Duke Energy reaches net metering compromise with N.C. solar installers
After weeks of considerable discussion, Duke Energy Corp. says it has reached an agreement with the leading rooftop solar installers in North Carolina to support the investor-owned utility’s originally proposed net metering filing.
There are some modifications to Duke Energy’s original proposal on net metering — the term for how customers who produce power with solar panels are credited for that energy — according to the power company, a Fortune 150 company headquartered in Charlotte, N.C., that is one of America’s largest energy holding companies. The company’s electric utilities serve 8.2 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio, and Kentucky, while its natural gas unit serves 1.6 million customers in North Carolina, South Carolina, Tennessee, Ohio, and Kentucky.
The new stipulation presents a transitional rate option known as the Proposed Bridge Rate for net energy metering (NEM) customers in North Carolina and creates additional benefits for Duke Energy customers, including low-income customers, according to the May 19 agreement filed with the North Carolina Utilities Commission.
The newly created Bridge Rate allows existing customers to switch to the Bridge Rate in 2027 and remain on it for 15 years minus the time spent on current net metering. Duke Energy says the Bridge Rate creates an orderly transition option for customers and supports the business efforts of the solar installer community.
“Duke Energy knows that customer-sited solar is an important part of the future growth of solar in North Carolina,” said Lon Huber, Duke Energy’s senior vice president of pricing and customer solutions, in a statement. “We believe this phased-in compromise will help the installer industry navigate market changes and adapt to the long-term rate design of Solar Choice.”
Duke Energy negotiated the agreement with the three owners of three North Carolina-based rooftop solar installers: Dave Hollister of Sundance Power Systems Inc., Stew Miller of Yes Solar Solutions, and Bob Kingery of Southern Energy Management Inc.
“In the end, we did the best we could to secure the best deal possible for our industry, one that would give us a runway that was sellable to our customers, and buy some time for some systemic changes to occur that could create a better system moving forward,” Hollister said in a May 27 statement.
According to the filed agreement, the Proposed Bridge Rate would be offered as a limited alternative to the time-of-use tariffs proposed in Duke’s original application. The alternative rate option would be open to existing and eligible new customers who apply for it through Dec. 31, 2026, subject to annual capacity caps. Customers electing to take service on the Proposed Bridge Rate may do so for up to 15 years, subject to certain limitations outlined in the stipulation, the filing says.
Essentially, Duke Energy is innovating its business model regarding distributed generation, with the main goal being the provision of incentives that will capture the environmental and social benefits of solar and deliver them back to customers in the form of an energy efficiency incentive, according to the Sundance Power statement, and this program will help align the utility with the business model for rooftop solar.
The original Duke Energy net metering filing would have been very complicated and difficult to calculate customer savings, according to Sundance Power, which noted that according to N.C. rooftop solar installers’ calculations, without any incentive program, all customers would have had the value of their solar investment reduced by 25 percent to 35 percent.
Additionally, among other issues cited by the solar installers, they said the grandfathered rate did not have any energy escalator and would have extended paybacks for all legacy customers by seven to eight years, a timeframe that could have negatively impacted the value of the investment for existing customers.
In addition to the Bridge Rate, some of the other elements of the newly negotiated policy include a commitment by Duke Energy to propose energy efficiency programs recognizing the reduction in consumption from the grid associated with installing rooftop solar; more time of up to five years for the industry and the public to find a true value of net metering and better rate schedules that include benefits of distributed generation solar; an improved return on investment; and, if necessary, commits both Duke Energy and the solar industry to work through the legislature to ensure that the reduction in consumption from the grid associated with a customer adopting renewable energy (rooftop solar) be considered energy efficiency.
“This will change the entire equation for cost-shifting and better recognize the value of distributed solar,” according to Sundance Power.
Taken as a whole, the filed stipulation provides a gradual transition option from the existing NEM programs for eligible customers, while creating additional future benefits for all of Duke Energy’s customers, according to J. Ashley Cooper, partner at Parker Poe Adams & Bernstein LLP, who filed the agreement on behalf of the utility.
“The compromise solution reached by the stipulating parties represents a collaborative effort to account for a broad range of interests, while also adhering to the NEM directives and timelines” within state legislation, wrote Cooper. “The stipulating parties are encouraged by this progress and look forward to collaborating on these matters going forward.”
A coalition of environmental and nonprofit groups remain opposed to Duke Energy’s plan.
