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House | June 19, 2013 | Committee Room | Utilities

Full MP3 Audio File

Members, let’s take your seats. I now call the meeting to order. Real quick, we have one bill on the calendar today, but I’ve got a substitute Chairman today and she will announce the pages and the sergeant at arms. This is Andrea Keeber. She’s a good friend of mine and a good friend of her parents. And she stood out all day in the snow and rain to campaign. So Andrea, go ahead. [SPEAKER CHANGES] The pages today are Gregory Stewart, Jada Hester, Andrea Keeber, James Kaliff and Eddie Kaliff. And the sergeant at arms is Young Bay, Patrick Mason, Barry Moore and B. H. Powell. [SPEAKER CHANGES] Good job. Thank you Andrea, I appreciate that. We have one bill on the calendar today. Senator Jackson, is it a PCS? I believe it is a PCS. Representative Catlin moves that the PCS is before us. Senator Jackson, the podium is yours. [SPEAKER CHANGES] Thank you Mr. Chairman. Thank you members. If it would help any, I actually prefer the substitute chairman, I don’t know about y’all. [LAUGHTER] [SPEAKER CHANGES] Representative Jackson, you’re out of order. [LAUGHTER] [SPEAKER CHANGES] I am, I know. Thank y’all for hearing this bill for me. Let me give you a little history on this bill. This bill originally was amend feed trucks and weight exemptions but thanks to my House counterpart, Representative Dixon, Brisson, Bell and Bell, they were able to get theirs heard into the Governor before I could, so we have gutted this bill and what you have before you is expansion of natural gas in rural areas. And I’ll go through a few talking points and if you have questions I’ll do my best to answer, but Peter, our Staff, knows this bill like his right hand. He’ll be glad to answer the technical ones. Those of us from rural North Carolina know it’s hard to get natural gas in some parts, well in most parts of rural North Carolina. And this bill is an effort to do that. And the current natural gas, you know, is by far the most cost-effective that we have found to provide for farmers and agribusiness currently in North Carolina. We have done a great job of getting natural gas to our municipalities and to other areas, but we lack in rural North Carolina. And we need major pipeline infrastructure and then from the pipelines to the actual customers. The language will allow state, regional and local economic development funds to be used to facilitate new and expanded natural gas service, prior to cultural projects in rural areas of the state. Funds would be paid to the owner of an economic development project that would expand agricultural production or processing capabilities that is located in a rural area and that requires new or expanded natural gas service. The funds would be available to allow the owner of an eligible project to pay for the infrastructure costs that exceeded the income the infrastructure would generate for the natural gas distribution company. The owner of the eligible project to pay for cost effective alternatives that would reduce excess infrastructure costs such as relocating equipment that burns natural gas or adding supplemental uses of natural gas. The language that I’m proposing does not supersede any economic development mechanism in place. It’s just another tool in the toolbox of the economic development group and is intended to act as a safety net, should all funds be tapped. This language would provide additional mechanical way specifically for farms to become eligible for natural gas infrastructure. I’ll be happy to try and answer your questions. [SPEAKER CHANGES] Thank you Senator Jackson. Representative Catlin. [SPEAKER CHANGES] Thank you. So this is just for infrastructure, like pipelines. [SPEAKER CHANGES] Yes sir, that’s correct. [SPEAKER CHANGES] Okay. Follow up. Based on the commerce bill we just passed, there might not be any funds for these economic development regions. [SPEAKER CHANGES] Well, that’s true. [LAUGHTER] [SPEAKER CHANGES] Representative Ellmore. Hold that motion for just a second. Representative Whitmire? Nothing? Representative Warren. [SPEAKER CHANGES] I support the bill. I’m just curious, wouldn’t the funding for this type of project be funded by something like the rural center? [SPEAKER CHANGES] Well, that is one way. [LAUGH] I know that was a House directive Senate question. [SPEAKER CHANGES] That was a rhetorical question. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Representative Lucas, Representative Haines, you guys need a minute for me or supervisor ?? the bill? Give you a second? Let’s, the House will be in suspense for just a few more minutes. Representative Arp? Go ahead. [SPEAKER CHANGES] Question. I saw in the, is this a one-time fund for the infrastructure costs, or is this an ongoing payment in terms of per-project? How does the

[??] to the project work. [SPEAKER CHANGES] I'll let Peter answer that. I have my thoughts, but I want to hear what he actually [??] [SPEAKER CHANGES] Mr. [??] Lefford? [SPEAKER CHANGES] Representative Arp, it would depend on the project. Sometimes, it's an up-front capital cost; other times, it is--a--ongoing smaller payments that would allow them to meet the needs of the natural gas company. [SPEAKER CHANGES] Representative Luebke, I was going to call on you next, anyway. [SPEAKER CHANGES] Mr. Chairman, I didn't know if you'd seen my hand. I'm-- [SPEAKER CHANGES] No, but I knew you had a question. [SPEAKER CHANGES] Thank you. Well, first of all, this was just to ask your staff, does this bill go on Appropriations, then? [SPEAKER CHANGES] There's not an appropriation in the bill; we will recommend that it should be referred to Finance. It doesn't appropriate any new funds. It's a new use of current and existing funds. [SPEAKER CHANGES] So--a follow up--so the--where are the funds? Whose funds are they? I mean, are they in the General Fund? [SPEAKER CHANGES] Mr. [??] Lefford? [SPEAKER CHANGES] These are funds that are already in place in various economic development funds at the state, regional, and local level. It's just giving a new approved use for those funds to be used. [SPEAKER CHANGES] And if I may add, Mr. Chairman, it sort of just broadens what the Commerce Department--if that bill was to go through--they could use that money for. Or, if the rural center stays in place what they could use that money for. And other means we have out there. [SPEAKER CHANGES] Thank--thank you, Senator. I guess what I'm trying to figure out, and maybe staff can read into the bill for me, who's administering this? There's gotta [sic] be some part of state government that's making a decision as to how much money to get--to determine what is an economic development project. I don't see that defined in the bill. Isn't that a problem? [SPEAKER CHANGES] The question for staff, Representative Luebke? [SPEAKER CHANGES] Yes, sir. [SPEAKER CHANGES] Mr. [??] Lefford. [SPEAKER CHANGES] I-- [SPEAKER CHANGES] Start with who's administering the program and how would I know that it's an eligible economic development project? [SPEAKER CHANGES] The program is being administered by the managers of the various economic development funds. That's set out at the beginning of Subsection B. That the managers may, at their discretion, use these funds for the approved purposes. As far as what would be an eligible project, that's going to have to be an agricultural production or processing project, and it needs to be located in a rural area. [SPEAKER CHANGES] It's just one-one-- [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] I guess just one comment. [SPEAKER CHANGES] Comment? [SPEAKER CHANGES] Senator, I feel like it's way too vague as to who's going to do it. I would like to see--I just worry about a bill that does not have the names of the funds--from which the--whether it's rural-center, as Representative Warren said, or it's some other pot of money within state government or with local government. I think the failure to identify those makes real problems in terms of misuse. And so, I wondered if you thought about being more specific as to where the monies would come from? [SPEAKER CHANGES] Senator Jackson. [SPEAKER CHANGES] They--Representative Luebke, I understand what you're saying that there's so much confusion as to what is going on with the funds in economic development in this state at this time. But, if everything was to stay the same, this money could come from the rural center, it could come from the partnerships that we have, it could come from the Commerce Department, and all those managers of those individual ones--I feel it's being covered in this bill--or this section--where they would have the final authority. And, they're already for whatever oversight we give them--they're having that oversight. And--that might not answer the question. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Representative Dockham. [SPEAKER CHANGES] Thank you, Mr. Chairman and Senator Jackson. [SPEAKER CHANGES] You almost messed up there, didn't you? [SPEAKER CHANGES] Pardon me? [SPEAKER CHANGES] You almost messed up, didn't you? [SPEAKER CHANGES] I did [laughter]. Mr. Chairman, thank you; and Senator Jackson, thank you for bringing this to us. I've just read a lot of bills and I was just wondering, is this for a specific project? Because on page one, line 11, it says eligible project. It says a discrete and specific economic development project. I've just never seen that language in a bill before. Is this for a certain area, or something that we're going to find out about later, or-- [SPEAKER CHANGES] Senator Jackson. [SPEAKER CHANGES] You're a great reader. You shouldn't read so well. No, seriously, no sir. This is not for a specific project. I don't know exactly. Peter might can explain his wording there on discrete and specific, but this was for broadly rural North Carolina. There is no intended project that I'm aware of. [SPEAKER CHANGES] Representative Blackwell. [SPEAKER CHANGES] Thank you, Mr. Chairman. I have a couple of questions for staff, if I may. I don't see, and I'm reading hurriedly --I don't see a definition in the bill as to what is a rural [end of data]

area, and I wonder am I missing it or is it somewhere else define? [SPEAKER CHANGES] Sen. Jackson. [SPEAKER CHANGES] This for staff? ?? [SPEAKER CHANGES] It was not defined in the bill for the purpose of allowing- I believe for the purpose of allowing it to cover more areas and be more project specific. [SPEAKER CHANGES] Intentionally left vague? [SPEAKER CHANGES] Follow up? [SPEAKER CHANGES] It was intentionally left vague? [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] One more follow up. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] In saying that this would add agricultural projects to the permitted use of these funds, these economic development funds, if we add this, where will- can you tell us sort of briefly who's in and who's out in terms of them being able to get money? Who are the winners- I understand we're adding agricultural products- and who's still not eligible under this newest addition to the incentive funds? I believe for example if a furniture factory required a natural gas service and was located in a rural area, it would not be eligible because it is not a agricultural or processing process. [SPEAKER CHANGES] Mr. Chairman? [SPEAKER CHANGES] Sen. Jackson. [SPEAKER CHANGES] But I believe Rep. Blackwell, that they would already be covered under another program we currently have. And if I may back up to your first question, the rural center, as it currently stands, considers 85% of all counties in North Carolina rural, but the tier 1s and tier 2 counties in this state, I believe is 65%, so it would be somewhere in that area. But actually the proposal the Senate sent over to you in NER when we were creating the new rural infrastructure authority, because actually 5 of the counties that the rural center is covering is really not rural counties. They have become metropolitan areas. [SPEAKER CHANGES] One more follow up Mr. Chairman? [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] For staff, I'm not sure whether I explained my earlier question correctly. As I understood the explanation I think from you or Sen. Jackson, this would add agricultural projects to the number of permitted uses of economic development funts, and what I'm trying to understand is apart from adding this, what are the uses that are already permitted for those same economic development funds, and who is it that doesn't get to share in those economic development funds because they've not been chosen to be on the receiving end? [SPEAKER CHANGES] ?? [SPEAKER CHANGES] Miss ??. [SPEAKER CHANGES] I'll try to answer you question Rep. Blackwell. This does not mention any specific economic development funds that are used, so it would exclude others to the extent that this money is used to these new projects, they could not be used for current projects. But it does not include these new projects at the expense of anyone else as the bill is drafted. [SPEAKER CHANGES] Any more, Rep. Blackwell? Rep. Whitmire. By the way Rep. Mills, nice of you to join us. [SPEAKER CHANGES] I'll simply be brief speaking in support of the bill. Living in a rural area of some western counties, getting any things such as this is challenging at best, and I see this as a measure to certainly help our agricultural sector in our rural areas and I appreciate you bringing the bill forward. [SPEAKER CHANGES] Rep. Harrison. [SPEAKER CHANGES] Thank you. I think Rep. Blackwell asked my quesiton, but just to clarify, and I apologize if you mentioned this in the beginning explanation of the bill, this is not a current permitted use- okay- of the economic development fund, just the need for this bill? [SPEAKER CHANGES] Yes ma'am. [SPEAKER CHANGES] Rep. Arp. [SPEAKER CHANGES] Wanna make sure I understand, when monies are used to run these lines and so forth, others as the areas grow they can tap onto the lines and stuff like this and so it's kinda like what we talked about, the broadband access where you put it out where it's not economically feasible at the time, but there's no restriction in here that future industries cannot connect onto those infrastructures, is that correct? [SPEAKER CHANGES] To my knowledge and my intent, Mr. Chairman, if I may, [SPEAKER CHANGES] Go ahead Sen. Jackson. [SPEAKER CHANGES] is that to answer your question, that is 100% correct. If you take it say to this farm that's got 25 to

the time formed in the body on that would more than from the main problem with their own more than one that might have given them a call that admittedly give them all the first time that would be cool the ball we wanted to try hard to get the Mitchell, one wonders if only for good for admission against the measure would make you a phone call, the meantime, raised them, and without bond in jail and a one-and-polish and years to one can do for a knowledge of this year's ago we had for a long, battle over time, the only at: what level in five years ago, now with the three years to live discussion we have to live by the unwelcome and do that, too,(SPEAKER CHANGES) time: 23 really having a stroke lead from: have to live as of the admission that they were all you might well have money going toward a part-time he struck a decade manager the bill because the building and which would have gotten from a lifetime, the man had declined and 212 compelling the people of the county's 20, and today, but with all the time for them and the upcoming copy of the original column by the Atlanta journal and among the time, and valuable than that of the burden of being counted as doing the best time of the cup of flour and yeast or you have is: more affection and an alleged brawl that(SPEAKER CHANGES) I'm helping them in jail and a viable model gives a good dental and longtime friend and you can do yourself a high-flying the opening time you can no longer stand that turned out that county council, all of them, but the time the deal support, pushing, we have a fellow of the fact that you are in all four of 25 timing and danger of a lot of this Monday and in Humboldt counties that valley and I would try to bury, 50 back to the deck homer, 20 of how the UN-skinned man in Portland, or time very good, not going to Laughlin, one of the split down the mountain view, not in the way we can work and that they can still be part of the poll numbers and equity-timers are contacting they do have a handle it, and he came in the first combat crime that the Federal equal-pound, corporate interest at the time that you have to take that the 38, (SPEAKER CHANGES) development project that get elected description given managers of the economic development, from scratch and time-finding that had been on the project in the area of you out of the dead time to determine the dead end of the kaleidoscope-time to allow the use of economic development version which is the import data incorporated of economic development vs. five -and the despair that the question of time the windows that would be a income and at times a year for the weekend, which goes into legal, and that's a pretty tough calculation good time and a bigot, with the weapon used to be overwritten to be a work area, have long taken care of the inning ended with the stand and in that time return on investments, it would then this would supplement that happens, the document in the system or the c??........

if you look in the definitions, definition 3 for project carrying costs that lays out all of the costs that the local natural gas distribution company would incur in developing this project and the utility is designed to include the rate of return on investment from the Utilities Commission from the latest rate case plus the various infrastructure construction costs and then those total costs would be reduced by whatever income they have coming in, through standard rates, through other contractual agreements such as a minimum margin agreement which is where even if the consumer uses less than a set amount they pay for that minimum amount so only after those ideas have been exhausted and it's still not economically viable for the natural gas company to build the pipeline would this mechanism be used. [SPEAKER CHANGES] Follow up. And would that take into account as Representative Bryant mentioned people being able to tie on in the future? So it's sort of like a developer agreement. Is staff going to make this final calculation or is the Utility Commission? Who's going to do that? [SPEAKER CHANGES] Staff. [SPEAKER CHANGES] That would be left to the managers of the various economic development funds. [SPEAKER CHANGES] Representative Blackwell. [SPEAKER CHANGES] Thank you Mr. Chairman. I appreciate you indulging me with another question. This time for Senator Jackson. The title of the bill is an act providing various incentives to facilitate new and expanding natural gas service in rural areas of the State but then as you read the bill it's actually limited to agricultural uses. Would there be objection to removing the reference specifically to agricultural and making these incentives available for use for any sort of needed expansion of natural gas service in rural areas of the state? [SPEAKER CHANGES] Senator Jackson. [SPEAKER CHANGES] Thank you Mr. Chairman. Representative Blackwell I would be totally offended to remove my ag folks. Not really, I'm picking at you. I think, though, to answer your question, everybody else in the world has access to these funds except for farmers. There is nothing in our General Statutes that I can find that would allow a farmer, because for some reason a $10 or $15 million business a year is not considered a business. It's still a farmer. So I think that the majority of businesses throughout the State are covered already but I'll let staff ???. [SPEAKER CHANGES] Staff have anything to add? [SPEAKER CHANGES] I don't have anything to add to Senator Jackson's response. [SPEAKER CHANGES] Perfect. Follow up. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Does that mean, staff, that you agree that everybody else except agriculture is already covered by the use of these funds? So we are now with this legislation fixing the one activity that would not be eligible for these funds for natural gas extension? [SPEAKER CHANGES] I don't know the answer to that question but I would be more than happy to look into it and get back to you. [SPEAKER CHANGES] Representative Blackwell as we said this will be referred to Finance so we'll certainly be able to answer those questions there. Representative Elmore. [SPEAKER CHANGES] Thank you Mr. Chairman. Senator Jackson, I appreciate you so much bringing this bill forth. Agriculture generates about $77 billion in the State of North Carolina and as you were saying the farmers have kind of been left off the radar when it comes to economic development. We have the Blake Farms that is in southeastern Wilks County and they built five new chicken houses at a cost of $1.5 million each. That's a $7.5 million investment and they could not qualify for any sort of economic incentive, qualification, anything, because of the way that Statutes are written. You're putting that on the radar and I appreciate that because agriculture is very important to not only rural areas but the entire State because I like to eat and that's where the food comes from. So I'd like to make a motion for favorable to Senate Bill, the PCS for Senate Bill 379 with referral to Finance. [SPEAKER CHANGES] And unfavorable to the original. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] Further discussion, further debate. If not, all those in favor say aye. All opposed. Thank you Senator Jackson. Meeting is adjourned. [SPEAKER CHANGES] Thank you Mr. Chairman. Thank you members.