The largest U.S. electric company wants to pay North Carolina shops and homeowners less for solar power they generate by changing a pricing rule that was designed to spur production of the power, a Duke Energy vice president said Thursday.
If approved by state utilities regulators, the reduced price would put rooftop solar power in line with Duke Energy’s costs for other generating methods, including industrial-scale solar farms, said Rob Caldwell, the vice president of renewable generation development.
Under current policy for what’s called “net metering” set by the North Carolina Utilities Commission about a decade ago, owners of rooftop solar systems sign contracts with Duke Energy that allow them to use electricity generated by the sun and sell any surplus to the company at 11 cents per kilowatt hour. That’s the same price households pay for electricity.
Federal law only requires utilities to pay their generating cost, which Caldwell said is between 5 cents and 7 cents a kilowatt hour for Duke Energy’s two regional operating subsidiaries. That’s what Duke pays owners of the multiplying number of solar farms. New large-scale projects pushed North Carolina to behind only California in the growth of solar-power capacity in 2013, according to an annual research report by NPD Solarbuzz, which tracks the industry.
The difference between how much it costs Duke Energy to generate energy and what it charges residential customers covers construction and maintenance of its distribution systems, repair, administration and other overhead, Caldwell said.
“Right now, we need to collect 11 cents for every kilowatt hour from all across our system to fairly cover the costs of providing that service. When we give a customer 11 cents for something that’s worth less than that — 5 to 7 cents in our example — that means other customers are going to have to make that up because our costs are fixed,” Caldwell said.
The energy output of the state’s 1,300 rooftop solar panels has doubled in the past two years, Caldwell said. U.S. electricity demand, meanwhile, has dropped to around 1 percent growth per year and is expected to stay that way for decades, according to the U.S. Energy Information Administration.
Some environmentalists believe Duke Energy’s real aim is preventing a proliferation of rooftop solar systems from shrinking its customer pool and interfering with its business model, said David Pomerantz, a Greenpeace spokesman on green energy and electric utilities.
“This is a power grab by Duke to make sure it maintains a monopoly on being able to sell electricity in North Carolina,” Pomerantz said.
“The more people who go solar, that’s fewer gas plants and coal plants and nuclear power plants that Duke has to build itself, which it ends up charging to all of its customers,” he said, noting that the company has raised electricity rates in North Carolina three times since 2009 in large part to reclaim expansion costs.
Changing the terms under which rooftop solar energy has grown in North Carolina would hurt businesses like Yes! Solar Solutions, said Steve Miller, co-owner of the Cary business.
“It will have a negative impact on those of us that design and sell solar systems,” said Miller, whose 12-employee business has added two workers this month and plans to hire three more installers this year. “If they want to change it they’re really not supporting net metering, which I think is probably their goal in the long run. I think the utilities see it as a threat.”
Charlotte-based Duke Energy delivers electricity to more than 7 million in the Carolinas, Florida, Kentucky, Indiana and Ohio. It is the largest U.S. utility as measured by number of customers and market value.