Groups argue utility’s plan ignores law requiring cost-benefit review
North Carolina regulators must reject a Duke Energy plan to impose new fees and onerous requirements on residential solar customers, says a coalition of advocacy groups. They say the plan ignores a state law that requires an assessment of solar’s benefits and would harm the rooftop solar industry and all state power users.
New fixed fees for solar customers lead to rates that discriminate against them and raise legal questions, the groups said in a joint brief and proposed partial order they filed with regulators today. The coalition includes the Environmental Working Group, NC WARN, Sunrise Durham, 350 Triangle, 350 Charlotte, the NC Climate Solutions Coalition, the NC Alliance to Protect Our People and the Places We Live and retired chemical engineer Donald Oulman.
Duke is asking the North Carolina Utilities Commission, or NCUC, to impose a new minimum monthly bill as part of the net energy metering (NEM) policy that applies to rooftop solar owners within Duke’s service areas. Duke’s two monopoly utilities in the state, Duke Energy Carolinas and Duke Energy Progress, would charge solar customers minimum bills of $22 and $28, respectively.
The advocacy groups say the NCUC has failed to comply with a state law known as House Bill 589, which requires a cost-benefit analysis of rooftop solar. Their joint brief states:
House Bill 589 sets forth a requirement that the Commission perform an investigation of the costs and benefits of customer-sited generation, including NEM…. In contradiction of the requirements of House Bill 589, [Duke Energy] would have this Commission impose a new NEM tariff based upon an in-house Embedded and Marginal Cost Study. This is precisely the type of one-sided study that House Bill 589, which requires an investigation, was intended to prohibit.
House Bill 589 became law in 2017, but the commission did not conduct such a study, instead relying on Duke’s own flawed and one-sided internal review to justify its proposed NEM tariff, which essentially imposes a solar tax. The failure to conduct this assessment clearly violates state law, the brief says. Duke Energy has argued against a commission-led study.
“Under the state’s law, it is crystal clear the commission must conduct its own cost-benefit analysis for rooftop solar,” said EWG Senior Energy Policy Advisor Grant Smith. “Anything less, especially relying on Duke’s own deeply flawed and one-sided study, violates the statute and ignores solar’s clear benefits.”
“The utilities commission hasn’t done a study of this change to rooftop solar, as required by law,” said Ziyad Habash, from Sunrise Durham. “Here’s what they’d find if they’d done the study: Promoting independent solar is better for North Carolina than letting Duke Energy run wild with fracked gas projects.
“Sunrise Durham will continue to press the utilities commission for a pro-solar verdict in this docket,” Habash added.
In its own filing with the NCUC, the Attorney General’s Office agreed that Duke’s internal study does not satisfy the statutory mandate to investigate costs and benefits, noting that, while it investigated the costs, “it did not analyze potential benefits . . . . [which] are many—from reducing carbon emissions by offsetting fossil fuel generation to improving grid resilience—and they should be studied and quantified.”
The solar plan might also run afoul of the federal Public Utility Regulatory Policies Act (PURPA), the groups warned. Under that law, the NCUC is prohibited from imposing differing rates on small rooftop solar customers than are charged to other customers with similar usage patterns. However, Duke’s proposed tariffs would burden NEM customers with many new charges that other low-usage non-solar customers would not be required to pay. This discrimination against rooftop solar is prohibited by PURPA.
“Just because Duke would prefer regulators violate state and federal law by rubber-stamping its proposed solar tax on customers doesn’t mean they should,” said Smith.
These same advocates urged the NCUC in June to hold a full evidentiary hearing to examine these statutory violations and other issues.
“We are very concerned that the commission refused to make Duke officials answer its critics under oath,” said Jim Warren, Executive Director of NC WARN. “This issue is at the core of whether North Carolina finally joins the clean energy revolution or allows Duke Energy to keep stifling renewables and building climate-wrecking gas-fired power plants.”
Duke is also seeking to lower by roughly two-thirds the price its monopoly utilities must pay ratepayers for surplus power generated by rooftop solar. That’s among the reasons 17 rooftop solar companies have urged Gov. Cooper to help defeat Duke’s scheme.
Duke Energy is also trying to force solar customers onto a complicated “time of use” schedule according to which the highest rate of solar credits would be awarded between 6 and 9 p.m., when very little, if any, solar power is generated. Duke’s proposal doesn’t even reflect daily peak power demand.
According to the arguments filed today, the value of a rooftop solar system would drop anywhere between 20-35% if Duke’s proposal is adopted. The new rules would even be imposed on existing solar customers as soon as 2027. Donald Oulman, a Duke solar customer who intervened in the docket as an individual, said: “Duke’s proposed changes would significantly increase the time required to pay back my initial solar system capital investment. No corporation should have the right to change the value of an individual homeowner’s investment after the purchase is made.” Many of the nearly 3,000 public comments received by the NCUC on this issue are from other solar customers with similar concerns.
“Local residents and businesses have built and continue to build solar arrays at their own expense, saving all ratepayers money by avoiding the costs of expensive fossil gas plants or transmission upgrades,” said Cathy Buckley, director of statewide organizing for the North Carolina Alliance to Protect Our People and the Places We Live.
In their proposed order, the intervenors suggest that the NCUC deny Duke Energy’s application, initiate a process for conducting a true cost-benefit analysis, and require Duke to file a new application based on the results of that study that exempts existing net metering customers from any new tariff for the life of their system.