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Duke Retains North Carolina Monopoly As NCUC Prohibits Third-Party Sales

April 22, 2016 By Cheryl Kaften

The North Carolina Utility Commission (NCUC) issued a declaratory order (Docket No. SP-100, SUB 31) on April 15 – ruling that third parties, such as NC WARN, are prohibited from installing a solar system and selling the power produced to a non-profit entity. The finding represents a victory for Duke Energy, which had argued that state law prohibits electricity sales by any organization other than a utility.

Indeed, Duke Energy had intervened in the case last November – telling the NCUC that the regulators should penalize NC WARN up to $1,000 for every day since late June, when the group began selling solar power to Faith Community Church in Greensboro, North Carolina, after contracting to have a 5.2 kilowatt (kW) solar system installed on its roof.

The NCUC levied a fine against NC WARN of about $60,000 for selling power to the church, but suspended the fine , if NC WARN stops selling power and meets other conditions.

NC WARN is a Durham, North Carolina-based nonprofit organization advocating for a swift transition to clean energy. The group said it had been selling electricity to the church as “a test case to clarify state policy.”

NC WARN contended that the arrangement – under which the church paid a monthly fee for the generation it received – allowed the house of worship to avoid the up-front cost of installing a solar system and created a revenue stream that enabled NC WARN to install similar systems for additional consumers.

To that end, argued NC WARN, it should not have been subject to regulation by the commission for third-party sales of electricity because it “provid[ed] funding, a service, rather than just selling electricity to a church.”

In a public statement, NC WARN Director Jim Warren explained, We have cited precedents from in-state cases and those in other states, and maintain that the funding arrangement is consistent with state energy policy and with the constitutional ban of monopolies, and that it should be encouraged across North Carolina.

“Since that time,” Warren said, “numerous other churches have expressed interest in solar power via third party – or “no money down” – solar financing in order to save money and further their Earth stewardship. Duke Energy is entitled to disagree with us, but seeking to financially hammer this 27 year-old nonprofit is more proof that Goliath wants neither competition, criticism, nor scrutiny.”

The case also had been joined by solar company, SolarCity, and others interested in offering “no money down” installation of solar on churches, businesses, and homes.

Nonprofit NC Interfaith Power & Light also intervened in support of NC WARN, represented by Southern Environmental Law Center.

The commissioners commented, “No party disputes that NC WARN is furnishing electricity under its program for compensation or that the electricity produced from its PV facilities is not for NC WARN’s own use. Therefore, the dispositive issue raised by this request is whether, under G.S. 62-3(23)a.1, the sales under NC WARN’s program are sales ‘to or for the public’ based on North Carolina law as it exists today.

Further, they found, “It is unclear why NC WARN seeks to sell electricity to the church rather than providing financing to the church to be repaid through the savings NC WARN represents will be achieved from the electricity the PV facilities will generate. Financing PV facilities with savings achieved does not involve making electric sales. NC WARN certainly makes no effort to support its conclusory assertion that sales are necessary for its program.”

In summary, the NCUC found and concluded:

  • NC WARN’s program constitutes sales “to or for the public” based on current North Carolina law;
  • NC WARN’s electric sales to the public (the church) is impermissible due to the fact that the Church is located within a service area that has been assigned exclusively to Duke;
  • The General Assembly has determined that the public is better served by a regulated monopoly than by competing suppliers of service, and this … policy decision … has resulted in consistently low electric rates compared to other parts of the country;
  • The church has legal ways to finance the installation of solar on its premises – including, among others, financing over a period of time by using electric bill savings to pay for the purchase and installation;
  • NCUC precedent supports the commission’s determination;
  • North Carolina is one of the nation’s leaders in adding renewable generation;
  • NC WARN knowingly entered into a contract to sell electricity in a franchised area and sold electricity without prior permission from the commission, subjecting itself to sanctions; and
  • Although the commission determines that penalties should be issued, those penalties shall be waived upon NC WARN’s honoring its commitment to refund all billings to the church and ceasing all future sales

This is the first test of third-party sales in North Carolina. The decision is likely to be appealed in the court system.

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