Flipping the switch on common-sense energy

July delivered a double shock to North Carolina’s energy landscape. On July 4, President Donald Trump signed HR 1 — the One Big Beautiful Bill Act — to begin unwinding dozens of federal clean‑energy tax credits. Less than four weeks later, on July 29, the state’s General Assembly overrode Gov. Josh Stein’s veto of Senate Bill 266, the Power Bill Reduction Act. Together, the new federal and state laws erase an imminent requirement to cut North Carolina’s power sector carbon dioxide emissions 70% below their 2005 level by 2030, turn off Washington’s subsidy spigot, and put reliability and affordability back at the center of the state’s power planning playbook.

And it took nearly two decades of policy zigzags to get here.

How mandates and subsidies shocked the grid
In 2007, the North Carolina General Assembly passed — and Gov. Mike Easley signed — Senate Bill 3, creating the South’s first Renewable Energy and Energy Efficiency Portfolio Standard (REPS) and unleashing a surge of subsidy-seeking lobbyists on Raleigh, inflating long-run electricity costs without producing the promised environmental gains.

The REPS compel investor-owned utilities to supply ever-larger shares of their retail sales from renewables or efficiency credits, rising to 12.5% of sales by 2021 (electric co-ops and municipal systems cap out at 10% after 2018). To finance those mandates, SB 3 authorizes an annual “REPS rider” that lets utilities pass compliance costs straight to customers. Each year, the Utilities Commission sets the rider, subject to per-account caps of $34 for residential, $150 for commercial, and $1,000 for industrial users. Despite several spirited repeal efforts, the REPS and its rider remain in force today.

In 2021, House Bill 951 (HB 951) locked in Gov. Roy Cooper’s mandate to slash power‑sector carbon‑dioxide emissions 70% by 2030 — though it did instruct the Utilities Commission to pursue the “least‑cost, reliable” mix of resources. That mandate set the stage for 2025’s showdown.

This year, the North Carolina General Assembly and Congress passed SB 266 and HR 1, which now restore the balanced framework North Carolina abandoned years ago.

Recentering state policy on reliability and affordability
SB 266 makes one decisive change: It removes the arbitrary 2030 deadline while leaving the 2050 carbon-neutral goal intact. The Utilities Commission must still craft a least-cost Carbon Plan and review it every two years, but it now has explicit authority to adjust interim timelines whenever grid adequacy or reliability could be jeopardized.

Equally important, the bill raises the bar for new power plants; applicants must prove a proposed facility is part of the least‑cost path and will maintain or improve reliability before a construction certificate can be issued.

SB 266 also modernizes financing rules so utilities can add new baseload gas or nuclear units without crippling their balance sheets. Regulators may allow reasonable construction‑work‑in‑progress costs to flow into rates, protecting consumers from surprise overruns while giving utilities a clear runway to replace nine gigawatts of retiring coal with around-the-clock power instead of intermittent wind or solar.

While North Carolina lawmakers were stripping away near-term mandates, Congress was terminating — or, where contractual realities require, phasing out — the federal tax credits that had made those mandates look painless. Chapter 5 of HR 1, “Ending Green New Deal Spending, Promoting America‑First Energy,” eliminates sweeping clean‑technology tax credits — including those for vehicles, refueling stations, and electricity production — and it shuts down the clean‑electricity production and investment credits that have distorted wholesale markets for decades.

It also phases out the § 45X advanced‑manufacturing production credit, bars any extension of the § 48C advanced‑energy project credit, and imposes a 2027 sunset on the otherwise open-ended clean‑electricity credits created by the Inflation Reduction Act. From 2028 forward, wind, solar, and battery projects will have to compete on real cost and performance instead of taxpayer support.

Least‑cost, technology‑neutral at last
Eliminating federal subsidies without changing state deadlines would have forced utilities to chase mathematically impossible renewable targets at full sticker price. Scrapping the 2030 mandate while leaving subsidies in place would still have encouraged over‑building wind and solar because Washington would continue to underwrite them.

Together, SB 266 and HR 1 restore the three‑legged energy‑policy stool that has guided North Carolina since the Utilities Commission’s creation in 1933. Reliability comes first, because the commission may postpone emissions milestones whenever grid integrity is genuinely at stake. Affordability follows, because every new resource must pass a least‑cost test, and updated financing rules spread expenses smoothly over time. Technological neutrality completes the triangle: With subsidies gone, competing resources will be judged on verifiable cost, land‑use, and performance data — not political favor.

Independent modeling published by the John Locke Foundation during the 2021 HB 951 debate showed Cooper’s plan would add more than $400 a year to the average residential bill — even before today’s inflation. SB 266 and HR 1 arrest that runaway trend. They preserve a pathway toward 2050 carbon neutrality without commanding it, replacing rigid quotas with a “least‑cost, reliability‑first” test for every new megawatt. That structure matters because the next generation of solutions — advanced nuclear, long-duration storage, high-efficiency natural gas — are still proving themselves in the marketplace.

If those resources become demonstrably cheaper and more dependable than today’s mix, North Carolina can meet — or even exceed — the 2050 mark organically. If not, the absence of interim mandates, coupled with the sunset of federal subsidies, makes it far easier for policymakers to revisit or retire the remaining neutrality mandate altogether. In other words, the bills restore competitive neutrality today while keeping tomorrow’s options open — shielding ratepayers from double payment in higher bills and federal taxes, and telling investors the state rewards genuine innovation over political fashion.

The July 29 override vote in Raleigh was bipartisan; the federal statute is sweeping. Together, they revive a principle North Carolina has upheld in law for decades: delivering electricity at the lowest feasible cost without sacrificing reliability. After a long detour, common sense is coming back on the grid.

Donald Bryson is CEO of the John Locke Foundation.