Senate Bill 1076 limits how certain North Carolina municipal utilities may use revenue collected from electric and natural gas rates. For municipal electric systems, the bill rewrites the general statute governing permitted uses of electric utility revenue to require that such revenue first be used for operating costs, debt service, capital needs, reserves, rate stabilization, payments in lieu of taxes, and reimbursement of allocable municipal costs. Any remaining revenue must be used to lower electric rates or pay additional debt service on utility-related debt, and municipalities are barred from transferring electric utility revenue to other municipal funds for any other purpose unless specifically authorized by law.
The bill also adds a parallel new statute for municipal natural gas systems with similar restrictions: gas-rate revenue must be used for operating costs and related utility purposes, with remaining revenue directed to lower rates or additional debt service, and with no other transfers to other municipal funds unless expressly authorized. The measure applies statewide to municipal electric and gas utilities in general, but its practical application is narrowed by specific local provisions: the electric-revenue restrictions are made applicable only to listed cities and towns that are members of the North Carolina Eastern Municipal Power Agency, and the natural gas provision applies only to the City of Rocky Mount. The bill also repeals Session Law 2021-103 and takes effect when it becomes law.
Impact
The bill would amend G.S. 159B-39 and add new G.S. 160A-314.2, significantly restricting municipal discretion over electric and natural gas utility revenues. It would prevent covered municipalities from using utility profits as a general revenue source for unrelated municipal spending, while preserving transfers tied to utility operations, debt, reserves, tax-equivalent payments, and reimbursement of allocable costs. For Rocky Mount and Louisburg, the bill would directly constrain existing practices involving transfers from utility funds to other municipal funds, and for Rocky Mount it would also bar use of electric-rate revenue for economic development projects. The bill would also repeal S.L. 2021-103, indicating a change from prior law governing these revenue uses.
Sentiment
The available voting history suggests the bill advanced with clear, though not unanimous, support, passing second reading 30-18. The absence of committee transcript material limits insight into detailed debate, but the structure of the bill indicates a policy preference for keeping utility revenues within the utility systems and reducing cross-subsidization of general municipal spending. Overall, the sentiment appears favorable among supporters of utility-ratepayer protections and fiscal restrictions, while opposition likely came from members concerned about limiting local budget flexibility and existing municipal revenue practices.
Contention
The main point of contention is likely the restriction on municipalities’ ability to transfer electric and natural gas utility revenues into general funds or other non-utility purposes. Opponents may view this as an intrusion on local fiscal autonomy and a constraint on how cities and towns finance broader municipal services or economic development efforts, especially in Rocky Mount and Louisburg. Supporters, by contrast, appear to favor ensuring that ratepayer-funded utility revenues are used for utility-related purposes and rate relief rather than subsidizing unrelated municipal spending. The specific local application to named municipalities and the repeal of prior law also suggest debate over whether the bill is a targeted correction or a broader policy shift.
Annual payments by the Monticello nuclear generating plant terminated, distributed solar energy standard modified, sales tax exemption on residential natural gas and electricity extended year round, and electric and natural gas facilities exempted from payment of the state commercial-industrial property tax.