By John Downey
Solar advocates who objected to Duke Energy Corp.’s initial proposal for a new community solar program don’t like the revised program much better and are calling on regulators to require more changes or reject it.
“The revised plan is a significantly worse program than the initial program,” says the N.C. Sustainable Energy Association, contending the new proposal would be much more costly to customers than the original version.
The Sierra Club says Duke made some improvements but that “the overall program costs … are too high for the Sierra Club to support.”
Consistent Duke critic NC WARN argues the company “did not put forth a good faith effort in the revised proposal … but again seem to have designed the program to fail.” The environmental and consumer watchdog group accuses Duke of “complying only with the law’s literal requirement to file a community solar program versus proposing a potentially successful program with the public’s interest in mind.”
The groups all contend Duke’s plan to delay the program until 2021 or 2022 is unjustified.
‘Premium’ product
Duke (NYSE: DUK) defends its latest proposal. Spokesman Randy Wheeless says community solar is a “premium” product that customers must be willing to pay a higher price for if they want it. He notes that the state law requiring Duke’s utilities to offer the service specifically mandates that it be self supporting and prohibits Duke from making customers who don’t use community solar pay for any of its costs.
“The key point is we have to design a product that will be attractive to our customers,” he says.
The N.C. General Assembly required Duke Energy Carolinas and Duke Energy Progress to develop up to 40 megawatts worth of community solar in the state as part of the Competitive Energy Solutions for NC Act, adopted last year.
Community solar programs allow customers to buy contracts for solar power produced at relatively large solar projects built either by the utility or third parties. The idea is to allow customers who cannot afford to build their own solar projects, or do not want to operate them, to purchase renewable energy through contract subscriptions.
Public Staff
The commission’s Public Staff, the state’s customer advocate, recommends the commission accept most of the revised proposal. But it does ask the commission to consider some issues the staff raises, including whether ways can be found to lower the costs for the program.
The N.C. General Assembly required Duke Energy Carolinas and Duke Energy Progress to develop up to 40 megawatts worth of community solar in the state as part of the Competitive Energy Solutions for NC Act, adopted last year.
Monthly fee
The delay that the groups object to is needed, Wheeless says, to allow Duke time to install a billing system — called Customer Connect. That system would allow Duke to charge a monthly subscription fee, and a lower up-front fee, enabling the utility to calculate monthly credits to customers that will reduce, though not eliminate, the premium costs for the service.
That subscription fee would be charged monthly over the 20-year life of the solar contract. And while it reduces the upfront costs, it’s similar to buying an appliance with money down and credit to cover the remaining price. It costs less initially, but over time the customer pays significantly more for the product.
Wheeless notes that the program may actually cost less than what Duke currently estimates. He says the final costs remain unknown until the company sees how much it costs to build the proposed solar projects and how well subscribed they are.
More costly
The first proposal Duke made in January called for customers to pay for the costs of the service up front. Duke estimated that cost to be about $500 for every 220 watts of capacity offered as the smallest unit a customer could buy. And critics worried that the high up-front costs would discourage customers.
Under the program, customers would continue to pay standard prices for energy. But over 20 years, the customer would get an estimated $420 in avoided cost credits for the solar energy produced by each unit of community solar purchased.
In the new program, proposed last month, Duke increased the minimum unit size to 1,000 watts. There are various costs proposed for that unit. But calculations by the Sierra Club based on the figures Duke proposed showed that all of them would cost customers much more than if they had been able to purchase the 1,000-watt unit under the original plan.
The original plan, with all of the costs up front and no monthly subscription fee, would have cost customers $363 more over the 20-year contract to purchase the 1,000 watts of capacity. But under the first example in the new program, Duke proposed a $295 up-front fee with $15.19 a month for the subscription to 1,000 watts over 20 years. Sierra Club estimates, that after the avoided cost credits, the customer would pay $2,032 more for his or her power over the 20 years.
