HB 951 — Energy Solutions for North Carolina.

The applicable electric public utility shall exert reasonable efforts to ensure that the designated replacement resources are constructed according to a time line that allows for retirement of the coal-fired generating facility by the targeted retirement dates, and the utility shall provide updates to the Utilities Commission regarding the status of such efforts in its integrated resource plans.

(2) Marshall Units 1 and 2.

– Except as provided in subdivisions (1) and (2) of subsection (e) of this section, Marshall Units 1 and 2 shall be retired on or before December 31, 2026.

On or near the site of the Marshall Plant, but in no event outside of Catawba County, the applicable electric public utility shall procure and own designated replacement resources comprised of natural gas– fueled simple-cycle combustion turbine generatingfacilities with a generating capacity totaling approximately 900 MW, provided that the electric public utility shall be permitted to propose a smaller combustion turbine generating facility where the electric public utility determines that technological or other constraints so require.

The applicable electric public utility shall exert reasonable efforts to ensure that the designated replacement resources are constructed accordingto a time line that allows for retirement of the coal-fired generating facility by the targeted retirement dates, and the utility shall provide updates to the Utilities Commission regarding the status of such efforts in its integrated resource plans.

(3) Roxboro Plant.

– A coal retirement and replacement plan shall be filed for the Roxboro Plant on or before September 1, 2024.

With respect to the designated replacement resource for the Roxboro Plant, the replacement resource shall be a generating facility located on the Roxboro Plant site or, in the event that the applicable electric public utility, in its reasonable discretion, determines that it will be unable or infeasible to procure or construct a generating facility at the Roxboro Plant site, at another location in Person County that satisfies all of the following criteria:

a.

The resource has continuous generating and dispatch capabilities and other operating characteristics that provide system reliability benefits that are equal to or greater than the retiring Roxboro Plant.

b.

The resource provides effective load carrying capability sufficient to ensure continued reliability of the system.

House Bill 951-Second Edition Page 3 General Assembly Of North Carolina Session 2021 c.

The resource has the ability to deliver continuous power at or near the maximumcapacityofthe resourceforacontinuous periodofoneweek or longer without reliance on other grid resources.

(4) Cliffside Unit 5.

– A coal retirement and replacement plan shall be filed for Cliffside Unit 5 on or before September 1, 2027.

With respect to designated replacement resources for the facility, the replacement resource shall be an energy storage system to be procured and owned by the applicable electric public utility.

The applicable electric public utility shall seek to locate a substantial portion of the ESS on the Cliffside Unit 5 site, but shall be permitted to site such ESS on or near other electric public utility property where such siting will provide increased benefit to customers.

(5) Mayo Plant.

– A coal retirement and replacement plan shall be filed for the Mayo Plant on or before September 1, 2027.

With respect to designated replacement resources for these facilities, the replacement resource for each facility shall be an ESS to be procured and owned by the applicable electric public utility.

The applicable electric public utility shall seek to locate a substantial portion of the ESS on the site of the applicable subcritical coal-fired generatingfacilitybut shall be permitted to site such ESS on or near other electric public utility property where such siting will provide increased benefit to customers.

SECTION 1.(d) Coal Retirement and Replacement Plans Generally.

– (1) A coal retirement and replacement plan shall include all of the following:

a.

The proposed retirement date for the applicable subcritical coal-fired generating facility and the reasons for that proposed retirement date.

b.

The proposed type, size, and location of the replacement resource or resources intended to replace the energyand capacityof the subcritical coal-fired generating facility in order to ensure safe, reliable, and cost-effective service to the electric public utility's customers and the projected timing of the commercial operation of such replacement resource or resources.

c.

A forecast of capital costs, fuel costs, other operation and maintenance costs, and the capacity factors of the proposed replacement resource, as well as any assumptions about future regulatory compliance costs.

d.

In the case of replacement resources that would require a certificate under G.S.

62-110.1 or otherwise, to the extent not already required above, the information that would be required in connection with an application for certificate of a generating facility under G.S.

62-110.1, except that the information required under or in connection with G.S.

62-110.1(d) shall not be required.

(2) After receipt of a coal retirement and replacement plan, the Commission shall do all of the following:

a.

Establish a procedural schedule to allow interested parties to intervene in the proceeding, to facilitate discovery of evidence between and among parties to the proceeding, and to receive comments of the parties and the filing of anydirect or rebuttal expert witness testimony.

b.

Hold one or more public hearings and require the applicant to publish a single notice of the public hearing in a newspaper of general circulation in the county in which the subcritical coal-fired generating facility is located.

c.

Schedule an evidentiary hearing to allow for the cross-examination of expert witnesses, to resolve all contested issues between the parties to Page 4 House Bill 951-Second Edition General Assembly Of North Carolina Session 2021 theproceeding, andto address anyquestions or issues theCommission may raise upon its own motion.

(3) Aftercompletionoftheprocessdescribedinsubdivision(2)ofthissubsection, the Commission shall issue an order approving, modifying, or rejecting an electric public utility's coal retirement and replacement plan within 180 days after the filing thereof.

The Commission shall approve a coal retirement and replacement plan if it finds all of the following:

a.

Thecoal retirementand replacement plan complies with theapplicable requirements set forth in this subsection.

b.

The replacement resource proposed in a coal retirement and replacement plan is sized appropriately to (i) ensure sufficient energy on an hourlybasis over anannual period andensuresufficient capacity to serve anticipated peak electrical load plus an adequate planning reserve margin based upon the applicable electric public utility's then current projections of customer load requirements and (ii) provide equivalent ancillary services and ensure compliance with any applicable reliabilitystandards, includingthe North American Electric Reliability Corporation's (NERC) reliability standards.

c.

The electric public utility has reasonably and prudently utilized competitive equipment procurement practices to ensure that the projected cost of the proposed replacement resource is reasonable in accordance with the requirements set forth in subdivisions (3) through (5) of subsection (c) of this section (4) In a decision issued pursuant to subdivision (3) of this subsection approving any replacement resource, the Commission shall include an approved construction cost for each such replacement resource.

If a replacement resource requires a certificate of public convenience and necessity under G.S.

62-110.1 or otherwise, and is approved by the Commission under this section, such replacement resource shall be deemed consistent with the public convenience and necessity and public interest for purposes of G.S.

62-110.1, and the Commission shall issue a certificate of public convenience and necessity for such replacement resources at the time of its approval, and no further process shall be required under G.S.

62-110.1 except as otherwise addressed herein.

SECTION 1.(e) General Provisions Applicable to Retirement of Subcritical Coal-Fired Generating Facilities.

– (1) Notwithstanding any date established under subsection (c) or (d) of this section that requires retirement of a subcritical coal-fired generating facility, in the event the applicable electric public utilitydetermines that the retirement of any such facility would have the potential to compromise reliability of the electric public utility's service, or otherwise impact the ability of the electric public utility to comply with any applicable reliability requirements, the electric public utility shall file notice with the Commission describing the reliability issues preventing compliance with the requirement for retirement by the date specified and requesting a delay of retirement date.

Upon receipt of a notice and request for retirement delay as authorized by this subdivision, the Commission may conduct a hearing regarding such delay and shall issue an order approving or rejecting the request for delay within 90 days of receipt of such notice and request.

(2) Inorderto ensurethecontinuedreliabilityoftheelectricsystem,no subcritical coal-fired generating facilities shall be retired unless and until the applicable House Bill 951-Second Edition Page 5 General Assembly Of North Carolina Session 2021 designated replacement resource has been placed in-service;

provided, however, that the electric public utility shall be authorized to retire the subcritical coal-fired generating facility prior to the in-service date of the applicable designated replacement resource if the electric public utility determines that it will beableto maintainreliableservicein thatcircumstance.

(3) In the case of each subcritical coal-fired generating facility that is retired pursuant to this section, the applicable electric public utilityshall be permitted to establish a regulatory asset for the remaining net book value of each subcritical coal-fired generating facility and amortize the regulatory asset at the same rate the subcritical coal-fired generating facility was previously being depreciated.

The regulatory asset shall be included in rate base for rate-making purposes, andin a future general rate proceeding theCommission shall establish an amortization period for recovery and allow a return on the unamortized balance at the electric public utility's then authorized, net-of-tax, weighted average cost of capital.

SECTION 1.(f) General Provisions Applicable to Designated Replacement Resources Purchased and Owned by the Electric Public Utilities Pursuant to Subsection (c) of this Section.

– (1) In order to ensure predictable and affordable customer electricity costs for all customers and to ensure an orderly and disciplined transition, the applicable electric utility shall:

a.

In the caseofthenonrenewable generatingfacilitiesprocuredpursuant to subsection (c) of this section, utilize competitive procurement for the design, engineering, and construction of such generating facilities.

b.

In the case of any renewable energy facilities procured pursuant to subsection(c) ofthis section, competitivelyprocureandpurchasesuch facilities from third parties utilizing the procedures set forth and in compliance with the requirements of G.S.

62-110.8 for procurements occurring after January 1, 2022;

provided, however, that (i) the procuring electric public utility shall own and operate all of the renewable energy facilities procured pursuant to this section and the percentage allocation of ownership between third parties and the electric public utilities for procurements commencing after January 1, 2021, that is specified in subsection (b1) of G.S.

62-110.8 for renewable generating facilities shall not apply to procurements of renewable energy facilities pursuant to subsection (c) of this section and (ii) the cost cap specified in subsection (g1) of G.S.

62-110.8 shall not apply to the procurement of renewable energy facilities pursuant to subsection (c) of this section.

c.

In the case of the ESS procured pursuant to subsection (c) of this section, competitively procure and purchase such facilities from third parties utilizing the procurement procedures and requirements for independent oversight set forth in G.S.

62-110.8 for procurements occurring after January 1, 2022;

provided, however, that (i) the procuring electric public utility shall own and operate all of the ESS procured pursuant to this section and the percentage allocation of ownership between third parties and the electric public utilities for procurements commencing after January 1, 2021, that is specified in subsection (b1) of G.S.

62-110.8 for renewable generating facilities shall not apply to procurements of ESS pursuant to subsection (c) of this section and (ii) the cost cap specified in subsection (g1) of Page 6 House Bill 951-Second Edition General Assembly Of North Carolina Session 2021 G.S.

62-110.8 shall not apply to the procurement of ESS pursuant to subsection (c) of this section.

(2) The designated replacement resources identified in subsection (c) of this section that require a certificate of public convenience and necessity under G.S.

62-110.1, or otherwise, shall be deemed consistent with the public convenience and necessity and public interest for purposes of G.S.

62-110.1 so long as the applicable electric public utility reasonably and prudently procures such replacement generation in a manner consistent with subdivision (1) of this subsection.

(3) Notwithstanding G.S.

62-110.1, the Commission shall provide an expedited decision on an application for a certificate of public convenience for all such resources.

The Commission shall render its decision on an application for a certificate, including any related transmission line needed for the new generation facility, within 90 days of the date the application is filed.

An application for a certificate of public convenience and necessity to construct or procure those designated replacement resources identified in subsection (c) of this section that require a certificate of public convenience and necessity and the renewable generating facilities purchased and owned by the electric public utilities pursuant to G.S.

62-110.8 through procurements occurring after January 1, 2021, shall be subject to all of the following:

a.

The applicable electric public utilityshall provide written notice to the Commission of the date the electric public utility intends to file an application no less than 30 days prior to the submission of the application.

b.

When the electric public utility applies for a certificate as provided in this subdivision, it shall submit to the Commission an estimate of the costs of construction of the generating facility in such detail as the Commission may require.

c.

G.S.

62-110.1(d) and (e) and G.S.

62-82(a) shall not apply to such applications.

d.

The Commission shall hold a single public hearing for such applications and require the applicant to publish a single notice of the public hearing in a newspaper of general circulation in the county in which the generating facility is located.

(4) The electric public utilities shall be permitted to recover from its customers the reasonably and prudently incurred cost of all generation facilities and energystorage systems purchased or constructed pursuant to subsection (c) or (d) of this section.

In the case of an energy storage system approved by the Commission pursuant to subsection (d) of this section, there shall be a rebuttable presumption that the electric public utility's actual costs are reasonable and prudent if such actual costs are at or below the projected costs approved by the Commission.

In the case of a certificated generation facility approved by the Commission pursuant to this subsection or subsection (d) of this section or procured pursuant to G.S.

62-110.8, notwithstanding G.S.

62-110.1(f1), there shall be a rebuttable presumption that the electric public utility's actual costs are reasonable and prudent if such actual costs are at or below the projected costs approved by the Commission, provided that upon the request of the electric public utility or upon its own motion pursuant to G.S.

62-110.1(f), the Commission may conduct an ongoing review of construction of the facility under G.S.

62-110.1(f), in which case the cost recovery provisions of G.S.

62-110.1(f1) shall apply except that the electric House Bill 951-Second Edition Page 7 General Assembly Of North Carolina Session 2021 public utility may seek cost recovery in a rate case under either G.S.

62-133 or G.S.

62-133.16.

The electric public utilities shall be permitted to establish a regulatory asset and defer to such regulatory asset the incremental costs of all such costs incurred pursuant to this section until such time as the costs can be reflected in customer rates.

The types of incremental costs that may be deferred include, but are not limited to, operation and maintenance expenses, administration costs, property tax, depreciation expenses, income taxes, carrying costs related to electric plant investments, and regulatoryassets at the electric public utility's then authorized, net-of-tax, weighted average cost of capital.

SECTION 1.(g) G.S.

62-110.8 reads as rewritten:

"§ 62-110.8.

Competitive procurement of renewable energy.

(a) Each electric public utility shall file for Commission approval a program for the competitive procurement of energy and capacity from renewable energy facilities with the purpose of adding renewable energy to the State's generation portfolio in a manner that allows the State's electric public utilities to continue to reliably and cost-effectively serve customers' future energy needs.

Renewable energy facilities eligible to participate in the competitive procurement shall include those facilities that use renewable energy resources identified in G.S.

62-133.8(a)(8) but but, except as provided in subsection (b1) of this section, shall be limited to facilities with a nameplate capacity rating of 80 megawatts (MW) alternating current (MW AC) or less that are placed in service after the date of the electric public utility's initial competitive procurement.

Subject to the limitations set forth in subsections (b) and (c) of this section, the electric public utilities shall issue requests for proposals to procure and shall procure, energyandcapacityfromrenewableenergyfacilitiesintheaggregateamountof 2,660megawatts (MW), and the total amount shall be reasonably allocated over a term of 45 months beginning when the Commission approves the program.

7,327 megawatts alternating current (MW AC), and the total amount shall be reasonably allocated over a term of 106 months beginning when the Commission approves the program;

provided, however, that the electric public utilities shall conduct an annual procurement of approximately 777 megawatts alternating current (MW AC) each calendar year beginning in 2021 and concluding in 2026.

The electric public utilities shall be permitted to petition the Commission for approval to modify the procurement schedule established herein in the event that administration of annual procurements becomes impractical duetotheneedtoalignwiththenexistinginterconnectionstudyprocessesorotherfactorsbeyond the utilities' control, and the Commission shall approve such modifications if it determines that the modifications would be in the public interest.

The Commission shall require the additional competitive procurement of renewable energy capacity by the electric public utilities in an amount that includes all of the following:

(i) any unawarded portion of the initial competitive procurement required by this subsection;

(ii) any deficit in renewable energy capacity identified pursuant to subdivision (1)ofsubsection (b)(b2)ofthis section;

and (iii) anycapacityreallocated pursuant to G.S.

62-159.2.

In addition, at the termination of the initial competitive procurement period of 45 months, the offering of a new renewable energy resources competitive procurement and the amount to be procured shall be determined by the Commission, based on a showing of need evidenced by the electric public utility's most recent biennial integrated resource plan or annual update approved by the Commission pursuant to G.S.

62-110.1(c).106 months, the Commission shall determine whether it is in the interest of ratepayers to require further competitive procurement of renewable generating facilities by the electric public utilities under this subsection, and shall also determine the amount to be procured beyond that required by this subsection, and the allocation of ownership between third parties and electric public utilities.

The Commission's determination shall be based on the electric public utility's most recent biennial integrated resource plan or annual update accepted or approved by the Commission, provided that such plan assures adequate, reliable utility service.

Page 8 House Bill 951-Second Edition General Assembly Of North Carolina Session 2021 (b) Electric public utilities may jointly or individually implement the aggregate competitive procurement requirements set forth in subsection (a) of this section and and, with respect to procurements commencing prior to January1, 2021, maysatisfysuch requirements for the procurement of renewable energy capacity to be supplied by renewable energy facilities through anyof the following:

(i) renewable energy facilities to be acquired from third parties and subsequentlyowned and operated bythesoliciting publicutilityorutilities;

(ii)renewable energy facilities to be constructed, owned, and operated by the soliciting public utilityor utilities subject to the limitations of subdivision (4) of this subsection;

or (iii) the purchase of renewable energy, capacity, and environmental and renewable attributes from renewable energy facilities owned and operated by third parties that commit to allow the procuring public utility rights to dispatch, operate, and control the solicited renewable energy facilities in the same manner as the utility's own generating resources.

(b1) All procurements required bysubsection (a) of this section commencingafter January 1, 2021, and continuing through December 31, 2026, shall be subject to the following requirements:

(1) Forty-five percent (45%) of the total megawatts alternating current (MW AC) of renewable energy facilities scheduled to be procured in procurements commencing after January 1, 2021, shall be supplied through the execution of power purchase agreements with third parties pursuant to which the electric public utilitypurchases of renewable energy, capacity, and environmental and renewable attributes from renewable energy facilities owned and operated by third parties that commit to allow the procuring electric public utility rights to dispatch, operate, and control the solicited renewable energy facilities in the same manner as the utility's own generating resources.

(2) Fifty-five percent (55%) of the total megawatts alternating current (MW AC) of renewable energyfacilities scheduled to be procured through procurements commencing after January 1, 2021, shall be supplied from renewable energy facilities purchased from third parties and owned and operated by the soliciting electric public utility.

The cap on facility nameplate capacity of 80 megawatts alternating current (MW AC) or less established by subsection (a) of this section shall not apply to facilities procured pursuant to this subdivision.

(b2) Procured renewable energy capacity, as provided for in this section, shall be subject to the following limitations:

(1) If prior to the end of the initial 45-month competitive procurement period the public utilities subject to this section have executed power purchase agreements and interconnection agreements for renewable energy capacity withintheirbalancingauthorityareasthatarenotsubjecttoeconomicdispatch or curtailment and were not procured pursuant to G.S.

62-159.2 having an aggregatecapacityin excess of3,500megawatts (MW),theCommission shall reduce the competitive procurement aggregate amount by the amount of such exceedance.

If the aggregate capacity of such renewable energy facilities is lessthan3,500megawatts(MW)attheendoftheinitial45-monthcompetitive procurement period, the Commission shall require the electric public utilities to conduct an additional competitive procurement in the amount of such deficit.In the event that it is reasonably projected that, on or before January 1, 2027, the electric public utilities subject to the procurement obligation under subsection (a) of this section will have executed power purchase agreements and interconnection agreements with renewable generating facilities within their balancing authority areas having an aggregate megawatts alternating current (MW AC) capacity in excess of 3,500 megawatts alternating current House Bill 951-Second Edition Page 9 General Assembly Of North Carolina Session 2021 (MW AC), exclusive of power purchase agreements entered into pursuant to this section, G.S.

62-159.2, and G.S.

62-126.8B, the Commission shall reduce the total aggregate megawatts alternating current (MW and AC) capacity of renewable generating facilities required for procurement under this section by an amount equal to the difference between (i) the amount of aggregate megawatts alternating current (MW AC) capacity of renewable generating facilities with executed power purchase agreements and interconnection agreements, including all such renewable generating facilities located in the electric public utility's balancing authority area, whether located inside or outside the geographic boundaries of the State but exclusive of power purchase agreements entered into pursuant to this section, G.S.

62-159.2, and G.S.

62-126.8B and (ii) 3,500 megawatts alternating current (MW AC).

(2) To ensure the cost-effectiveness of procured new renewable energyresources, each public utility's procurement obligation the price to be paid under any power purchase agreements for third-party owned resources, combined with the cost of anynecessarytransmission or distribution upgrade, shall be capped by the public utility's current forecast of its avoided cost calculated over the term of the power purchase agreement.

The public utility's current forecast of its avoided cost shall be consistent with the Commission-approved avoided cost methodology.

(3) Each public utility shall submit to the Commission for approval and make publicly available at 30 days prior to each competitive procurement solicitation a pro forma contract power purchase agreement to be utilized for the purpose of informing market participants of terms and conditions of the competitive procurement.

Each pro forma contract power purchase agreement shall define limits and compensation for resource dispatch and curtailments.

curtailments;

provided, however, that curtailment shall be limited to a percentage of the expected output of the generation facility that is determined by the Commission to be in the public interest.

The pro forma contract power purchase agreement shall be for a term of 20 years;

provided, however, the Commission may approve a contract term of a different duration if the Commission determines that it is in the public interest to do so.

(4) No With respect only to those procurements commencing prior to January 1, 2021, more than thirtypercent (30%) of an electric public utility's competitive procurement requirement may be satisfied through the utility's own development of renewable energy facilities offered by the electric public utility or any subsidiary of the electric public utility that is located within the electric public utility's service territory.

This limitation shall not apply to any renewable energy facilities acquired by an electric public utility that are selected through the competitive procurement and are located within the electric public utility's service territory.

(c) Subject to the aggregate competitive procurement requirements established by this section, theelectricpublicutilities shall havetheauthorityto determinethe location and allocated amountofthecompetitiveprocurementwithintheirrespectivebalancingauthorityareas,whether located inside or outside the geographic boundaries of the State, taking into consideration (i) the State's desire to foster diversification of siting of renewable energy resources throughout the State;

(ii) the efficiency and reliability impacts of siting of additional renewable energy facilities in each public utility's service territory;

and (iii) the potential for increased delivered cost to a public utility's customers as a result of siting additional renewable energy facilities in a public utility's service territory, including additional costs of ancillaryservices that maybe imposed due to the operational or locational characteristics of a specific renewable energy resource Page 10 House Bill 951-Second Edition General Assembly Of North Carolina Session 2021 technology, such as nondispatchability, unreliabilityof availability, and creation or exacerbation ofsystemcongestionthat mayincreaseredispatchcosts.

Inthecaseofrenewableenergyfacilities to be procured and owned by the electric public utilities pursuant to this section, the electric public utilities shall be permitted through the competitive processes described herein to solicit bids for the construction of such renewable energy facilities on or near property owned or controlled by the electric public utility, including the site of any retiring subcritical coal-fired generating facility, where such sites will provide benefits to customers, including through reduced interconnection or infrastructure costs.

(d) The For all procurements commencing prior to January 1, 2022, the competitive procurement of renewable energy capacity established pursuant to this section shall be independently administered by a third-party entity to be approved by the Commission.

The third-party entity shall Commission, provided that in the case of any procurement commencing after January 1, 2021, but prior to January 1, 2022, the electric public utilities shall be permitted to directly assist the third-party entity and provide input on all aspects of the procurement and shall collaborate with the third-party entity to develop and publish the methodology used to evaluate responses received pursuant to a competitive procurement solicitation and to ensure that all responses are treated equitably.

For all procurements commencing after January 1, 2022, the competitive procurement of renewable energy capacity required pursuant to this section shall be administered by the electric public utilities in accordance with the rules to be adopted pursuant to subdivision (1) of subsection (h) of this section, and subject to oversight and evaluation by a third-party entity to be approved by the Commission.

All reasonable and prudent administrative and related expenses incurred to implement this subsection shall be recovered from market participants through administrative fees levied upon those that participate in the competitive bidding process, as approved by the Commission.

(e) An With respect only to those procurements commencing prior to January 1, 2021, an electric public utility may participate in any competitive procurement process, but shall only participate within its own assigned service territory.

If the public utility uses nonpublicly available information concerning its own distribution or transmission system in preparing a proposal to a competitive procurement, the public utility shall make such information available to third parties that have notified the public utility of their intention to submit a proposal to the same request for proposals.

(e1) In the case of all procurements commencing after January1, 2021, neither the electric public utilities nor any of their affiliates shall be permitted to submit bids into the competitive procurement process or to have any financial interest in third-party bidders.

(e2) The renewable generating facilities purchased and owned by the electric public utilities pursuant to this section through procurements occurring after January 1, 2021, shall be deemed consistent with the public convenience and necessity and public interest for purposes of G.S.

62-110.1 so long as the renewable generating facilities were procured in compliance with the procurement process established under this section.

(f) For purposes of this section, the term "balancing authority" means the entity that integrates resource plans ahead of time, maintains load-interchange-generation balance within a balancing authority area, and supports interconnection frequency in real time, and the term "balancing authority area" means the collection of generation, transmission, and loads within the metered boundaries of the balancing authority, and the balancing authority maintains load-resource balance within this area.

(g) An electric public utility shall be authorized to recover the costs of all purchases of energy, capacity, and environmental and renewable attributes from third-party renewable energy facilities and to recover the authorized revenue of any utility-owned assets that are procured pursuant to this section prior to January 1, 2021, through an annual rider approved by the Commission and reviewed annually.

Provided it is in the public interest, the authorized revenue foranysuch renewable energyfacilitiesownedbyanelectricpublicutilityandprocuredpursuant House Bill 951-Second Edition Page 11 General Assembly Of North Carolina Session 2021 to this section prior to January 1, 2021, may be calculated on a market basis in lieu of cost-of-service based recovery, using data from the applicable competitive procurement to determine the market price in accordance with the methodology established by the Commission pursuant to subsection (h) of this section.

The annual increase in the aggregate amount of these costs that are recoverable by an electric public utility pursuant to this subsection shall not exceed one percent (1%) of the electric public utility's total North Carolina retail jurisdictional gross revenues for the preceding calendar year.

(g1) With respect to allprocurements commencing after January1,2021, an electricpublic utility shall be permitted to recover from its customers the reasonably and prudently incurred costs paid under power purchase agreements executed pursuant to this section through the rider authorized under subsection (g) of this section;

provided, however, costs that may be recovered by the utility for utility-owned renewable generating facilities shall be subject to the same cost caps established under subdivision (2) of subsection (b2) of this section applicable to power purchases of third-partyowned resources.

An electricpublicutilityshall be permitted to establish a regulatory asset and defer to such regulatory asset the incremental costs of all such costs incurred pursuant to this section until such time as the costs can be reflected in customer rates.

The types of incremental costs that maybe deferred include, but are not limited to, operation and maintenance expenses, administration costs, property tax, depreciation expense, income taxes, carrying costs related to electric plant investments, and regulatory assets at the electric public utility's then authorized, net-of-tax, weighted average cost of capital.

(g2) In determining the most cost-effective proposals in any procurement process under this section, the electric public utility shall take into account the cost of any needed transmission or distribution upgrades but, in the case of any proposals selected by the electric public utility, such transmission or distribution upgrades costs shall not be directly assigned to the bidder but instead shall be included in the electric public utility's rate base for rate-making purposes.

In addition, the electric public utility shall be permitted to establish a regulatory asset and defer to such regulatory asset the incremental cost of all such upgrades, along with associated carrying costs based on the electric public utility's then authorized net-of-tax, weighted average cost of capital, until such time as the costs can be reflected in customer rates.

In a future general rate proceeding, the Commission shall establish an amortization period for recovery and allow a return on the unamortized balance at the electric public utility's then authorized, net-of-tax, weighted average cost of capital.

(h) The Commission shall adopt rules to implement the requirements of this section, as follows:

(1) Oversight of the competitive procurement program.program by the Commission and by independent third parties.

No later than May 1, 2022, the Commission's rules shall be amended to provide for (i) administration of the procurement process, including establishing the selection methodology and selection of projects, by the electric public utilities subject to the oversight of an independent evaluator retained by the utilities pursuant to a contract approved by the Commission, (ii) approval by the Commission of the electric public utilities' selection methodology and the independent evaluator's review procedures, (iii) detailed reports by the independent evaluator to the Commission regarding the results of each procurement, and (iv) any further changes related to the foregoing, including modification of communication restrictions deemed appropriate by the Commission.

(2) To provide for a waiver of regulatory conditions or code of conduct requirements that would unreasonably restrict a public utility or its affiliates from participating in the competitive procurement process, with respect to procurements occurring under this section prior to January 1, 2021, unless the Page 12 House Bill 951-Second Edition General Assembly Of North Carolina Session 2021 Commission finds that such a waiver would not hold the public utility's customers harmless.

(3) Establishment ofaprocedureforexpeditedreview and approval of certificates of public convenience and necessity, or the transfer thereof, for renewable energy facilities owned by the public utility and procured pursuant to this section.

The Commission shall issue an order not later than 30 days after a petition for a certificate is filed by the public utility.

(4) Establishment of a methodology to allow an electric public utility to recover its costs pursuant to subsection (g) subsections (g), (g1), and (g2) of this section.

(5) Establishment of a procedure for the Commission to modify or delay implementation of the provisions of this section in whole or in part if the Commission determines that it is in the public interest to do so.

…." SECTION 1.(h) The requirements of subsections (a) through (g) of this section shall not apply to an electric public utility serving fewer than 150,000 North Carolina retail jurisdictional customers as of January 1, 2021.

SECTION 1.(i) G.S.

62-133.2 reads as rewritten:

"§ 62-133.2.

Fuel and fuel-related charge adjustments for electric utilities.

… (d) The Commission shall provide for 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 decision including changes in the cost of fuel consumed and fuel-related costs that occur within a reasonable time, as determined bythe Commission, after the test period is closed.

The Commission shall incorporate in its cost of fuel and fuel-related costs determination under this subsection the experienced over-recovery or under-recovery of reasonable costs of fuel and fuel-related costs prudently incurred during the test period, based upon the prudent standards set pursuant to subsection (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 shall 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.

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.

Efficient management and economic operations include actions and decisions that modify commitment and dispatch to manage seasonal demand, mitigate fuel supply security and transportation risk, and maintain dispatchable capacity value.

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 House Bill 951-Second Edition Page 13 General Assembly Of North Carolina Session 2021 case is just and reasonable, the Commission shall order that the increment or decrement become effective for all sales of electricityand remain in effect until changed in a subsequent general rate case or annual proceeding under this section.

…." SECTION 1.(j) This section is effective when it becomes law.

7 AUTHORIZE FINANCING OF CERTAIN ENERGY TRANSITION COSTS SECTION2.(a) Article8ofChapter62oftheGeneralStatutesisamended byadding a new section to read:

"§ 62-173.

Financing for certain energy transition 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 into in connection with energy transition bonds.

(2) Assignee.

– A legally recognized entityto which a public utilityassigns, sells, or transfers, other than as security, all or a portion of its interest in or right to energy transition property.

The term includes a corporation, limited liability company, general partnership or limited partnership, public authority, trust, financing entity, or any entityto which an assignee assigns, sells, or transfers, other than as security, its interest in or right to energy transition property.

(3) Bondholder.

– A person who holds an energy transition bond.

(4) Code.

– The Uniform Commercial Code, Chapter 25 of the General Statutes.

(5) Commission.

– The North Carolina Utilities Commission.

(6) Energy transition bonds.

– Bonds, debentures, notes, certificates of participation, certificates of beneficial interest, certificates of ownership, or otherevidences ofindebtedness orownership that areissued byapublicutility or an assignee pursuant to a financing order, the proceeds of which are used directly or indirectly to recover, finance, or refinance Commission-approved energy transition costs and financing costs, and that are secured by or payable from energy transition 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.

(7) Energy transition charge.

– The amounts authorized by the Commission to repay, finance, or refinance energy transition 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 analternative electricity supplier following a fundamental change in regulation of public utilities in this State.

(8) Energy transition costs.

– A cost other than a monetary penalty, fine, or forfeiture assessed against a public utility by a government agency or court under a federal or State environmental statute, rule, or regulation for retirement of Marshall Units 1 and 2, the Allen Plant, the Roxboro Plant, the Cliffside Unit 5 Plant, and the Mayo Plant.

The total amount that shall be securitized as provided by this subdivision shall be five hundred million dollars ($500,000,000), which shall be allocated among these plants in a Page 14 House Bill 951-Second Edition General Assembly Of North Carolina Session 2021 manner that realizes the greatest cost savings to ratepayers as determined by the Commission.

Such costs include:

a.

AnamountdeterminedandapprovedbytheCommissionnottoexceed the total aggregate unrecovered net book value, plus the costs set forth in sub-subdivisions b., c., and d.

of this subdivision, of the subcritical coal-fired electric generating facilities at Marshall Units 1 and 2, the Allen Plant, the Roxboro Plant, the Cliffside Unit 5 Plant, and the Mayo Plant.

b.

The following costs the public utilityhas incurred or will incur caused by, associated with, or that remain as a result of the earlyretirement of electric generating facilities at Marshall Units 1 and 2, the Allen Plant, the Roxboro Plant, the Cliffside Unit 5 Plant, and the Mayo Plant:

1.

All incremental costs, including capital costs, appropriate for recovery from existing and future retail customers receiving transmission or distribution service from the electric public utilitythat the utilityhas incurred or expects to incur as a result of the early retirement of the Marshall Units 1 and 2, the Allen Plant, the Roxboro Plant, the Cliffside Unit 5 Plant, and the Mayo Plant, including the costs of decommissioning and restoring the site of such early retired electric generating facilities,except for costs incurred pursuant to G.S.

130A-309.200 through G.S.

130A-309.226 or 40 C.F.R.

Subpart D, which are not subject to this section.

2.

The electric public utility's cost of capital from the date this section becomes effective to the date the energy transition 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.

Such costs also include other applicable capital and operating costs, accrued carrying charges, deferred expenses, reductions for applicable insurance and salvage proceeds and the costs of retiring any existing indebtedness, fees, costs, and expenses to modify existing debt agreements or for waivers or consents related to existing debt agreements.

c.

Energy transition costs shall be net of applicable insurance proceeds, tax benefits, and any other amounts intended to reimburse the public utilityfor energytransition activitiessuch as governmentgrants, oraid ofanykind andwheredeterminedappropriatebytheCommission,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 case proceeding.

d.

With respect to energytransition costs that the public utilityexpects to incur, anydifference between costs expected to be incurred and actual, reasonable, and prudent costs incurred, or any other rate-making adjustments appropriate to fairly and reasonably assign or allocate energy transition 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 House Bill 951-Second Edition Page 15 General Assembly Of North Carolina Session 2021 financingorderandapprovaloftheissuanceofenergytransitionbonds may not be revoked or otherwise modified.

(9) Energy transition property.

– All of the following:

a.

All rights and interests of a public utility or successor or assignee of thepublicutilityunder afinancingorder,includingtheright toimpose, bill, charge, collect, and receive energy transition 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.

(10) Financing costs.

– The term includes all of the following:

a.

Interest and acquisition, defeasance, or redemption premiumspayable on energy transition bonds.

b.

Redemption premiums or make-whole payments related to the early redemption of the public utility's first mortgage bonds or other debt associated with the retired electric generating facility.

c.

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 energy transition bonds.

d.

Anyother cost related to issuing, supporting, repaying, refunding, and servicingenergytransitionbonds, includingservicingfees, accounting and auditing fees, trustee fees, legal fees, consulting fees, structuring 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 technology programming costs, and any other costs necessary to otherwise ensure the timely payment of energy transition bonds or other amounts or charges payable in connection with the bonds, including costs related to obtaining the financing order.

e.

Any taxes and license fees or other fees imposed on the revenues generated from the collection of the energy transition charge or otherwise resulting from the collection of energytransition charges, in any such case whether paid, payable, or accrued.

f.

Any State and local taxes, franchise, gross receipts, and other taxesor similar charges, including regulatory assessment fees, whether paid, payable, or accrued.

g.

Any costs incurred by the Commission or public staff for any outside consultants or counsel retained in connection with the securitization of energy transition costs.

(11) Financing order.

– An order that authorizes the issuance of energy transition bonds;

the imposition, collection, and periodic adjustments of an energy transition charge;

the creation of energy transition property;

and the sale, assignment, or transfer of energy transition property to an assignee.

Page 16 House Bill 951-Second Edition General Assembly Of North Carolina Session 2021 (12) Financingparty.

– Bondholdersand trustees, collateral agents, anypartyunder an ancillary agreement, or any other person acting for the benefit of bondholders.

(13) Financing statement.

– Defined in Article 9 of the Code.

(14) 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 energy transition property.

(15) Public utility.

– A public utility, as defined in G.S.

62-3, that sells electric power to retail electric customers in the State.

(b) Financing Orders.

– (1) A public utility shall petition the Commission for a financing order for energy transition costs.

The petition shall include all of the following:

a.

The energy transition costs incurred by the utility and an estimate of the costs that are being undertaken but are not completed.

b.

An estimate of the financing costs related to the energy transition bonds.

c.

An estimate of the energy transition charges necessary to recover the energytransition costs and financing costs and the proposed period for recovery of such costs.

d.

A comparison between the net present value of the costs to customers thatareestimatedtoresultfromtheissuanceofenergytransitionbonds and the costs that would result from the application of the traditional method of financing and recovering energy transition costs from customers.

The comparison shall demonstrate that the issuance of energy transition bonds and the imposition of energy transition charges are expected to provide quantifiable benefits to customers.

e.

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 thatcould beincludedin energytransition costs, and the principal costs are not already subject to review and approval by the Commission in a separate proceeding, then the public utility shall 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, initially filed on or before January 1, 2023, 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 aCommission decision nolaterthan 135 days after thedatethe petition is filed.

2.

No later than 135 days after the date the petition is filed, the Commission shall issue a financing order or an order rejecting the petition.

If a petition for a financing order is rejected, the Commission shall include in its order the reasons for the rejection, and the utility shall resubmit a petition within 60 days of the order rejecting the earlier petition.

A party to the House Bill 951-Second Edition Page 17 General Assembly Of North Carolina Session 2021 Commission proceeding may petition the Commission for reconsiderationofthefinancingorderwithinfivedays afterthe date of its issuance.

b.

A financing order issued by the Commission to a public utility shall include all of the following elements:

1.

Except for changes made pursuant to the formula-based mechanismauthorizedunderthissection,theamountofenergy transition costs to be financed using energy transition bonds.

The Commission shall describe and estimate the amount of financing costs that shall be recovered through energy transition charges and specify the period over which energy transition costs and financing costs shall be recovered.

2.

Afindingthattheproposed issuanceof energytransition bonds and the imposition and collection of an energy transition charge are expected to provide quantifiable benefits to customers as compared to the cost that would have been incurred absent the issuance of energy transition bonds.

3.

A finding that the structuring and pricing of the energy transition bonds are reasonably expected to result in the lowest energy transition charges consistent with market conditions at thetime the energy transition bonds are priced and the terms set forth in such financing order.

4.

A requirement that, for so long as the energy transition bonds are outstanding and until all financing costs have been paid in full, the imposition and collection of energy transition charges authorized under a financing order shall be nonbypassableand paid by all existing and 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 electricityfrom an alternative electric supplierfollowing a fundamental change in regulation of public utilities in this State.

5.

A formula-based true-up mechanism for making, at least annually, expeditious periodic adjustments in the energy transition charges that customers are required to pay pursuant to the financing order and for making any adjustments thatare necessary to correct for any overcollection or undercollection of the charges or to otherwise ensure the timely payment of energy transition bonds and financing costs and other required amounts and charges payable in connection with the energy transition bonds.

6.

The energy transition 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 energy transition bonds and all financing costs.

7.

The degree of flexibility to be afforded to the public utility in establishing the terms and conditions of the energy transition bonds, including, but not limited to, repayment schedules, expected interest rates, and other financing costs.

Page 18 House Bill 951-Second Edition General Assembly Of North Carolina Session 2021 8.

How energy transition charges will be allocated among customer classes.

9.

Arequirementthat,afterthefinaltermsofanissuanceofenergy transition bonds have been established and before the issuance of energy transition bonds, the public utility determines the resultinginitial energytransition charge in accordancewith the financing order and that such initial energy transition charge be final and effective upon the issuance of such energy transition bonds without further Commission action so long as the energy transition charge is consistent with the financing order.

10.

A requirement that the public utility, simultaneously with the inception of the collection of energy transition charges, reduce its rates through a reduction in base rates or by a negative rider on customer bills in an amount equal to the revenue requirement in customer rates associated with the utility assets being financed by energy transition bonds.

The public utility shall propose the method to reduce its rates in accordance with this sub-sub-subdivision in its petition.

11.

A method of tracing funds collected as energy transition charges, or other proceeds of energy transition property, and determine that such method shall be deemed the method of tracing such funds and determining the identifiable cash proceeds of any energy transition property subject to a financing order under applicable law.

12.

Establishment of a bond team consisting of representatives of the public utility and its consultant, the Public Staff and its consultant, and the Commission with a designated Commissioner and the Commission's consultant and counsel.

13.

A direction for the bond team to work together and make all decisions as to the structuring, marketing, and pricing of the energy transition bonds;

the selection of the underwriters;

and the approval of the transaction documents.

The Commission shall have final decision-making authority on all matters considered by the bond team.

14.

Any other conditions not otherwise inconsistent with this section that the Commission determines are appropriate.

c.

A financing order issued to a public utility may provide that creation of the public utility's energy transition property is conditioned upon, and simultaneous with, the sale or other transfer of the energy transition property to an assignee and the pledge of the energy transition property to secure energy transition bonds.

d.

If the Commission issues a financing order, the public utility shallfile 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 of any overcollection or undercollection of energy transition charges and the House Bill 951-Second Edition Page 19 General Assembly Of North Carolina Session 2021 amount of an adjustment.

The adjustments shall ensure the recovery of revenues sufficient to provide for the payment of principal, interest, acquisition, defeasance, financing costs, or redemption premium and other fees, costs, and charges in respect of energy transition bonds approved under the financing order.

Within 30 days after receiving a public utility's request pursuant to this paragraph, the Commission 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 energy transition property to an assignee or the issuance of energy transition bonds authorized thereby, whichever is earlier, a financing order is irrevocable and, except for changesmade pursuant to the formula-based mechanism authorized in this section, the Commission maynot amend, modify, or terminate the financing order by any subsequent action or reduce, impair, postpone, terminate, or otherwise adjust energy transition 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 energy transitionproperty.

(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 theenergy transition 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 energy transition bonds and the issuance of new energy transition bonds, the Commission shall adjusttherelated energy transition 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 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 energy transition property under the financing order continues to exist until energy transition 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 energy transition 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) Exception to Commission Jurisdiction.

– 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 energy transition bonds issued pursuant to a financing order to be the debt Page 20 House Bill 951-Second Edition General Assembly Of North Carolina Session 2021 of the public utility other than for federal income tax purposes, consider the energy transition charges paid under the financing order to be the revenue of the public utility for any purpose, or consider the energy transition costs or financing costs specified in the financing order to be the costs of the public utility, nor maythe Commission determine anyaction taken bya public utility which is consistent with the financing order to be unjust or unreasonable.

(d) Public Utility Duties.

– The electric bills of a public utility that has obtained a financing order and caused energy transition bonds to be issued must comply with the provisions of this subsection;

however, the failure of a public utilityto complywith this subsection does not invalidate, impair, or affect any financing order, energy transition property, energy transition charge, or energy transition bonds.

The public utility must do all of thefollowing:

(1) Explicitly reflect that a portion of the charges on such bill represents energy transitionchargesapprovedinafinancingorderissuedtothepublicutilityand, if the energy transition property has been transferred to an assignee, must include a statement to the effect that the assignee is the owner of the rights to energy transition charges and that the public utility or other entity, if applicable, isactingas acollectionagentorservicerforthe assignee.Thetariff applicable to customers must indicate the energy transition charge and the ownership of the charge.

(2) Include the energy transition charge on each customer's bill as a separate line item and include both the rate and the amount of the charge on each bill.

(e) Energy Transition Property.

– (1) Provisions applicable to energy transition property.

– a.

All energy transition 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 energy transition charges depends on the public utility, to which thefinancing order is issued, performing its servicing functions relating to the collection of energy transition 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 bythe public utilityor its successors or assignees and the future consumption of electricity bycustomers.

b.

Energy transition property specified in a financing order exists until energytransition bonds issued pursuant to the financing order are paid in full and all financing costs and other costs of such energy transition bonds have been recovered in full.

c.

Alloranyportionofenergytransitionpropertyspecifiedin afinancing 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 administering energy transition property or issuing energy transition bonds under the financing order.

All or any portion of energy transition property may be pledged to secure energy transition bonds issued pursuant to the financing order, amounts payable to financing parties and to counterparties under any ancillary agreements, and other financing costs.

Anytransfer, sale, conveyance, assignment, grant of a security interest in, or pledge of energy transition property by a public utility, or an affiliate of the public utility, to an assignee,totheextentpreviouslyauthorizedinafinancing House Bill 951-Second Edition Page 21 General Assembly Of North Carolina Session 2021 order, does not require the prior consent and approval of the Commission.

d.

If a public utility defaults on any required payment of charges arising from energy transition property specified in a financing order, a court, upon application byan interested party, and without limiting anyother remedies available to the applying party, shall order the sequestration and payment of the revenues arising from the energy transition propertyto thefinancingparties or their assignees.

Anysuch 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 energy transition 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 otherinsolvencyproceedingor whether pursuant to any merger or acquisition, sale, or other 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 thesame rights under a financingorder 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 energy transition 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.

Energytransition bonds shall benonrecourseto the credit oranyassets of the public utility other than the energy transition 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 energy transition property to secure the repayment of the principal and interest and other amounts payable in respect of energy transition 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 energy transition property is created, valid, and binding and perfected at the later of the time (i) the financing order is issued, (ii) a security agreement is executed and delivered by the debtor granting such securityinterest, (iii) the debtor has rights in such energy transition property or the power to transfer rights in such energy transition property, or (iv) value is received for the energy transition property.

The description of energy transition property in a security agreement is sufficient if the description refers to this section and the financing order creating the energy transition property.

Page 22 House Bill 951-Second Edition General Assembly Of North Carolina Session 2021 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 Secretaryof State, the lien of the securityinterest 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 energy transition 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 than any prior security interest, ownership interest, or assignment in the property previouslyperfected 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 maintains financing statements filed by transmitting utilities under the Code.

The filing of a financing statement underthis section shall be governed by the provisions regarding the filing of financing statements in the Code.

e.

The priority of a security interest in energy transition property is not affected by the commingling of energy transition charges with other amounts.

Any pledgee or secured party shall have a perfected security interest in the amount of all energy transition charges that are deposited in any cash or deposit account of the qualifying utility in which energy transition charges have been commingled with other funds, andanyothersecurityinterestthatmayapplytothosefundsshall beterminated when theyaretransferred toa segregated account forthe assignee or a financing party.

f.

No application of the formula-based adjustment mechanism as provided in this section will affect the validity, perfection, or priority of a security interest in or transfer of energy transition property.

g.

If a default or termination occurs under the energy transition bonds, the financing parties or their representatives may foreclose on or otherwise enforce their lien and security interest in any energy transition property as if theywere secured parties with a perfected and prior lien under the Code, and the Commission may order amounts arising from energy transition 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 financing parties, the Superior Court of Wake County shall order the sequestrationandpayment to themofrevenues arisingfrom theenergy transition charges.

(3) Provisions applicable to the sale, assignment, or transfer of energy transition property.

– a.

Any sale, assignment, or other transfer of energy transition property shall be an absolute transfer and true sale of, and not a pledge of or secured transaction relating to, the seller's right, title, and interest in, to, and under the energy transition 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 House Bill 951-Second Edition Page 23 General Assembly Of North Carolina Session 2021 purposes, the parties' characterization of a transaction as a sale of an interest in energy transition property shall be conclusive that the transaction is a true sale and that ownership has passed to the party characterized 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 energy transition property may be created only when all of the following have occurred (i) the financing order creating theenergy transition property has become effective, (ii) the documents evidencing the transfer of energy transition property have been executed by the assignor and delivered to the assignee, and (iii) value is received for the energy transition property.

After such a transaction, the energy transition 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 energy transition property perfected in accordance with subdivision (2) of this subsection.

b.

The characterization of the sale, assignment, 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 followingfactors:

1.

Commingling of energytransition charges with otheramounts.

2.

The retention by the seller of (i) a partial or residual interest, including an equity interest, in the energy transition property, whetherdirect orindirect, orwhethersubordinate orotherwise, or (ii) the right to recover costs associated with taxes, franchise fees, or license fees imposed on the collection of energy transition 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 energy transition charges on behalf of an assignee.

6.

The transferor acting as the servicer of the energy transition charges or the existence of any contract that authorizes or requires the public utility, to the extent that any interest in energy transition 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 energy transition charges for thebenefitand accountof suchassigneeorfinancingparty, 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.

8.

The granting or providing to bondholders a preferred right to the energy transition property or credit enhancement by the public utility or its affiliates with respect to such energy transition 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 energy transition property before its pledge, sale, or transfer or any other right created under this Page 24 House Bill 951-Second Edition General Assembly Of North Carolina Session 2021 section or created 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 energy transition 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 energytransition property or the power to transfer rights in such energytransitionpropertytoanassignee,(iii)theexecutionand delivery by the assignor of transfer documents in connection with the issuance of energy transition bonds, and (iv) the receipt of value for the energy transition property.

An enforceable transfer of an interest in energy transition 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, assignment, or transfer of energy transition property under this section in the same manner that the Secretary maintains financingstatements filed bytransmittingutilities 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 energy transition property.

e.

The priority of a transfer perfected under this section is not impaired by any later modification of the financing order or energy transition propertyorbythecomminglingoffundsarisingfromenergytransition 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 energy transition 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 energy transition 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.

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 assignee has priority over a person who becomes a lien creditor after the perfection of such assignee's interest or right.