost of fuel and fuel -related costs prudently incurred
under efficient management and economic operations. In evaluating whether cost of fuel and
fuel-related costs were reasonable and prudently incurred, the Commission shall apply the rule
adopted pursuant to subsection (d1) of this section. To the extent that the Commission determines
that an increment or decrement to the rates of the utility due to changes in the cost of fuel and
fuel-related costs over or under base fuel costs established in the preceding general rate case is
just and reasonable, the Commission shall order that the increment or decrement become
effective for all sales of electricity and remain in effect until changed in a subsequent general rate
case or annual proceeding under this section.
(d1) Within one year after ratification of this act, for the purposes of setting cost of fuel
and fuel-related costs rates, the Commission shall adopt a rule that establishes prudent standards
and procedures with which it can appropriately measure management efficiency in minimizing
cost of fuel and fuel-related costs.
(d2) Within 45 days of the end of every quarter of the applicable 12 month recovery-period
approved by the Commission, each electric public utility shall file a report detailing its actual
over- and under -recovered amounts through such quarter and an updated projection of the
cumulative over- or under-recovered amounts at the end of such 12 month recovery-period based
on the most recently available fuel forecast. If the updated projection of the cumulative over- or
under-recovered amounts at the en d of such 12 month recovery -period, inclusive of the actual
amounts, is greater than ten percent (10%) of the total revenue requirement approved by the
Commission in the most recent fuel proceeding, then the electric public utility shall identify the
adjustment needed to the increment or decrement rider to address such over - or under-recovery

Senate Bill 266 Session Law 2025-78 Page 9
over the twelve month period following the effective date of such adjustment, or such other time
period that the Commission deems reasonable, and file an updated tarif f to reflect such
adjustment as part of such quarterly report.
(1) The identified adjustment to the increment or decrement rider shall go into
effect at the start of the month that is approximately 45 days after the quarterly
update filing made under this subsection and such adjustment shall remain in
effect for the twelve month period following the effective date of such
adjustment, or such other time period that the Commission deems reasonable.
(2) All of the costs of fuel and fuel -related costs, including those which are
recovered through the quarterly adjustment authorized under this subsection
will be reviewed for reasonableness and prudence of such costs in the next
annual proceeding held by the Commission to review an electric p ublic
utility's annual fuel and fuel -related adjustment pursuant to subsections (b)
and (c) of this section.
(3) In the event that the electric public utility 's projections result in either solely
downward rate adjustments for 12 consecutive quarterly peri ods or solely
upward rate adjustments for 12 consecutive quarterly periods, the electric
public utility shall report to the Commission in the next annual fuel filing
regarding the reasons for such outcome and its plans to improve the accuracy
of its projection methodology.
(e) If the Commission has not issued an order pursuant to this section within 180 days of
a utility's submission of annual data under subsection (c) of this section, the utility may place the
requested cost of fuel and fuel-related costs adjustment into effect. If the change in rate is finally
determined to be excessive, the utility shall make refund of any excess plus interest to its
customers in a manner ordered by the Commission.
(f) Nothing in this section shall relieve the Commission from its duty to consider the
reasonableness of the cost of fuel and fuel -related costs in a general rate case and to set rates
reflecting reasonable cost of fuel and fuel-related costs pursuant to G.S. 62-133. Nothing in this
section shall invalidate or p reempt any condition adopted by the Commission and accepted by
the utility in any proceeding that would limit the recovery of costs by any electric public utility
under this section.
(g) Repealed by Session Laws 2014-120, s. 10(d), effective September 18, 2014."

PERFORMANCE-BASED REGULATION CHANGES
SECTION 4. G.S. 62-133.16 reads as rewritten:
"§ 62-133.16. Performance-based regulation authorized.
…
(c) Application. – An electric public utility shall be permitted to submit a PBR
application in a general rate case proceeding initiated pursuant to G.S. 62-133. A PBR application
shall include a decoupling rate-making mechanism, one or more PIMs, and a MYRP, including
both an earnings sharing mechanism and proposed revenue requirements and base rates for each
of the years that a MYRP is in effect or a method for calculating the same. The PBR application
may also include proposed tracking metrics with or without targets or benchmarks to measure
electric public utility achievement. The following additional requi rements apply to a PBR
application:
(1) The following shall apply to a MYRP:
a. The base rates for the first rate year of a MYRP shall be fixed in the
manner prescribed under G.S. 62-133, including actual changes in
costs, revenues, or the cost of the electric public utility's property used
and useful, or to be used and useful within a reasonable time after the
test period, plus costs associated with a known and measurable set of

Page 10 Session Law 2025-78 Senate Bill 266
capital investments, net of operating benefits, associated with a set of
discrete and identifiable capital spending projects to be placed in
service during the first rate year. Subsequent changes in base rates in
the second and third rate years of the MYRP shall be based on
projected incremental Commission -authorized capital investm ents
that will be used and useful during the rate year and associated
expenses, net of operating benefits, including operation and
maintenance savings, and depreciation of rate base associated with the
capital investments, that are incurred or realized during each rate year
of the MYRP period; provided that the amount of increase in the
second rate year under the MYRP shall not exceed four percent (4%)
of the electric public utility's North Carolina retail jurisdictional
revenue requirement that is used to fix rates during the first year of the
MYRP pursuant to G.S. 62-133 excluding any revenue requirement
for the capital spending projects to be placed in service during the first
rate year. The amount of increase for the third rate year under the
MYRP shall not exceed four percent (4%) of the electric public
utility's North Carolina retail jurisdictional revenue requirement that is
used to fix rates during the first year of the MYRP pursuant to
G.S. 62-133, excluding any revenue requirement for the capital
spending projects placed in service during the first rate year. The
revenue requirements associated with any single new generation plant
placed in service during the MYRP for which the total plant in service
balance exceeds five hundred million dollars ($500,000,000) shall not
be included in a MYRP. Instead, MYRP, except that combustion
turbine generating units which are not part of a combined cycle
generating unit may be included in the MYRP subject to the four
percent (4%) limit identified in this subdivision. In the alternative, the
utility may request and the Commission may grant, if it deems
appropriate, permission to establish a regulatory asset and defer to
such regulatory all or a portion of the asset incremental costs related
to such electric generation investments to be considered for recovery
in a future rate proceeding. In setting the electric public utility's
authorized rate of return on equity for an MYRP period, the
Commission shall conside r any increased or decreased risk to either
the electric public utility or its ratepayers that may result from having
an approved MYRP.
b. In a proceeding authorizing a MYRP, the Commission shall establish
a rider to refund amounts related to the earnings sharing mechanism,
and to refund or collect amounts related to PIM rewards or penalties,
and decoupling adjustments.
c. Within 60 days of the conclusion of each rate year, the Commission
shall establish a proceeding to:
1. Examine the earnings of the elect ric public utility during the
rate year to determine if the earnings exceeded the authorized
rate of return on equity determined by the Commission in the
proceeding establishing the PBR. If the weather -normalized
earnings exceed the authorized rate of return on equity plus 50
basis points, the excess earnings above the authorized rate of
return on equity plus 50 basis points shall be refunded to
customers in the rider established by the Commission. If the

Senate Bill 266 Session Law 2025-78 Page 11
weather-normalized earnings fall below the authorize d rate of
return on equity, the electric public utility may file a rate case
pursuant to G.S. 62-133. Any penalties or rewards from PIM
incentives and any incentives related to demand -side
management and energy efficiency measures pursuant to
G.S. 62-133.9(f) will be excluded from the determination of
any refund pursuant to earnings sharing mechanism.
2. Evaluate the performance of the electric public utility with
respect to Commission approved PIMs applicable in the rate
year. Any financial rewards shall be collected from customers
and any penalties refunded to customers, in each case, through
the rider established by the Commission.
3. Evaluate the decoupling rate -making mechanism, and refund
or collect, as applicable, a corresponding amount from
residential customers through the rider established by the
Commission.
d. In addition to the annual review process set forth in sub-subdivision c.
of this subdivision, the following shall apply:
1. For each quarter of a MYRP, the electric public utility shall
report regarding the status of the approved MYRP projects in
the manner directed by the Commission, including reporting
on any project that is canceled, along with a detailed
explanation regarding the reasons for such cancellation and the
replacement capital spending project, if any. The Commission
may, upon its own motion or petition by the Public Staff, open
a proceeding to examine any potentially unreasonable or
imprudent cancellations of approved capital spending projects
and may initiate a proceeding to adjust base rates as necessary
or direct further action with respect to such canceled project.
2. In any base rate case immediately following an authorized
MYRP, the electric public utility shall be obligated to report
on its execution of the approved MYRP pr ojects with respect
to any rate year completed as of the date of the filing of the
PBR application, including by explaining any material
differences between the approved MYRP projects and the
actual executed projects.
…
(d) Commission Action on Application. –
(1) The Commission shall approve a PBR application by an electric public utility
only upon a finding that a proposed PBR would result in just and reasonable
rates, is in the public interest, and is consistent with the criteria established in
this secti on and rules adopted thereunder. In reviewing any such PBR
application under this section, the Commission shall consider whether the
PBR application:
a. Assures that no customer or class of customers is unreasonably harmed
and that the rates are fair both to the electric public utility and to the
customer.
b. Reasonably assures the continuation of safe and reliable electric
service.
c. Will not unreasonably prejudice any class of electric customers and
result in sudden substantial rate increases or "rate shock" to customers.

Page 12 Session Law 2025-78 Senate Bill 266
(2) In reviewing any such PBR application under this section, the Commission
may consider whether the PBR application:
a. Encourages peak load reduction or efficient use of the system.
b. Encourages utility-scale clean energy and storage.
c. Encourages DERs.
d. Reduces low-income energy burdens.
e. Encourages energy efficiency.
f. Encourages carbon reductions.
g. Encourages beneficial electrification, including electric vehicles.
h. Supports equity in contracting.
i. Promotes resilience and security of the electric grid.
j. Maintains adequate levels of reliability reliability, power quality, and
customer service.
k. Promotes rate designs that yield peak load reduction or beneficial
load-shaping.
(3) When an electric public utility files with the Commission an application for a
general rate case pursuant to G.S. 62-133 and that application includes a PBR
application, the Commission shall institute proceedings on the application as
provided in this subdivision. The electric public uti lity shall not make any
changes in any rate or implement a PBR except upon 30 days' notice to the
Commission, and the Commission may require the electric public utility to
provide notice of the pending PBR application to the same extent as provided
in G.S. 62-134(a) and may suspend the effect of the proposed base rates and
PBR implementation pending investigation in the same manner as provided
in G.S. 62-134(b), provided that, the Commission may suspend the
implementation of the proposed base rates for no l onger than 300 330 days.
The electric public utility's application shall plainly state the changes in base
rates and the time when the change in rates will go into effect and shall include
schedules in the same manner required pursuant to G.S. 62-134(a). T he
Commission shall, upon reasonable notice, conduct a hearing concerning the
lawfulness of the proposed base rates and the PBR application. After hearing,
the Commission shall issue an order approving, modifying, or rejecting the
electric public utility's PBR application. In the event that the Commission
rejects a PBR application, the Commission shall nevertheless establish the
electric public utility's base rates in accordance with G.S. 62-133 based on the
PBR application. If the Commission rejects the PB R application, it shall
provide an explanation of the deficiency and an opportunity for the electric
public utility to refile, or for the electric public utility and the stakeholders to
collaborate to cure the identified deficiency and refile.
…
(j) Rulemaking. – The Commission shall adopt rules to implement the requirements of
this section. Rules adopted shall include all of the following matters:
(1) The specific procedures and requirements that an electric public utility shall
meet when requesting approval of a PBR application.
(2) The criteria for evaluating a PBR application.
(3) The parameters for a technical conference process to be conducted by the
Commission prior to submission of any PBR application consisting of one or
more public meetings meeting at which the electric public utility presents
information regarding projected transmission and distribution expenditures
and interested parties are permitted to provide comment and feedback;
provided, however, no cross -examination of parties shall be perm itted. The

Senate Bill 266 Session Law 2025-78 Page 13
technical conference process to be established shall not exceed a duration of
60 days from the date on which the electric public utility requests initiation of
such process.shall occur after the electric public utility submits its application
but no later than 90 days after the filing of such application , and at least 30
days before the deadline established by the Commission for any interested
parties to intervene.
(4) In the event the Commission rejects a PBR application, the process by which
an electric public utility may address the Commission's reasons for rejection
of a PBR application, which process may include collaboration between
stakeholders and the electric public utility to cure any identified deficiency in
an electric public utility's PBR application."

CODIFY SECURITIZATION FOR COSTS TO RETIRE COAL PLANTS
SECTION 5. G.S. 62-172 reads as rewritten:
"§ 62-172. Financing for certain storm and coal plant retirement recovery costs.
(a) Definitions. – The following definitions apply in this section:
(1) Ancillary agreement. – A bond, insurance policy, letter of credit, reserve
account, surety bond, interest rate lock or swap arrangement, hedging
arrangement, liquidity or credit support arrangement, or other financial
arrangement entered in to in connection with storm recovery securitization
bonds.
(2) Assignee. – A legally recognized entity to which a public utility assigns, sells,
or transfers, other than as security, all or a portion of its interest in or right to
storm recovery securitization property. The term includes a corporation,
limited liability company, general partnership or limited partnership, public
authority, trust, financing entity, or any entity to which an assignee assigns,
sells, or transfers, other than as security, its i nterest in or right to storm
recovery securitization property.
(3) Bondholder. – A person who holds a storm recovery securitization bond.
(3a) Coal plant retirement activity. – An activity or activities by a public utility, its
affiliates, or its contractors, directly and specifically in connection with the
retirement of subcritical coal -fired generating facilities, including
decommissioning and restoring the site of such subcritical coal -fired
generating facilities and related activities.
(3b) Coal plant retirement charge. – The amounts authorized by the Commission
to repay, finance, or refinance coal plant retirement costs and financing costs
and that are nonbypassable charges (i) imposed on and part of all retail
customer bills, (ii) collected by a public utility or its successors or assignees,
or a collection agent, in full, separate and apart from the public utility 's base
rates, and (iii) paid by all existing or future retail customers receiving
transmission or distribution service, or both, from the public utility or its
successors or assignees under Commission-approved rate schedules or under
special contracts, even if a customer elects to purchase electricity from an
alternative electricity supplier following a fundamental change in regulat ion
of public utilities in this State.
(3c) Coal plant retirement costs. – All of the following, as applicable, in the
determination of the Commission in a separate proceeding:
a. One hundred percent (100%) of the remaining net book value of all of
a public utility's subcritical coal -fired electric generating facilities at
the time of retirement.

Page 14 Session Law 2025-78 Senate Bill 266
b. The public utility's cost of capital from the date of the applicable coal
plant retirement to the date the securitization bonds are issued,
calculated using the public utility's weighted average cost of capital as
defined in its most recent base rate case proceeding before the
Commission net of applicable income tax savings related to the
interest component; provided, however, if the coal plant is included in
base rates for all or any portion of the interval between date of the
applicable coal plant retirement and the securitization bonds are
issued, coal plant retirement costs shall not include the public utility's
cost of capital for such period of time.
c. Coal plant retirement costs shall include coal plant retirement
activities and shall be net of applicable insurance proceeds, tax
benefits, and government grants, or aid of any kind and where
determined appropriate by the Commission. Coal plant retirement
costs include costs of repurchasing equity or retiring any existing
indebtedness relating to the retirement of a subcritical coal -fired
electric generating facility.
d. With respect to coal plant retirement costs that the public utility
expects to incur, any difference between costs expected to be incurred
and actual, reasonable , and prudent costs incurred, or any other
ratemaking adjustments appropriate to fairly and reasonably assign or
allocate coal plant retirement bond s to customers over time, shall be
addressed in a future general rate proceeding, as may be facilitated by
other orders of the Commission issued at the time or prior to such
proceeding; provided, however, that the Commission 's adoption of a
financing order and approval of the issuance of coal plant retirement
bonds may not be revoked or otherwise modified.
(4) Code. – The Uniform Commercial Code, Chapter 25 of the General Statutes.
(5) Commission. – The North Carolina Utilities Commission.
(6) Financing costs. – The term includes all of the following:following costs
applicable to the type of securitization bond, including:
a. Interest and acquisition, defeasance, or redemption premiums payable
on storm recovery the securitization bonds.
b. Any payment required under an ancillary agreement and any amount
required to fund or replenish a reserve account or other accounts
established under the terms of any indenture, ancillary agreement, or
other financing documents pertaining to storm recovery the
securitization bonds.
c. Any other cost related to issuing, supporting, repaying, refunding, and
servicing storm recovery the securitization bonds, including, servicing
fees, accounting and auditing fees, trustee fees, legal fees, consulting
fees, stru cturing adviser fees, administrative fees, placement and
underwriting fees, independent director and manager fees, capitalized
interest, rating agency fees, stock exchange listing and compliance
fees, security registration fees, filing fees, information te chnology
programming costs, and any other costs necessary to otherwise ensure
the timely payment of storm recovery the securitization bonds or other
amounts or charges payable in connection with the securitization
bonds, including costs related to obtaining the financing order.
d. Any taxes and license fees or other fees imposed on the revenues
generated from the collection of the storm recovery charge

Senate Bill 266 Session Law 2025-78 Page 15
securitization charges, or otherwise resulting from the collection of
storm recovery the charges, in any such case whether paid, payable, or
accrued.
e. Any State and local taxes, franchise, gross receipts, and other taxes or
similar charges, including regulatory assessment fees, whether paid,
payable, or accrued.
f. Any costs incurred by the Commission or Public Staff for any outside
consultants or counsel retained in connection with the financing of the
securitization of storm recovery costs.
(7) Financing order. – An order that authorizes the issuance of storm recovery
securitization bonds; the imposition, collection, and periodic adjustments of a
storm recovery securitization charge; the creation of storm recovery
securitization property; and the sale, assignment, or transfer of storm recovery
securitization property to an assignee.
(8) Financing party. – Bondholders and trustees, collateral agents, any party under
an ancillary agreement, or any other person acting for the benefit of
bondholders.
(9) Financing statement. – Defined in Article 9 of the Code.
(10) Pledgee. – A financing party to which a public utility or its successors or
assignees mortgages, negotiates, pledges, or creates a security interest or lien
on all or any portion of its interest in or right to storm recovery securitization
property.
(11) Public utility. – A public utility, as defined in G.S. 62-3, that sells electric
power to retail electric customers in the State.
(11a) Securitization activities. – The aggregate of activities that qualify as either (i)
storm recovery activities, as defined in subdivision (13) of this subsection, or
(ii) coal plant retirement activities, as defined in subdivision ( 3a) of this
subsection, as the case may be.
(11b) Securitization bonds. – Bonds, debentures, notes, certificates of participation,
certificates of beneficial interest, certificates of ownership, or other evidence
of indebtedness or ownership that are issued by a public utility or an assignee
pursuant to a financing order, the proceeds of which are used directly or
indirectly to recover, finance, or refinance Commission -approved coal plant
retirement costs or storm recovery costs, or both, and financing costs, and that
are secured by or payable from securitization property. If certificates of
participation or ownership are issued, references in this section to principal,
interest, or premium shall be construed to refer to comparable amounts under
those certificates.
(11c) Securitization charges. – Storm recovery charges, as defined in subdivision
(15) of this subsection, or coal plant retirement charges, as defined in
subdivision (3b) of this subsection, or both, as the case may be.
(11d) Securitization costs. – Storm recovery costs, as defined in subdivision (16) of
this subsection, or coal plant retirement costs, as defined in subdivision (3c)
of this subsection, as the case may be.
(11e) Securitization property. – All of the following:
a. All rights and interests of a public utility or successor or assignee of
the public utility under a financing order, including the right to impose,
bill, charge, collect, and receive coal plant retirement charges, storm
recovery charges, or both, as authorized under the financing order and
to obtain periodic adjustments to such charges as provided in the
financing order.

Page 16 Session Law 2025-78 Senate Bill 266
b. All revenues, collections, claims, rights to payments, payments,
money, or proceeds arising from the rights and interests specified in
the financing order, regardless of whether such revenues, collections,
claims, rights to payment, payments, money, or proceeds are imposed,
billed, received, collected, or maintained together with or commingled
with other revenues, collections, rights to payment, payments, money,
or proceeds.
(12) Storm. – Individually or collectively, a named tropical storm or hurricane, a
tornado, ice storm or snow storm, flood, an earthquake, or other signific ant
weather or natural disaster.
(13) Storm recovery activity. – An activity or activities by a public utility, its
affiliates, or its contractors, directly and specifically in connection with the
restoration of service and infrastructure associated with electric power outages
affecting customers of a public utility as the result of a storm or storms,
including activities related to mobilization, staging, and construction,
reconstruction, replacement, or repair of electric generation, transmission,
distribution, or general plant facilities.
(14) Storm recovery bonds. – Bonds, debentures, notes, certificates of
participation, certificates of beneficial interest, certificates of ownership, or
other evidences of indebtedness or ownership that are issued by a public utility
or an assignee pursuant to a financing order, the proceeds of which are used
directly or indirectly to recover, finance, or refinance Commission -approved
storm recovery costs and financing costs, and that are secured by or payable
from storm recovery property. If certificates of participation or ownership are
issued, references in this section to principal, interest, or premium shall be
construed to refer to comparable amounts under those certificates.
(15) Storm recovery charge. – The amount s authorized by the Commission to
repay, finance, or refinance storm recovery costs and financing costs and that
are nonbypassable charges (i) imposed on and part of all retail customer bills,
(ii) collected by a public utility or its successors or assigne es, or a collection
agent, in full, separate and apart from the public utility's base rates, and (iii)
paid by all existing or future retail customers receiving transmission or
distribution service, or both, from the public utility or its successors or
assignees under Commission -approved rate schedules or under special
contracts, even if a customer elects to purchase electricity from an alternative
electricity supplier following a fundamental change in regulation of public
utilities in this State.
(16) Storm recovery costs. – All of the following:
a. All incremental costs, including capital costs, appropriate for recovery
from existing and future retail customers receiving transmission or
distribution service from the public utility that a public utility has
incurred or expects to incur as a result of the applicable storm that are
caused by, associated with, or remain as a result of undertaking storm
recovery activity. Such costs include the public utility's cost of capital
from the date of the applicable sto rm to the date the storm recovery
securitization bonds are issued calculated using the public utility's
weighted average cost of capital as defined in its most recent base rate
case proceeding before the Commission net of applicable income tax
savings related to the interest component.
b. Storm recovery costs shall be net of applicable insurance proceeds, tax
benefits and any other amounts intended to reimburse the public utility

Senate Bill 266 Session Law 2025-78 Page 17
for storm recovery activities such as government grants, or aid of any
kind and where determined appropriate by the Commission, and may
include adjustments for capital replacement and operating costs
previously considered in determining normal amounts in the public
utility's most recent general rate proceeding. Storm recovery costs
includes the cost to replenish and fund any storm reserves and costs of
repurchasing equity or retiring any existing indebtedness relating to
storm recovery activities.
c. With respect to storm recovery costs that the public utility expects to
incur, any difference between costs expected to be incurred and actual,
reasonable and prudent costs incurred, or any other ratemaking
adjustments appropriate to fairly and reasonably assign or allocate
storm cost recovery to customers over time, shall be addressed in a
future general rate proceeding, as may be facilitated by other orders of
the Commission issued at the time or prior to such proceeding;
provided, however, that the Commission's adoption of a financing
order and approval of the issuance of storm recovery securitization
bonds may not be revoked or otherwise modified.
d. Notwithstanding any other provision herein, storm recovery costs
deemed reasonable and prudent by the Commission, including any
storm reserve amounts, shall be fully recoverable in a financing order
for securitization bonds and shall not be removed, reduced, or
disallowed on the basis of storm cost -related treatment in any prior
regulatory orders or by application of the quantifiable benefits
comparison required herein.
(17) Storm recovery property. – All of the following:
a. All rights and interests of a public utility or successor or assignee of
the public utility under a financing order, including the right to impose,
bill, charge, collect, and receive storm recovery charges authorized
under the financing order and to obtain periodic adjustments to such
charges as provided in the financing order.
b. All revenues, collections, claims, rights to payments, payments,
money, or proceeds arising from the rights and interests specified in
the financing order, regardless of whether such revenues, collections,
claims, rights to payment, payments, money, or proceeds are imposed,
billed, received, collected, or maintained together with or commingled
with other revenues, collections, rights to payment, payments, money,
or proceeds.
(18) Subcritical coal-fired generating facility. – A plant that utilizes pulverized coal
combustion technology in which the steam pressure within the boiler is below
3,200 pounds per square inch and the temperature is below 1 ,025 degrees
Fahrenheit (550 degrees Celsius) and has a conversion of the energy in the
coal to electricity of no greater than thirty-seven percent (37%).
(19) Traditional method of recovery. – The standard method by which a public
utility generally finance s and recovers costs incurred for storm recovery
activities or the remaining net book value of a retired generation facility
through base rates, absent securitization. The method to calculate the
traditional method of recovery shall be limited to the follo wing without
additional modification or reductions:
a. The recovery of costs , including both capital and O&M costs in
customer rates over a time period of not less than five years; and

Page 18 Session Law 2025-78 Senate Bill 266
b. The application of carrying costs at the public utility 's most recently
approved weighted average cost of capital from the date the costs ,
including both capital and O&M costs , are incurred until fully
recovered.
(a1) References to the terms "storm recovery bonds," "storm recovery charges," and
"storm recovery property" in any financing order issued by the Commission prior to the date this
act becomes effective shall mean "securitization bonds," "securitization charges," or
"securitization property," as defined in subsection (a) of this section.
(b) Financing Orders. –
(1) A public utility may petition the Commission for a financing order. order to
finance securitization costs. The petition shall include all of the following:the
following, as applicable:
a. A description of the storm recovery securitization activities that the
public utility has undertaken or proposes to undertake and the reasons
for undertaking the activities, with clear identification of those relating
to storm recovery activities, or coal plant retirement activities, or both,
or if the pub lic utility is subject to a settlement agreement as
contemplated by subdivision (2) of this subsection, a description of the
settlement agreement.
b. The storm recovery securitization costs and estimate of the costs of
any storm recovery securitization activities that are being undertaken
but are not completed.
c. The level of the storm recovery reserve reserve, if any, that the public
utility proposes to establish or replenish and has determined would be
appropriate to recover through storm recovery securitization bonds
and is seeking to so recover and such level that the public utility is
funding or will seek to fund through other means, together with a
description of the factors and calculations used in determining the
amounts and methods of recovery.
d. An indicator of whether the public utility proposes to finance all or a
portion of the storm recovery securitization costs using storm recovery
securitization bonds. If the public utility proposes to finance a portion
of the costs, the public utility must identify the specific portion in the
petition. By electing not to finance a portion of such storm recovery
costs using storm recovery securitization bonds, a public utility shall
not be deemed to waive its right to recover such costs pursuant to a
separate proceeding with the Commission.
e. An estimate of the financing costs related to the storm recovery
securitization bonds.
f. An estimate of the storm recovery securitization charges necessary to
recover the storm recovery securitization costs, including the storm
recovery reserve amount amount, if any, determined appropriate by
the Commission, and financing costs and the period for recovery of
such costs.
g. A comparison between the net present value of the costs to customers
that are estimated to result from the issuance of storm recovery
securitization bonds and the costs that would result from the
application of the traditional method of financing and recov ering
storm recovery applicable securitization costs from customers. The
comparison should demonstrate that the issuance of storm recovery
securitization bonds and the imposition of storm recovery

Senate Bill 266 Session Law 2025-78 Page 19
securitization charges are expected to provide quantifiable benefits to
customers.customers compared to the traditional method of recovery.
h. Direct testimony and exhibits supporting the petition.
(2) If a public utility is subject to a settlement agreement that governs the type
and amount of principal costs that could be included in storm recovery
securitization costs and the public utility proposes to finance all or a portion
of the principal costs using storm recovery securitization bonds, then the
public utility must file a petition with the Commission for review and approval
of those principal costs no later than 90 days before filing a petition for a
financing order pursuant to this section.
(3) Petition and order. –
a. Proceedings on a petition submitted pursuant to this subdivision begin
with the petition by a public utility, filed subject to the time frame
specified in subdivision (2) of this subsection, if applicable, and shall
be disposed of in accordance with the requirements of this Chapter and
the rules of the Commission, except as follows:
1. Within 14 days after the date the petition is filed, the
Commission shall establish a procedural schedule that permits
a Commission decision no later than 135 days after the date the
petition is filed.
2. No later than 1 35 days after the date the petition is filed, the
Commission shall issue a financing order or an order rejecting
the petition. A party to the Commission proceeding may
petition the Commission for reconsideration of the financing
order within five days after the date of its issuance.
b. A financing order issued by the Commission to a public utility shall
include all of the following elements:elements, as applicable:
1. Except for changes made pursuant to the formula -based
mechanism authorized under this section, the amount of storm
recovery securitization costs, including the level of storm
recovery reserves, if any, to be financed using storm recovery
securitization bonds. The Commission shall describe and
estimate the amount of financing costs that may be r ecovered
through storm recovery securitization charges and specify the
period over which storm recovery securitization costs and
financing costs may be recovered.
2. A finding that the proposed issuance of storm recovery
securitization bonds and the imposition and collection of a
storm recovery securitization charge are expected to provide
quantifiable benefits to customers as compared to the costs that
would have been incurred absent the issuance of storm
recovery bonds. securitization bonds through the traditional
method of recovery.
3. A finding that the structuring and pricing of the storm recovery
securitization bonds are reasonably expected to result in the
lowest storm recovery securitization charges consistent with
market conditions at the time the storm recovery securitization
bonds are priced and the terms set forth in such financing order.
4. A requirement that, for so long as the storm recovery
securitization bonds are outstanding and until all financing
costs have been paid in full, the imposition and collection of

Page 20 Session Law 2025-78 Senate Bill 266
storm recovery securitization charges authorized under a
financing order shall be nonbypassable and paid by all existing
and future retail customers receiving transmission or
distribution service, or both, from the p ublic utility or its
successors or assignees under Commission -approved rate
schedules or under special contracts, even if a customer elects
to purchase electricity from an alternative electric supplier
following a fundamental change in regulation of public utilities
in this State.
5. A determination of what portion, if any, of the storm recovery
reserves must be held in a funded reserve and any limitations
on how the reserve may be held, accessed, or used.
6. A formula -based true -up mechanism for making, at least
annually, expeditious periodic adjustments in the storm
recovery securitization charges that customers are required to
pay pursuant to the financing order and for making any
adjustments that are necessary to correct for any overcollection
or undercollection of the charges or to otherwise ensure the
timely payment of storm recovery securitization bonds and
financing costs and other required amounts and charges
payable in connection with the storm recovery securitization
bonds.
7. The storm recovery securitization property that is, or shall be,
created in favor of a public utility or its successors or assignees
and that shall be used to pay or secure storm recovery
securitization bonds and all financing costs.
8. The degree of flexibility to be afforded to the public utility in
establishing the terms and conditions of the storm recovery
securitization bonds, including, but not limited to, repayment
schedules, expected interest rates, and other financing costs.
9. How storm recovery securitization charges will be allocated
among customer classes.
10. A requirement that, after the final terms of an issuance of storm
recovery securitization bonds have been established and before
the issuance of storm recovery securitization bonds, the public
utility determines the resulting initial storm recovery charge in
accordance with the financing order and that such initial storm
recovery securitization charge be final and effective upon the
issuance of such storm recovery securitization bonds without
further Commission action so long as the storm recovery
securitization charge is consistent with the financing order.
11. A method of tracing funds collected as storm recovery
securitization charges, or other proceeds of storm recover y
securitization property, and determine that such method shall
be deemed the method of tracing such funds and determining
the identifiable cash proceeds of any storm recovery
securitization property subject to a financing order under
applicable law.
12. Any other conditions not otherwise inconsistent with this
section that the Commission determines are appropriate.

Senate Bill 266 Session Law 2025-78 Page 21
c. A financing order issued to a public utility may provide that creation
of the public utility's storm recovery securitization property is
conditioned upon, and simultaneous with, the sale or other transfer of
the storm recovery securitization property to an assignee and the
pledge of the storm recovery property to secure storm recovery
securitization bonds.
d. If the Commission issues a financing order, the public utility shall file
with the Commission at least annually a petition or a letter applying
the formula-based mechanism and, based on estimates of consumption
for each rate class and other mathematical factors, requesting
administrative approval to make the applicable adjustments. The
review of the filing shall be limited to determining whether there are
any mathematical or clerical errors in the application of the
formula-based mechanism relating to the appropriate amount o f any
overcollection or undercollection of storm recovery securitization
charges and the amount of an adjustment. The adjustments shall ensure
the recovery of revenues sufficient to provide for the payment of
principal, interest, acquisition, defeasance, f inancing costs, or
redemption premium and other fees, costs, and charges in respect of
storm recovery securitization bonds approved under the financing
order. Within 30 days after receiving a public utility's request pursuant
to this paragraph, the Commiss ion shall either approve the request or
inform the public utility of any mathematical or clerical errors in its
calculation. If the Commission informs the utility of mathematical or
clerical errors in its calculation, the utility may correct its error and
refile its request. The time frames previously described in this
paragraph shall apply to a refiled request.
e. Subsequent to the transfer of storm recovery securitization property to
an assignee or the issuance of storm recovery securitization bonds
authorized thereby, whichever is earlier, a financing order is
irrevocable and, except for changes made pursuant to the
formula-based mechanism authorized in this section, the Commission
may not amend, modify, or terminate the financing order by any
subsequent action or reduce, impair, postpone, terminate, or otherwise
adjust storm recovery securitization charges approved in the financing
order. After the issuance of a financing order, the public utility retains
sole discretion regarding whether to assign, sell, or otherwise transfer
storm recovery securitization property or to cause storm recovery
securitization bonds to be issued, including the right to defer or
postpone such assignment, sale, transfer, or issuance.
(4) At the request of a public utility, the Commission may commence a
proceeding and issue a subsequent financing order that provides for
refinancing, retiring, or refunding storm recovery securitization bonds issued
pursuant to the original financing order if the Commission finds that the
subsequent financing order satisfies all of the criteria specified in this section
for a financing order. Effective upon retirement of the refunded storm
recovery securitization bonds and the issuance of new storm recovery
securitization bonds, the Commission s hall adjust the related storm recovery
securitization charges accordingly.
(5) Within 60 days after the Commission issues a financing order or a decision
denying a request for reconsideration or, if the request for reconsideration is

Page 22 Session Law 2025-78 Senate Bill 266
granted, within 30 days after the Commission issues its decision on
reconsideration, an adversely affected party may petition for judicial review
in the Supreme Court of North Carolina. Review on appeal shall be based
solely on the record before the Commission and briefs to the court and is
limited to determining whether the financing order, or the order on
reconsideration, conforms to the State Constitution and State and federal law
and is within the authority of the Commission under this section.
(6) Duration of financing order. –
a. A financing order remains in effect and storm recovery securitization
property under the financing order continues to exist until storm
recovery securitization bonds issued pursuant to the financing order
have been paid in full or defeased and, in each case, all
Commission-approved financing costs of such storm recovery
securitization bonds have been recovered in full.
b. A financing order issued to a public utility remains in effect and
unabated notwithstanding the reorganization, bankruptcy or other
insolvency proceedings, merger, or sale of the public utility or its
successors or assignees.
(c) Exceptions to Commission Jurisdiction. –
(1) The Commission may not, in exercising its powers and carrying out its duties
regarding any matter within its authority pursuant to this Chapter, consider the
storm recovery securitization bonds issued pursuant to a financing order to be
the debt of the pub lic utility other than for federal income tax purposes,
consider the storm recovery securitization charges paid under the financing
order to be the revenue of the public utility for any purpose, or consider the
storm recovery securitization costs or financ ing costs specified in the
financing order to be the costs of the public utility, nor may the Commission
determine any action taken by a public utility which is consistent with the
financing order to be unjust or unreasonable.
(2) The Commission may not or der or otherwise directly or indirectly require a
public utility to use storm recovery securitization bonds to finance any project,
addition, plant, facility, extension, capital improvement, early retirement,
equipment, or any other expenditure. After the issuance of a financing order,
the public utility retains sole discretion regarding whether to cause the storm
recovery securitization bonds to be issued, including the right to defer or
postpone such sale, assignment, transfer, or issuance. Nothing shall prevent
the public utility from abandoning the issuance of storm recovery
securitization bonds under the financing order by filing with the Commission
a statement of abandonment and the reasons therefor. The Commission may
not refuse to allow a public utility to recover storm recovery securitization
costs in an otherwise permissible fashion, or refuse or condition authorization
or approval of the issuance and sale by a public utility of securities or the
assumption by the public utility of liabilities or obligations, solely because of
the potential availability of storm recovery securitization bond financing.
(d) Public Utility Duties. – The electric bills of a public utility that has obtained a
financing order and caused storm recovery securitization bonds to be issued must comply with
the provisions of this subsection; however, the failure of a public utility to comply with this
subsection does not invalidate, impair, or affect any financing order, storm recovery
securitization property, storm recovery securitization charge, or storm recovery securitization
bonds. The public utility must do the following:

Senate Bill 266 Session Law 2025-78 Page 23
(1) Explicitly reflect that a portion of the charges on such bill represents the
portions representing the storm recovery charges charge or the portions
representing the coal plant retiremen t charge approved in a financing order
issued to the p ublic utility and, if the storm recovery securitization property
has been transferred to an assignee, must include a statement to the effect that
the assignee is the owner of the rights to storm recovery the appl icable
securitization charges and that the public utility or other entity, if applicable,
is acting as a collection agent or servicer for the assignee. The tariff applicable
to customers must indicate the storm recovery charge charge, or the coal plant
retirement charge, or both, and the ownership of the charge.charges.
(2) Include the storm recovery charge and the coal plant retirement charge as
separate line items on each customer's bill as a separate line item and include
both the rate and the amount of the charge on each bil l.consolidated by the
type of charge with supporting detail included on each bill, in a periodic bill
attachment or by way of a reference to a tariff or explanation of the bill
prepared by the public utility as approved by the Commission, provided each
charge is not commingled with charges of a different type.
(e) Storm Recovery Securitization Property. –
(1) Provisions applicable to storm recovery securitization property. –
a. All storm recovery securitization property that is specified in a
financing order constitutes an existing, present intangible property
right or interest therein, notwithstanding that the imposition and
collection of storm recovery securitization charges depends on the
public utility, to wh ich the financing order is issued, performing its
servicing functions relating to the collection of storm recovery
securitization charges and on future electricity consumption. The
property exists (i) regardless of whether or not the revenues or
proceeds arising from the property have been billed, have accrued, or
have been collected and (ii) notwithstanding the fact that the value or
amount of the property is dependent on the future provision of service
to customers by the public utility or its successors or assignees and the
future consumption of electricity by customers.
b. Storm recovery Securitization property specified in a financing order
exists until storm recovery securitization bonds issued pursuant to the
financing order are paid in full and all financing costs and other costs
of such storm recovery securitization bonds have been recovered in
full.
c. All or any portion of storm recovery securitization property specified
in a financing order issued to a public utility may be transferred, sold,
conveyed, or assigned to a successor or assignee that is wholly owned,
directly or indirectly, by the public utility and created for the limited
purpose of acquiring, owning, or administeri ng storm recovery
securitization property or issuing storm recovery securitization bonds
under the financing order. All or any portion of storm recovery
securitization property may be pledged to secure storm recovery
securitization bonds issued pursuant to the financing order, amounts
payable to financing parties and to counterparties under any ancillary
agreements, and other financing costs. Any transfer, sale, conveyance,
assignment, grant of a security interest in or pledge of storm recovery
securitization property by a public utility, or an affiliate of the public
utility, to an assignee, to the extent previously authorized in a

Page 24 Session Law 2025-78 Senate Bill 266
financing order, does not require the prior consent and approval of the
Commission.
d. If a public util ity defaults on any required payment of securitization
charges arising from storm recovery securitization property specified
in a financing order, a court, upon application by an interested party,
and without limiting any other remedies available to the ap plying
party, shall order the sequestration and payment of the revenues arising
from the storm recovery securitization property to the financing parties
or their assignees. Any such financing order remains in full force and
effect notwithstanding any reorganization, bankruptcy, or other
insolvency proceedings with respect to the public utility or its
successors or assignees.
e. The interest of a transferee, purchaser, acquirer, assignee, or pledgee
in storm recovery securitization property specified in a financing order
issued to a public utility, and in the revenue and collections arising
from that property, is not subject to setoff, counterclaim, surcharge, or
defense by the public utility or any other person or in connection with
the reorganization, bankruptcy, or other insolvency of the public utility
or any other entity.
f. Any successor to a public utility, whether pursuant to any
reorganization, bankruptcy, or other insolvency proceeding or whether
pursuant to any merger or acquisition, sale, or o ther business
combination, or transfer by operation of law, as a result of public
utility restructuring or otherwise, must perform and satisfy all
obligations of, and have the same rights under a financing order as, the
public utility under the financing order in the same manner and to the
same extent as the public utility, including collecting and paying to the
person entitled to receive the revenues, collections, payments, or
proceeds of the storm recovery securitization property. Nothing in this
sub-subdivision is intended to limit or impair any authority of the
Commission concerning the transfer or succession of interests of
public utilities.
g. Storm recovery Securitization bonds shall be nonrecourse to the credit
or any assets of the public utility oth er than the storm recovery
securitization property as specified in the financing order and any
rights under any ancillary agreement.
(2) Provisions applicable to security interests. –
a. The creation, perfection, and enforcement of any security interest in
storm recovery securitization property to secure the repayment of the
principal and interest and other amounts payable in respect of storm
recovery securitization bonds; amounts payable under any ancillary
agreement and other financing costs are governed by this subsection
and not by the provisions of the Code.
b. A security interest in storm recovery securitization property is created,
valid, and binding and perfected at the later of the time: (i) the
financing order is issued, (ii) a security agreement i s executed and
delivered by the debtor granting such security interest, (iii) the debtor
has rights in such storm recovery securitization property or the power
to transfer rights in such storm recovery securitization property, or (iv)
value is received for the storm recovery securitization property. The
description of storm recovery securitization property in a security

Senate Bill 266 Session Law 2025-78 Page 25
agreement is sufficient if the description refers to this section and the
financing order creating the storm recovery property.
c. A security interest shall attach without any physical delivery of
collateral or other act, and, upon the filing of a financing statement
with the office of the Secretary of State, the lien of the security interest
shall be valid, binding, and perfected against all parties having claims
of any kind in tort, contract, or otherwise against the person granting
the security interest, regardless of whether the parties have notice of
the lien. Also upon this filing, a transfer of an interest in the storm
recovery securitization property shall be perfected against all parties
having claims of any kind, including any judicial lien or other lien
creditors or any claims of the seller or creditors of the seller, and shall
have priority over all competing claims other th an any prior security
interest, ownership interest, or assignment in the property previously
perfected in accordance with this section.
d. The Secretary of State shall maintain any financing statement filed to
perfect any security interest under this section in the same manner that
the Secretary of State maintains financing statements filed by
transmitting utilities under the Code. The filing of a financing
statement under this section shall be governed by the provisions
regarding the filing of financing statements in the Code.
e. The priority of a security interest in storm recovery securitization
property is not affected by the commingling of storm recovery
securitization charges with other amounts. Any pledgee or secured
party shall have a perfected security interest in the amount of all storm
recovery securitization charges that are deposited in any cash or
deposit account of the qualifying utility in which storm recovery
securitization charges have been commingled with other funds and any
other security interest that may apply to those funds shall be terminated
when they are transferred to a segregated account for the assignee or a
financing party.
f. No application of the formula -based adjustment mechanism as
provided in this section will affect the vali dity, perfection, or priority
of a security interest in or transfer of storm recovery securitization
property.
g. If a default or termination occurs under the storm recovery
securitization bonds, the financing parties or their representatives may
foreclose on or otherwise enforce their lien and security interest in any
storm recovery securitization property as if they were secured parties
with a perfected and prior lien under the Code, and t he Commission
may order amounts arising from storm recovery securitization charges
be transferred to a separate account for the financing parties' benefit,
to which their lien and security interest shall apply. On application by
or on behalf of the financi ng parties, the Superior Court of Wake
County shall order the sequestration and payment to them of revenues
arising from the storm recovery securitization charges.
(3) Provisions applicable to the sale, assignment, or transfer of storm recovery
securitization property. –
a. Any sale, assignment, or other transfer of storm recovery
securitization property shall be an absolute transfer and true sale of,
and not a pledge of or secured transaction relating to, the seller's right,

Page 26 Session Law 2025-78 Senate Bill 266
title, and interest in, to, and under the storm recovery securitization
property if the documents governing the transaction expressly state
that the transaction is a sale or other absolute transfer other than for
federal and State income tax purposes. For all purposes other than
federal and State income tax purposes, the parties' characterization of
a transaction as a sale of an interest in storm recovery securitization
property shall be conclusive that the transaction is a true sale and that
ownership has passed to the party characteriz ed as the purchaser,
regardless of whether the purchaser has possession of any documents
evidencing or pertaining to the interest. A transfer of an interest in
storm recovery securitization property may be created only when all
of the following have occurred: (i) the financing order creating the
storm recovery securitization property has become effective, (ii) the
documents evidencing the transfer of storm recovery securitization
property hav e been executed by the assignor and delivered to the
assignee, and (iii) value is received for the storm recovery
securitization property. After such a transaction, the storm recovery
securitization property is not subject to any claims of the transferor or
the transferor's creditors, other than creditors holding a prior security
interest in the storm recovery securitization property perfected in
accordance with subdivision (2) of subsection (e) of this section.
b. The characterization of the sale, assignme nt, or other transfer as an
absolute transfer and true sale and the corresponding characterization
of the property interest of the purchaser, shall not be affected or
impaired by the occurrence of any of the following factors:
1. Commingling of storm recov ery securitization charges with
other amounts.
2. The retention by the seller of (i) a partial or residual interest,
including an equity interest, in the storm recovery
securitization property, whether direct or indirect, or whether
subordinate or otherwise, or (ii) the right to recover costs
associated with taxes, franchise fees, or license fees imposed
on the collection of storm recovery securitization charges.
3. Any recourse that the purchaser may have against the seller.
4. Any indemnification rights, obligations, or repurchase rights
made or provided by the seller.
5. The obligation of the seller to collect storm recovery
securitization charges on behalf of an assignee.
6. The tran sferor acting as the servicer of the storm recovery
securitization charges or the existence of any contract that
authorizes or requires the public utility, to the extent that any
interest in storm recovery securitization property is sold or
assigned, to contract with the assignee or any financing party
that it will continue to operate its system to provide service to
its customers, will collect amounts in respect of the storm
recovery securitization charges for the benefit and account of
such assignee or financing party, and will account for and remit
such amounts to or for the account of such assignee or
financing party.
7. The treatment of the sale, conveyance, assignment, or other
transfer for tax, financial reporting, or other purposes.

Senate Bill 266 Session Law 2025-78 Page 27
8. The granting or providing to bondholders a preferred right to
the storm recovery securitization property or credit
enhancement by the public utility or its affiliates with respect
to such storm recovery securitization bonds.
9. Any application of the formula -based adjustment mechanism
as provided in this section.
c. Any right that a public utility has in the storm recovery securitization
property before its pledge, sale, or transfer or any other right created
under this section or creat ed in the financing order and assignable
under this section or assignable pursuant to a financing order is
property in the form of a contract right or a chose in action. Transfer
of an interest in storm recovery securitization property to an assignee
is enforceable only upon the later of (i) the issuance of a financing
order, (ii) the assignor having rights in such storm recovery
securitization property or the power to transfer rights in such storm
recovery securitization property to an assignee, (iii) the execution and
delivery by the assignor of transfer documents in connection with the
issuance of storm recovery securitization bonds, and (iv) the receipt of
value for the storm recovery securitization property. An enforce able
transfer of an interest in storm recovery securitization property to an
assignee is perfected against all third parties, including subsequent
judicial or other lien creditors, when a notice of that transfer has been
given by the filing of a financing statement in accordance with
sub-subdivision c. of subdivision (2) of this subsection. The transfer is
perfected against third parties as of the date of filing.
d. The Secretary of State shall maintain any financing statement filed to
perfect any sale, ass ignment, or transfer of storm recovery
securitization property under this section in the same manner that the
Secretary maintains financing statements filed by transmitting utilities
under the Code. The filing of any financing statement under this
section shall be governed by the provisions regarding the filing of
financing statements in the Code. The filing of such a financing
statement is the only method of perfecting a transfer of storm recovery
securitization property.
e. The priority of a transfer perfected under this section is not impaired
by any later modification of the financing order or storm recovery
securitization property or by the commingling of funds arising from
storm recovery securitization property with other funds. Any other
security interest that may apply to those funds, other than a security
interest perfected under subdivision (2) of this subsection, is
terminated when they are transferred to a segregated account for the
assignee or a financing party. If storm recovery securitization property
has been transferred to an assignee or financing party, any proceeds of
that property must be held in trust for the assignee or financing party.
f. The priority of the conflicting interests of assignees in the same
interest or rights in any storm recovery securitization property is
determined as follows:
1. Conflicting perfected interests or rights of assignees rank
according to priority in time of perfection. Priority dates from
the time a filing covering the transfer is made in accordance
with sub-subdivision c. of subdivision (2) of this subsection.

Page 28 Session Law 2025-78 Senate Bill 266
2. A perfected interest or right of an assignee has priority over a
conflicting unperfected interest or right of an assignee.
3. A perfected interest or right of an assig nee has priority over a
person who becomes a lien creditor after the perfection of such
assignee's interest or right.
(f) Description or Indication of Property. – The description of storm recovery
securitization property being transferred to an assignee in any sale agreement, purchase
agreement, or other transfer agreement, granted or pledged to a pledgee in any security
agreement, pledge agreement, or other security document, or indicated in any financing statement
is only sufficient if such description or indication refers to the financing order that created the
storm recovery securitization property and states that the agreement or financing statement
covers all or part of the property described in the financing order. This section applies to all
purported transfers of, and all purported grants or liens or security interests in, storm recovery
securitization property, regardless of whether the related sale agreement, purchase agreement,
other transfer agreement, security agreement, pledge agreement, or other security document was
entered into, or any financing statement was filed.
(g) Financing Statements. – All financing statements referenced in this section are subject
to Part 5 of Article 9 of the Code, except that the requirement as to continuation statements does
not apply.
(h) Choice of Law. – The law governing the validity, enforceabilit y, attachment,
perfection, priority, and exercise of remedies with respect to the transfer of an interest or right or
the pledge or creation of a security interest in any storm recovery securitization property shall be
the laws of this State.
(i) Storm Recovery Securitization Bonds Not Public Debt. – Neither the State nor its
political subdivisions are liable on any storm recovery securitization bonds, and the bonds are
not a debt or a general obligation of the State or any of its political subdivisions, ag encies, or
instrumentalities, nor are they special obligations or indebtedness of the State or any agency or
political subdivision. An issue of storm recovery securitization bonds does not, directly,
indirectly, or contingently, obligate the State or any a gency, political subdivision, or
instrumentality of the State to levy any tax or make any appropriation for payment of the storm
recovery securitization bonds, other than in their capacity as consumers of electricity. All storm
recovery securitization bonds must contain on the face thereof a statement to the following effect:
"Neither the full faith and credit nor the taxing power of the State of North Carolina is pledged
to the payment of the principal of, or interest on, this bond."
(j) Legal Investment. – All of the following entities may legally invest any sinking funds,
moneys, or other funds in storm recovery securitization bonds:
(1) Subject to applicable statutory restrictions on State or local investment
authority, the State, units of local gove rnment, political subdivisions, public
bodies, and public officers, except for members of the Commission.
(2) Banks and bankers, savings and loan associations, credit unions, trust
companies, savings banks and institutions, investment companies, insurance
companies, insurance associations, and other persons carrying on a banking
or insurance business.
(3) Personal representatives, guardians, trustees, and other fiduciaries.
(4) All other persons authorized to invest in bonds or other obligations of a similar
nature.
(k) Obligation of Nonimpairment. –
(1) The State and its agencies, including the Commission, pledge and agree with
bondholders, the owners of the storm recovery securitization property, and
other financing parties that the State and its agencies will not take any action
listed in this subdivision. This paragraph does not preclude limitation or

Senate Bill 266 Session Law 2025-78 Page 29
alteration if full compensation is made by law for the full protection of the
storm recovery securitization charges collected pursuant to a financing order
and of the bondholders and any assignee or financing party entering into a
contract with the public utility. The prohibited actions are as follows:
a. Alter the provisions of this section, which authorize the Commission
to create an irrevocable contract ri ght or chose in action by the
issuance of a financing order, to create storm recovery securitization
property, and make the storm recovery securitization charges imposed
by a financing order irrevocable, binding, or nonbypassable charges.
b. Take or permit any action that impairs or would impair the value of
storm recovery securitization property or the security for the storm
recovery securitization bonds or revises the storm recovery
securitization costs for which recovery is authorized.
c. In any way impair the rights and remedies of the bondholders,
assignees, and other financing parties.
d. Except for changes made pursuant to the formula -based adjustment
mechanism authorized under this section, reduce, alter, or impair
storm recovery securitization charges that are to be imposed, billed,
charged, collected, and remitted for the benefit of the bondholders, any
assignee, and any other financing parties until any and all principal,
interest, premium, financing costs and other fees, expenses, or charges
incurred, and any contracts to be performed, in connection with the
related storm recovery securitization bonds have been paid and
performed in full.
(2) Any person or entity that issues storm recovery securitization bonds may
include the la nguage specified in this subsection in the storm recovery
securitization bonds and related documentation.
(l) Not a Public Utility. – An assignee or financing party is not a public utility or person
providing electric service by virtue of engaging in the transactions described in this section.
(m) Conflicts. – If there is a conflict between this section and any other law regarding the
attachment, assignment, or perfection, or the effect of perfection, or priority of, assignment or
transfer of, or security interest in storm recovery securitization property, this section shall govern.
(n) Consultation. – In making determinations under this section, the Commission or
Public Staff or both may engage an outside consultant and counsel.
(o) Effect of Invalidity. – If any provision of this section is held invalid or is invalidated,
superseded, replaced, repealed, or expires for any reason, that occurrence does not affect the
validity of any action allowed under this section which is taken by a public utility, an assignee, a
financing party, a collection agent, or a party to an ancillary agreement; and any such action
remains in full force and effect with respect to all storm recovery securitization bonds issued or
authorized in a financing order issued under this sect ion before the date that such provision is
held invalid or is invalidated, superseded, replaced, or repealed, or expires for any reason."
SECTION 6. If any provision of this act or the application thereof to any person or
circumstances is held invalid, such invalidity shall not affect other provisions or applications of
this act that can be given effect without the invalid provision or application an d, to this end, the
provisions of this act are declared to be severable.

Page 30 Session Law 2025-78 Senate Bill 266
SECTION 7. This act is effective when it becomes law.
In the General Assembly read three times and ratified this the 23rd day of June, 2025.

s/ Rachel Hunt
President of the Senate

s/ Donna McDowell White
Presiding Officer of the House of Representatives

VETO Josh Stein
Governor

Became law notwithstanding the objections of the Governor at 10:21 a.m. this 29 th
day of July, 2025.

s/ Mr. James White
House Principal Clerk