Utility’s support of distributed solar not what it seems

By John David Baldwin on March 12, 2018

There is no surer sign that solar is winning than the effort utilities are making to appear pro-solar. But appearances can be deceiving. North Carolina’s Duke Energy made an impressive-sounding announcement. The company has proposed giving $62 million in rebates to residential and commercial solar projects over the next five years. A close look into the proposal, and into the company’s other actions, shows it may not have the impact Duke would have customers, and regulators, believe it will have.

Duke’s decision to launch this rebate program was not made in a fit of corporate generosity. It was mandated by the North Carolina legislature in a bill passed last year. The annual amount Duke would spend on the rebate is $12.4 million per year (less than the $13.5 million annual salary it pays its CEO, Lynn Good). In its initial comments before the Commission, the Southern Alliance for Clean Energy (SACE) expressed concern that possible future changes in net metering laws in North Carolina would make the solar rebates much less beneficial to customers. They asked the Commission to revisit the rebate issue should the state’s net metering rules change.

Duke’s proposed rebate program is before the state Utilities Commission, which has the authority to sign off on the plan. Even while Duke has presented this rebate program, the company is also asking the commission for a substantial increase in the fixed charges it can impose on customers. The utility has requested to be allowed to raise them from $11.80 per month to $17.79 per month, nearly 51 percent. Fixed charges do not change based upon how much electricity customers use. Increases in fixed charges don’t necessarily mean customer bills will rise. Utilities will often use them to supplant volumetric charges (charges that vary with electricity use), meaning a customer sees no change in the amount they’re paying per month. Increasing fixed charges limits how much money customers can save by being more energy efficient, or from getting their electricity from solar.

“The behavior is consistent with Duke’s corporate actions over the years to dissuade energy saving and to disregard low- and fixed-income customers,” said Jim Warren, Executive Director for NC WARN, the renewable energy advocacy organization.

According to the Charlotte Observer editorial board, Duke’s fixed charge ask would bring in an additional $647 million per year to the company. In other words, Duke would get more than ten times what the company is spending on its solar rebates. Duke has asked for the fixed charge increase to pay the cost to clean up pollution from the company’s coal ash ponds and for not building a nuclear plant.

Raising fixed charges is just one common utility tactic to discourage competition from rooftop solar. Utilities like Duke have also been eager to have regulators cut net metering policies. Net metering ensures solar homeowners receive fair value for the electricity they generate. Reducing compensation from net metering enables monopoly utilities to dissuade their customers from going solar.

Other groups ask that the new rebate be put in perspective. The total five-year rebate comes out to 1.7% of Duke customers’ share of the proposed $6 billion Atlantic Coast gas pipeline. The annual rebate cap of 20MW, for the two subsidiaries together, over the course of five years (100MW), represents only 1.1% of the fracked natural gas generation that Duke intends to build over the next 15 years, according to NC WARN.

“All new solar is good, but with Duke, it’s swamped by the huge expansion of fracked gas,” said Warren.

North Carolina is a leading state for solar because of its Renewable Portfolio Standard (RPS). The state’s RPS has a 12.5 percent target by 2021. It includes a 2 percent carve out by 2018 for solar. Shannon Helm, Senior Director, Communications & External Relations for NC Clean Energy Technology Center, notes that North Carolina ranks second in the country for total amount of installed PV (solar).

“The majority of these installations have been utility-scale systems, which generate a sufficient amount of RECs for RPS compliance,” Helm said. “The installations from the rebate program will provide minimal contribution towards Duke’s RPS requirements.” While the RPS requirements have helped to spur utility-scale solar, there has been very little benefit for regular people hoping to lower their bills with rooftop solar. The new program may change that.