State of NC v. NC Sustainable Energy Ass'n , 803 S.E.2d 430 ( 2017 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA16-1067
Filed: 1 August 2017
N.C. Utilities Commission Docket No. E-100, Sub 113
STATE OF NORTH CAROLINA EX REL. UTILITIES COMMISSION; PUBLIC
STAFF – NORTH CAROLINA UTILITIES COMMISSION; DUKE ENERGY
CAROLINAS, LLC; DUKE ENERGY PROGRESS, LLC; SOUTHERN ALLIANCE
FOR CLEAN ENERGY, Appellees,
v.
NORTH CAROLINA SUSTAINABLE ENERGY ASSOCIATION, Appellant.
Appeal by appellants from order entered 6 June 2016 by the North Carolina
Utilities Commission. Heard in the Court of Appeals 3 May 2017.
Staff Attorney David T. Drooz, for Appellee Public Staff – North Carolina
Utilities Commission.
Troutman Sanders, LLP, by Brian L. Franklin and Molly McIntosh
Jagannathan, for Appellee Duke Energy Carolinas, LLC.
Nadia L. Luhr and Gudrun Thompson, for Appellant North Carolina
Sustainable Energy Association and Appellee Southern Alliance for Clean
Energy.
Peter H. Ledford, for Appellant North Carolina Sustainable Energy
Association.
MURPHY, Judge.
Appellant North Carolina Sustainable Energy Association (“NCSEA”) appeals
from a ruling from the North Carolina Utilities Commission (the “Commission”) that
NORTH CAROLINA UTILS. COMM’N V. NCSEA
Opinion of the Court
“a topping cycle CHP system does not constitute an energy efficiency measure under
[N.C.G.S. §] 62-133.8(a)(4), except to the extent that the . . . waste heat component is
used and meets the definition of [an] energy efficiency measure in [N.C.G.S. §] 62-
133.8(a)(4).” We disagree and hold that, for the purposes of classifying a topping cycle
CHP as an energy efficiency measure, N.C.G.S. § 62-133.8(a)(4) (2015) is
unambiguous. A plain reading of the statute at issue includes the entire topping cycle
CHP system.
I. Background
Combined heat and power (“CHP”) systems generate both electricity and
useable thermal energy in contrast to conventional power generation in which
electricity is purchased from a central power plant, which is less efficient.
Conventional power generation based on amount of fuel used to produce electricity
and useful thermal energy is 45 % to 50% efficient, while CHP systems are typically
60% to 80% efficient.
Topping cycle CHP systems burn fuel to generate electricity, and then some of
the resulting waste heat is recovered and used as thermal energy. As of 7 August
2013, there were 62 topping cycle CHP systems in North Carolina.
On 1 June 2015, NCSEA filed a Request for Declaratory Ruling asking the
Commission to issue a declaratory ruling that:
A new topping cycle combined heat and power . . . system-
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NORTH CAROLINA UTILS. COMM’N V. NCSEA
Opinion of the Court
including such a system that uses non-renewable energy
resources-that both (a) produces electricity or useful,
measureable thermal or mechanical energy at a retail
electric customer’s facility and (b) results in less energy
being used to perform the same function or provide the
same level of service at the retail electric customer’s facility
constitutes an “energy efficiency measure” for purposes of
[N.C.G.S] § 62-133.9 and Commission Rule R8-67.
It also asked that, “if deemed necessary or helpful,” the Commission issue a
complementary declaratory ruling that:
It is inconsistent with the clear and unambiguous language
of the [N.C.G.S] §§ 62-133.8 and 62-133.9 to recognize only
the heat recovery component of a new topping cycle CHP
system as an “energy efficiency measure.”
After hearing comments from NCSEA, Appellees Duke Energy Carolinas,
LLC and Duke Energy Progress, LLC (collectively “Duke”), and Appellee Public
Staff – North Carolina Utilities Commission (the “Public Staff”), the Commission
issued its Order, stating:
1. That a topping cycle CHP system does not constitute an
energy efficiency measure under [N.C.G.S. §} 62-
133.8(a)(4), except to the extent that the secondary
component, the waste heat component is used and
meets the definition of energy efficiency measure in
[N.C.G.S. §] 62-133.8(a)(4); and
2. That the Commission has jurisdiction under its
rulemaking authority to determine and clarify this
issue.
NCSEA filed a timely Notice of Appeal and Exceptions.
II. Analysis
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NORTH CAROLINA UTILS. COMM’N V. NCSEA
Opinion of the Court
A. Standard of Review
The case before us is one of statutory interpretation, and is thus a question of
law to be reviewed de novo. Dare Cty. Bd. of Educ. v. Sakaria, 127 N.C. App. 585,
588, 492 S.E.2d 369, 371 (1997). Agencies must give effect to the intent of the
legislature when “the legislature unambiguously expressed its intent in the statute.”
Charlotte-Mecklenburg Hosp. Auth. v. N.C. HHS, 201 N.C. App. 70, 73, 685 S.E.2d
562, 565 (2009). Courts will not defer to an agency’s interpretation when that
interpretation is in direct conflict with the clear intent and purpose of the legislature’s
act. High Rock Lake Partners, LLC v. N.C. Dept. of Transp., 366 N.C. 315, 319, 735
S.E.2d 300, 303 (2012).
Appellees argue that the Commission should receive deference as to the
interpretation of N.C.G.S. § 62-133.8(a) because it is a highly technical matter and
the law is vague. However, the statute is in fact quite clear in its definition of an
energy efficient measure, which includes “energy produced from a combined heat and
power system,” N.C.G.S. § 62-133.8(a)(4) (emphasis added), and is further defined as
“a system that uses waste heat to produce electricity or useful, measureable thermal
or mechanical energy at a retail customer’s facility,” N.C.G.S. § 62-133.8(a)(1)
(emphasis added).
B. Plain Language
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NORTH CAROLINA UTILS. COMM’N V. NCSEA
Opinion of the Court
The Commission interpreted the language of N.C.G.S. § 62-133.8(a)(1) and
(a)(4) to mean that only the waste heat recovery component of a topping cycle system
constitutes an energy efficient measure under the statute, rather than the system as
a whole. In doing so, the Commission was in error as it went against the plain
language of the statute.
N.C.G.S. § 62-133.8(a)(1) defines a “combined heat and power system” as “a
system that uses waste heat to produce electricity or useful, measureable thermal or
mechanical energy at a retail electric customer’s facility.” (Emphasis added).
N.C.G.S. § 62-133.8(a)(4) then defines an “energy efficient measure” as “an
equipment, physical or program change implemented after January 1, 2007 that
results in less energy used to perform the same function.” An “energy efficient
measure” includes “energy produced from a combined heat and power system that
uses nonrenewable energy resources”. N.C.G.S. § 62-133.8(a)(4) (emphasis added)
A statute that is clear and unambiguous must be given its “plain and definite
meaning.” In re Banks, 295 N.C. 236, 239, 244 S.E.2d 386, 388-89 (1978) (citing State
v. Camp, 286 N.C. 148, 152, 209 S.E.2d 754, 756 (1974)); see also State ex rel. Utils
Comm’n v. Env’t Def. Fund, 214 N.C. App. 364, 366, 716 S.E.2d 370, 372 (2011). The
statutory language of N.C.G.S. § 62-133.8(a)(1) is clear and unambiguous. A plain
reading of the statute shows that it is the CHP system as a whole that is the energy
efficient measure. An energy efficient measure includes not only the waste heat
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NORTH CAROLINA UTILS. COMM’N V. NCSEA
Opinion of the Court
recovery part of a CHP system, but rather the system in its entirety. The
Commission, however, found that “for the purposes of being deemed an energy
efficient measure, the electricity or useful, measurable thermal or mechanical energy
must be produced from waste heat.” This limitation cannot be found anywhere in
N.C.G.S. § 62-133.8.
The Commission’s argument ignores the fact that the legislature plainly states
that an “ ‘Energy efficiency measure’ includes, but is not limited to, energy produced
from a combined heat and power system that uses nonrenewable energy resources.”
N.C.G.S. § 62-133.8(a)(4). It is a CHP system that is noted by the law, not just the
waste heat component of the system. If the legislature had intended only for the
waste heat component of a CHP system to qualify as an energy efficiency measure, it
was within the power of the legislature to write N.C.G.S. § 62-133.8(a)(4) in that way,
but that is not the law as written by our General Assembly.
Furthermore, this Court cannot “delete words used or insert words not used”
in a statute. Lunsford v. Mills, 367 N.C. 618, 623, 766 S.E.2d 297, 301 (2014). By
interpreting “energy efficient measure” to include only the waste heat component of
a topping cycle CHP system instead of the system as a whole, the language of
N.C.G.S. § 62-133.8(a)(4) is rendered unnecessary and creates surplusage.
III. Conclusion
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NORTH CAROLINA UTILS. COMM’N V. NCSEA
Opinion of the Court
The Commission has misread the plain language of N.C.G.S. § 62-133.8 and
has found an ambiguity where none exists. N.C.G.S. § 62-133.8 governs the
treatment of CHP systems, and not just their individual components, as energy
efficient measures. Accordingly, we reverse the decision of the Commission.
REVERSED.
Judges CALABRIA and DIETZ concur.
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