             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
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                                   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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                                   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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       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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      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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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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      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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