In the midst of global, catastrophic climate warming, the Inflation Reduction Act (IRA) — the largest climate change spending bill in U.S. history — presents opportunities and challenges for public utilities commissions (PUCs), which can serve a key role in activating IRA funding.
PUCs, known in some states as public service commissions, or PSCs, are state-level bodies that regulate monopoly utilities. Since PUCs have regulatory authority over 70 percent of electricity delivered to customers, they have an outsized role in energy-related decision making. PUCs should embrace their role as economic regulators in the public interest, setting fair and affordable rates by embracing low-cost renewable energy resources. If PUCs incorporate IRA funding into their energy planning processes, they can expand the uptake of renewable energy resources at a lower cost to consumers.
North Carolina is one state example of missed opportunities to accelerate a clean energy transition. The North Carolina Utilities Commission (NCUC) has failed to compel the state’s monopoly utility, Duke Energy, to integrate IRA funding into the state’s legislatively mandated carbon reduction plan — the Carbon Plan Integrated Resource Plan, or CPIRP. Despite NCUC professional staff (Public Staff) recommending that Duke Energy better utilize IRA funding within the carbon planning process (namely the Energy Infrastructure Reinvestment loan program), commissioners have failed to mandate that Duke Energy do so. Instead, the NCUC has allowed Duke Energy to develop a decarbonization plan that prioritizes methane gas over cheaper, more environmentally sound renewable energy sources.
The NCUC can and should embrace a “movement” approach, which would rise to the challenge of climate change, over a “mandate” approach, which would adhere to a strict interpretation of its role as an economic regulator and compel Duke Energy to model IRA funding into its proposed portfolios. As evidenced in states such as Michigan, Virginia, and Missouri, PUCs can take strong leadership in closing carbon emissions gaps by leveraging IRA funding in their utility planning processes.
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