Duke Energy is Trying to Rig NC Solar Rules
The North Carolina Utilities Commission (NCUC) is considering a Duke Energy-backed ‘net metering’ proposal. If approved, the new rules would allow the utility to increase profit off of customers with rooftop solar. Sunrise Movement’s Durham Hub has filed a joint ‘intervention’ before the NCUC along with NC WARN and NC Climate Solutions Coalition to stop this attack on the green transition. Other intervenors trying to stop the new rules include the Environmental Working Group, the 350 Charlotte and Triangle chapters, and the NC Alliance to Protect Our People and the Places We Live.
In states with net metering, such as NC, utilities have to pay solar customers for electricity supplied to the grid. Net metering differs in the forty-one states where it applies, and the variations can be split into two camps:
- Policies good for homeowners like ‘retail rate’, and ‘standard use’
- Policies good for utilities like ‘time-of-use’ and ‘avoided cost’ (Note: in some cases, ‘time-of-use’ can be part of strong net metering policy)
NC has retail rate and standard use rules, which should be kept. To understand the system, look at the Duke Energy Carolinas rate schedule for all-electric households. Solar customers are paid 9¢ per kilowatt (kWh). The energy flows onto Duke Energy’s grid, then the utility sells it to other standard rate customers for 9¢. Solar customers get a lower electric bill. Solar installers get more business. Non-solar customers get renewable energy, clean air, and less climate change. Duke Energy doesn’t like the status quo because it doesn’t add to their $4 billion profit, so the utility is trying to throw out the current “fair and straight-forward net metering arrangement”
This is how the Duke Energy Carolina’s rate schedule would change. The utility would get permission to pay solar customers different prices depending on the time of day (time-of-use). Between 9 AM and 6 PM, practically the entire time the sun is shining and solar panels are working, solar customers would be paid less. Either:
- An ‘off peak’ rate of 8¢ per kWh
- A ‘discount’ rate of 6¢ per kWh.
- An ‘avoided cost’ rate of 3¢ per kWh for any energy the home sells in excess of the amount that it buys.
Duke Energy could then sell this energy to standard rate customers for 9¢ per kWh. A profit margin appears, as high as 200% for the avoided cost rate. The new rules would also create a second profit stream, a ‘fixed charge’ for solar customers of $8 to $14 per month. The proposal is also incredibly complex, which serves a dual function. The public can’t understand it, and solar installers can’t explain it to customers. In a letter to Governor Cooper, 15 solar installers said:
“Time-of-use rates, critical peak pricing, minimum bill, complicated netting procedure, non-bypassable charges, and variable treatment of existing customers create such complexity that it would become quite difficult for us to model for our customers what the payback on their solar investment would be.”
Duke Energy’s net metering proposal would make solar less affordable, even as many states are headed in the opposite direction. In California, well-designed incentives have brought rooftop solar to 150,000 low-income households. Solar panels could adorn every household in NC, serving to curb fossil fuel use and shrink electricity bills. Instead, the NCUC is contemplating the path of pouring more money into a monopoly’s pockets and harming every other interest group: a green industry, solar customers, and non-solar customers.
Duke Energy’s profit-grab follows a nationwide playbook. The Edison Electric Institute (EEI) is a trade association for utilities of which Duke Energy is a member. Around 2012, EEI addressed the rise of independent solar by making the following recommendations:
- Promote time of use and avoided cost net metering rules
- Charge solar customers higher user fees
To implement the plan, EEI hired Edelman, a massive PR firm, and donated to corporate lobbies such as American Legislative Exchange Council (ALEC) and the U.S. Chamber of Commerce. In return, ALEC formulated anti-solar ‘model legislation’ based on utility needs. No small victory, since when ALEC adopts model legislation, GOP legislators often copy the text word-for-word.
Anti-solar laws began to appear in dozens of states. Wisconsin raised user fees in 2014, Hawaii lost net metering in 2015, Arizona lost retail rate in 2016, and on and on. EEI and its members have attacked independent solar in dozens of states. Duke Energy wants NC to be next. When considering the monopoly’s PR claims, remember that their net metering proposal originated from a meeting with dozens of investor-owned utilities asking “how do you grow earnings” given the threat of independent solar.
No one should be surprised that Duke Energy wants to make more money, but how to sell the profit-grab? Duke Energy followed EEI’s advice, and has relied on the ‘cost shift’ narrative. The PR story is simple: Solar panels reduce electric bills to zero in many cases. Duke Energy loses money by maintaining connections to these homes. Non-solar customers pay the difference. Duke Energy has never released any evidence to support this story. Independent studies about cost shift tell a murky story: some find an undetectably small cost shift, some find it in reverse, and some find none at all.
Lawrence Berkeley National Laboratory found a cost shift of 12¢ per year to each non-solar customer. If this is accurate, the NCUC should lower non-solar customers rates by this amount, and Duke Energy should absorb the minuscule loss. This would provide the highly profitable, state-guaranteed monopoly a chance to demonstrate its deeply felt moral urge to look out for the interests of customers.
The Environment America Research and Policy Center found a cost shift in the other direction, reporting that solar customers “generally deliver greater benefits to the grid and society than they receive through net metering.” The study found that solar customers subsidize the non-solar customers by reducing generation needs, saving on substations and feeders, and improving public health by reducing pollution.
The South Carolina Public Service Commission declared: “[Net metering] does not cause a significant potential cost-shift”.
The idea that cost shift poses a huge burden has been discredited, so why is the NCUC entertaining the utility’s demand to fix a non-existent problem? Duke Energy seems to possess so much political power that even clumsy lunges for cash are treated with the utmost respect. Governor Roy Cooper, who appointed most NCUC commissioners, took $5,400 from Duke Energy for his re-election campaign. The executive director of the NCUC’s Public Staff is a lawyer whose old firm used to represent the utility. Raleigh is saturated with Duke Energy influence, and this has dulled the will of even liberal figures to choose green energy over fossil fuel.
The NCUC Public Staff has released disappointing comments about Duke Energy’s proposal. The Public Staff seemed willing to ignore a state law, HB 589, that requires the NCUC to perform an “investigation of the costs and benefits of customer-sited generation” before changing net metering rules. The study didn’t need to be done, the Public Staff said, because Duke Energy had already studied the issue. They surely understand the utility’s conflict of interest, and are familiar with the independent studies, so it is natural to worry about undue Duke Energy influence.
Duke Energy claims their proposal has nothing to do with creating new sources of profit, and is solely for the benefit of non-solar customers. To put it mildly, the utility doesn’t have a record of concern for ratepayers. Just recently, the utility asked to raise fixed charges on customers in South Carolina by 240%. Stunned commissioners rejected the request, noting that the effects on “elderly, the disabled, the low income and low use customers” would be horrific. In North Carolina and other states, Duke Energy has attacked efficiency programs, programs for the poor, and legal protections for low-income customers. The public shouldn’t fall for Duke Energy’s professed concern about low-income families. Crocodile tears are hiding a profit-grab.
There are genuine cost shifts in the NC energy system. Duke Energy benefits from them. Between 2001–2019, the monopoly received over $1.2 billion in public subsidies. Meanwhile, Duke Energy’s obsession with fossil fuels is leading us toward “an unlivable world”. The utility is working to preserve this cost shift through a two-track approach. First, it is dedicated to suppressing renewables such as rooftop solar. Second, Duke Energy plans to build 9600 MW of fracked gas capacity in NC, with each plant expected to last 40 years. If NC ever does pass decarbonization laws, these new plants will become stranded assets, putting taxpayers on the hook for as much as $4.8 billion. The NCUC must realize that approval of Duke Energy’s proposal would not occur in a vacuum. It would be one sad page in the bigger story of a Climate Crisis caused in large part by the greed and power of fossil fuel companies.
North Carolina must transition to a clean and renewable energy system. Independent solar is a promising piece of the puzzle, with benefits for ratepayers, green industry, and the environment. Sunrise Durham is proud to intervene against the Duke Energy-backed attempt to rig NC solar policy, and urges the Utilities Commission to dismiss this attack on net metering.
