North Carolina court hears challenge to Duke Energy’s reduced credits for rooftop solar

North Carolina court hears challenge to Duke Energy’s reduced credits for rooftop solar

The debate over rooftop solar in North Carolina entered the courtroom on Wednesday, when a three-judge Court of Appeals panel heard a challenge to Duke Energy’s reduced payments for home solar arrays.

“We are here this morning because a terrible injury has been inflicted on the rooftop solar industry in our state,” said Matthew Quinn, the lawyer for seven climate justice groups appealing the rates approved last year by the Utilities Commission.

The lowered credits are part of a complicated truce between Duke, some of the state’s oldest rooftop installers, and multiple clean energy groups, all of whom sought to avoid the bruising battles over net metering seen in other states.

But the new payments have undoubtedly tamped interest in homes going solar since they took effect last fall, with one installer reporting residential sales falling by as much as 50%. 

Since the entities who compromised with Duke don’t represent all of those who engaged in the commission’s net metering docket, their agreement should be given “little to no weight,” the challengers, including NC WARN and Environmental Working Group, say in their legal appeal.

What’s more, they argue, the new rates are illegal because they were promulgated after internal Duke studies and stakeholder discussions regarding rooftop solar — not the independent investigation they believe is required by law.

“A 2017 state law mandates the Utilities Commission conduct its own solar net metering cost-benefit analysis,” said Jim Warren, the executive director of NC WARN, in a note to reporters before the oral arguments. “The commission flouted the law, choosing instead to lean on Duke Energy’s deeply flawed and one-sided calculations.”

The reasoning rests in part on an Energy News Network article that quotes one of the 2017 law’s authors, John Szoka, a Fayetteville Republican who served in the state House of Representatives for a decade. The story describes Szoka as “adamant” that the commission should conduct the study. 

“It’s not up to the utility to determine whether net metering is good or bad,” Szoka told the Energy News Network at the time. “We know what that answer will be. We’re not putting the fox in charge of the hen house here. That is not the intent.”

After quoting the piece in their brief, the plaintiffs write: “Clearly, the General Assembly did not intend for [Duke] to satisfy [the law] by performing an internal study. Indeed, such a study would be akin to ‘the fox in charge of the hen house.’”

Duke and other defenders of the new credits say Szoka’s comments don’t override the “plain meaning” of the language in the law, which says simply that the rates, “shall be nondiscriminatory and established only after an investigation of the costs and benefits of customer-sited generation.” 

“Legislative intent,” lawyers for Duke note dryly in one footnote in a legal filing, “is not derived from news articles from Energy News Network.”

The appellants also claim the commission erred by failing to consider all of the benefits of rooftop solar and by forcing solar owners to migrate to time-variable rates instead of allowing flat rates to stand.

The solution, they say in their brief: “The Court of Appeals should reverse the Commission’s… Order and remand this matter for a Commission-led investigation of the costs and benefits for [net metered] solar.”

‘Massive contraction’ ahead?

A dogged Duke foe, NC WARN and its partners aren’t just trying to prevail on an obscure technical point of process. Examinations of distributed solar in other states have shown a clear trend: when utilities conduct the analyses, the benefits of rooftop solar come in lower than when commissions or independent groups are in charge.

Indeed, both Duke and Public Staff, the state-sanctioned customer advocate which sided against the appeal, maintained in court Wednesday that rooftop solar unfairly burdens non-solar customers and the company itself, a point few clean energy advocates or solar industry representatives concede.

Duke also isn’t alone among investor-owned utilities in its years-long quest to lower the one-to-one net metering credit rooftop solar owners have long enjoyed. After all, the fewer electrons the company sells at a markup, the lower its profits.

But Duke has also found compromise with at least some of its critics in ways many of its peers have not, helping to explain why it was groups like NC WARN —  and not the rooftop industry itself — that appeared formally in court on Wednesday.

The crux of the grand bargain is a move toward “time of use” rates, in which diligent solar owners can conceivably squeeze out the same benefits they enjoyed under the old rates, so long as they time their energy use to account for peak demand hours. 

A “bridge rate,” negotiated by long-time installers Southern Energy Management, Sundance Power Systems, and Yes Solar will be available for new customers until 2027, and many in the industry say it’s preferred for its simplicity and its relative low risk.

A final piece of the deal was greenlit last month: financial incentives for home batteries paired with rooftop solar, part of a pilot program to be rolled out in May called PowerPair.

While many veteran installers acknowledged fewer customer inquiries last year after the new rates took effect, they also suggested the harder-to-negotiate terms could weed out “bad actors” in the industry

And all say they’re focused long term on maximizing their key business advantage: Fossil fuels are becoming more expensive, while the materials designed to harness and store forever-free sunlight are getting cheaper.

Still, Bryce Bruncati, director of residential sales at 8M Solar and one of the industry’s most outspoken critics of the time-of-use rates, hopes the lawsuit argued today will lay the groundwork for a better long-term solution for installers.

“We’ve got these interim patches,” he told Energy News Network, referring to the bridge rate and the Power Pair program. “But starting in 2027, we’re going to see this massive contraction of the solar industry —  and fewer people going solar in general — if we don’t do something.”

There’s no firm deadline for the judges who heard Wednesday’s argument to issue a decision, but many observers were expecting an outcome within 90 days.

North Carolina court hears challenge to Duke Energy’s reduced credits for rooftop solar is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

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