If North Carolina state regulators accept Duke Energy’s proposal (Docket E-100 Sub 148) to cut the price it pays for power from independent producers, a typical 5-MW solar array built in 2017 would make about $230,000 less a year than one built in 2016, according to an April 19 report by the Triad Business Journal.
That would be equivalent to a 36 percent cut in the compensation that the Charlotte-based utility provides to customer generators for solar and other kinds of renewable energy, according to calculations by John Hinton, director of economic research for the Public Staff of the North Carolina. Utilities Commission.
Indeed, in testimony filed with the commission on April 17, Ben Johnson, a regulatory economist retained by the North Carolina Sustainable Energy Association, argued “If the proposed tariffs are approved, it will be much more difficult to finance [independent] projects.”
The basic purpose of the biennial avoided costs case brought before the commission by Duke is to allow the commission to set the price utilities must pay for independent power they are required to buy under the federal Public Utilities Regulatory Policy Act of 1978, known as PURPA.
The case revolves around the utility’s goal to reduce the size of projects that qualify for standard power-purchase contracts in the state to 1 MW from the current 5 MW, the local business news outlet reported.
Duke also wants the commission to cut the standard length of the contract to 10 years from the current 15 – as well as to make those contracts variable, resetting every two years.
Right now, Duke Energy Carolinas is required to pay a little more than 6.2 cents/kWh to purchase power from customer operators. However, Triad Business Journal reported, under Duke’s new proposed avoided cost rates, that would drop to almost 3.8 cents/kWh. (By comparison, the local news outlet said, a typical residential customer pays Duke a little more than 9.3 cents per kilowatt-hour.)
Meanwhile, according to a report by the Charlotte Observer, solar developers are pushing to increase the scale of projects eligible for the “standard offer” to 10 MW and to lengthen contract terms to as much as 20 years.
How this case shakes out could influence solar pricing nationwide.