Will NC join California in cutting payments to rooftop solar owners?
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California utility regulators last week adopted new rules sought by utility companies that reduce what rooftop solar owners get paid for electricity they send back to the grid. Will North Carolina be next?
Charlotte-based Duke Energy hopes so. Last year's state energy reform law requires regulators to revise rooftop solar rates. So in November 2021, the state's major utility asked North Carolina regulators to approve its proposed new rules for what's known as "net metering." That sparked a year-long battle with solar advocates and installers over the new rules, which would not only reduce payments, but also add an extra monthly fee for anyone who installs solar panels on their home.
Last week, Duke and several industry groups filed a joint proposed order for North Carolina Utilities Commission approval. Opponents filed their own orders and briefs in hopes of persuading regulators to reject or at least delay a decision. The fight could be decided in 2023.
Solar advocates say Duke’s proposal would make solar less attractive, cost customers with rooftop solar systems more and increase the length of time it takes for people who invest in solar panels to recoup their investment.
Right now, solar panel owners whose systems produce more electricity than they need get credits on their bills equal to whatever they pay for electricity. Under the proposed changes, those monthly credits would be lower and would vary according to the time of day and electricity demand. And homeowners would be charged an extra $10 monthly fee if they add solar. Duke says the changes would better align payments with the cost of electricity.
Net metering and rebates have been important incentives driving growth in North Carolina's solar industry. But in recent years, utilities across the country have tried to roll back these incentives - with some success. It's not difficult to see why. If too many consumers generate their own electricity, demand will fall and so will the need for expensive centralized power plants. (And those plants are where Duke makes most of its money, since it sells electricity to customers at cost.) In a national campaign, utilities and pro-utility groups have argued that net metering is unfair to customers who don't have solar.
That's how Duke Energy CEO Lynn Good put it at the company's annual meeting in May.
"We need to pay at a fair and reasonable rate, so that not only the customer who generates the power, but the customers who benefit from power are paying a fair amount," she said.
But some environmental groups, solar owners, and installers have objected. They say Duke's plan would slow adoption of solar energy and make it harder for the state to meet its climate goals. Meanwhile, North Carolina's 2017 law House Bill 589 required an "investigation of the costs and benefits of customer-sited solar." Duke says it has provided that information, but the groups say Duke's in-house study was "flawed" and doesn't comply with the law.
Attorney general's office objects
North Carolina Attorney General Josh Stein has also objected in multiple filings, including one last week. Back in March, his office called for postponing consideration of the plan, to allow time for further analysis of what role rooftop solar should play in meeting the state's goal for reducing carbon emissions from energy production. State law requires a study of rooftop solar's costs and benefits.
Nobody at the attorney general's office was available for an interview this week, but the office said in a statement: "Our office believes that Duke hasn’t appropriately studied the benefits of customer-sited generation, and its proposed net metering rates don’t take those benefits into account, including the carbon-reduction benefits of rooftop solar."
"It's important that rates fairly compensate people who installed solar energy to support the transition to clean energy. As it stands, Duke’s rates don’t take into account all of the factors they should consider to ensure customers who install solar are fairly compensated and customers who don’t aren’t unfairly penalized with higher rates," the statement said.
Duke has won the support of some large installers and solar industry groups by agreeing to slow the transition to new rules, which would help existing solar owners. Last week's proposed order was filed jointly with the North Carolina Sustainable Energy Association, Vote Solar, Southern Alliance for Clean Energy and the Solar Energy Industries Association.
Among other things, that agreement would create a 15-year "bridge rate" for some current solar owners and those who install solar by the end of 2026. That bridge rate would be lower than the current one-to-one net-metering rate, but still above the final rate. And it would be available to only a limited number of customers each year. The deal also lets Duke proceed with its original plan to ultimately trim payments and add a new monthly fee for solar users.
Opponents keep fighting
But other installers and rooftop solar advocates are still fighting the idea. In a March letter to the governor, attorney general and regulators, 15 installers wrote that their own calculations show Duke's plan would reduce the value of a home solar investment by 25% to 35%. They worry that could make it difficult for solar owners to pay off loans to buy solar panels.
“Duke’s proposed changes would significantly increase the time required to pay back my initial solar system capital investment," Donald Oulman of Durham, a home solar owner, said in a statement last week. "No corporation should have the right to change the value of an individual homeowner’s investment after the purchase is made.”
Oulman was one of the parties to another joint filing last week at the utilities commission. Others included the Environmental Working Group, NC WARN, Sunrise Durham, 350 Triangle, 350 Charlotte, the NC Climate Solutions Coalition, and the NC Alliance to Protect Our People and the Places We Live. They also called for a formal cost-benefit study of rooftop solar before any change in rates.
Duke Energy spokesman Randy Wheeless says Duke is paying too much for electricity from solar owners.
"If you're paying a retail price for solar every time you get it, a lot of times it's not really worth that. So you're overpaying people to generate solar at the detriment of other people who are saying, 'Wait, I don't get that same benefit.' So we're just trying to come up with something that is fair to the solar customer and to the non-solar customer," Wheeless said this week.
For now, the utilities commission is busy working on the carbon plan, which is due Dec. 31. It's not clear when regulators might turn their attention to the net metering changes.
You can read all filings in the case at NCUC.net.
More about the carbon plan
State regulators have spent much of this year reading filings and comments and holding public hearings on Duke's proposed carbon plan. Last year's N.C. energy reform law requires the commission to draft a plan by the end of the year for how Duke Energy will eliminate carbon emissions at power plants to meet the state's climate goals. Regulators are expected to issue an order by next Friday. Read more in my Dec. 21 report "NC energy regulators face a choice with Duke carbon-cutting plan: How fast and how far to go?"
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