Rate Case: Partial Settlement with Duke

NC Sustainable Energy Association Announces Partial Settlement with Duke on Rate Case

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NC Solar Now is a proud member of the North Carolina Sustainable Energy Association, an organization that works to promote renewable energy and energy efficiency in North Carolina through education, public policy, and economic development. Our involvement with NCSEA helps drive policy and market development to create clean energy jobs, economic opportunities and affordable energy that benefits all of North Carolina. We are proud to announce that NCSEA has recently made some leeway in their rate case settlement with Duke Energy Carolina’s. Below is a letter from their Executive Director, Ivan Urlaub. They succeeded in ensuring future modernization efforts are both affordable and clean, reduced short and long-term bill impacts, and established administrative review and stakeholder meetings. We are very happy to share these advancements in the renewable energy industry and hope you are too!

Dear NCSEA Member,

NCSEA’s mission is to drive policy and market development that creates clean energy jobs, economic opportunities, and affordable energy for the benefit of all North Carolinians. We believe sourcing more of our energy needs from clean energy resources located in North Carolina and enabling customers to utilize a truly modern grid and non-wires alternatives is necessary for all electricity to be affordable, accessible, and reliable in the future. 

For NCSEA, “clean” encompasses affordable and systemic access to, and use of, renewable energy, energy saving solutions, transportation electrification, an intelligent grid, and energy storage. And clean has helped grow North Carolina’s economy in both rural and urban areas every year since 2007. Employment in North Carolina’s clean energy economy has steadily grown from less than 2,000 in 2007 to more than 34,000 in 2017.

To advance this mission, throughout the spring NCSEA has been deeply engaged in the Duke Energy Carolinas (“DEC”) rate case. In both the DEC and the recent Duke Energy Progress rate cases, NCSEA advocated for essential policies such as fair rate design, transparent and collaborative grid planning, giving customers easy access to their energy usage data, and true grid modernization. 

DEC’s initial proposal in its rate case would have been an unnecessary and expensive setback for the affordable and accessible electricity that benefits all North Carolina, clean or otherwise. The proposal would significantly increase fixed charges on customer bills, charge customers for coal ash clean-up, and invest heavily in Duke’s Power/Forward initiative, including a $7.8 billion investment over 10 years on a combination of both grid modernization activities and typical operations and maintenance, such as tree trimming and burying power lines. NCSEA agrees some grid modernization is necessary, but given the price tag of Duke’s proposal, how North Carolina modernizes its grid matters more now than ever for consumers.

As proposed, DEC’s Power/Forward investments would do little to ensure electricity service includes affordable, accessible clean energy options for all customers. In fact, DEC’s proposal laid bare the reality that the interests of Duke and customers have become misaligned in fundamental ways that cannot be resolved under current laws and regulations. NCSEA is committed to aligning the interests of North Carolina’s regulated utilities, customers, and innovative clean energy providers around an energy system, policy framework, and economy that benefit all North Carolinians. Given the ongoing absence of an opportunity for collaboration, NCSEA engaged in the DEP and DEC rate cases to advance these three goals. 

During the DEC rate case, NCSEA advocated for a grid modernization process that would: 1) prioritize intelligent and efficient planning, 2) comprehensively include distributed energy resources in the planning process, and 3) evaluate non-wires alternatives to traditional investments. Today, I write to share that NCSEA has reached a partial settlement agreement with DEC, along with the Environmental Defense Fund and the Sierra Club. This agreement results in a comprehensive planning process, including integrated distribution planning, with an annual review by the Utilities Commission.The agreement prioritizes true grid modernization activities, instead of traditional operations and maintenance activities; significantly reduces the financial impact on customers from DEC’s initial proposal; and includes several important steps for clean energy in the areas of EV infrastructure, energy storage, and distributed energy planning. NCSEA is also agreeing to enter into a similar agreement with the same benefits in Duke Energy Progress’ next rate case, expected in 2019.

While not a perfect solution, this settlement reduces DEC’s investment from a staggering $7.8 billion over 10 years to $2.5 billion over 3 years while investing in grid modernization and taking procedural steps to advance North Carolina’s energy economy down a cleaner, more affordable, and transparent path. Specifically, the settlement will: 

  • Institute integrated distribution resource planning. Integrated distribution planning, which DEC terms Integrated System Operation Planning (“ISOP”), will be rolled out in steps with full deployment by January 1, 2022. NCSEA will provide input and feedback to DEC about parameters, the use of distributed energy resources (“DER”) and non-wires alternatives, forecasts, assumptions, and inputs as DEC develops ISOP.
  • Deploy voltage optimization. DEC will install voltage optimization equipment on 20 percent of its circuits by 2021. This will facilitate changes in electricity flow, allowing the utility to adjust voltage as needed without impacts to power quality in their homes or on the grid. This also gives the utility the ability to lower voltage during periods of high energy use in order to avoid running expensive peaking power plants — reducing the amount of fossil fuel used. DEC will also provide relief from the LVR screen that has been a barrier to the interconnection of distributed energy generation.  
  • Invest $25 million in electric vehicle charging infrastructure. This investment will include rebates for residential customers who install chargers capable of providing demand response services, charging for low-income communities, transit and school bus electrification, and public charging.  
  • Deploy 200 MW of energy storage by May 2023 and another 100 MW by May 2026. As you may recall, the Western Modernization Project in Asheville and the DEP updated IRP outlines as much as 75 MW of utility-owned battery storage in the 2019-2021 time period. This though is the first time that DEC has committed to significant energy storage deployment in its territory.  
  • Institute Green Button data access. DEC commits that they will finally make customers’ data fully available to them through “Green Button,” a platform that provides customers with easy and secure access to their energy usage information. Green Button Download My Data will be implemented in 2019 and upgraded to Green Button Connect My Data thereafter. This will empower customers to make better-informed decisions about energy consumption and, as a result, increase opportunities for customers to reduce their usage and use energy more efficiently. This is something that NCSEA initially brought to the table years ago and has been advocating for in its policy work.  

On the whole, this settlement represents great opportunities to continue advancing North Carolina’s clean energy economy. It will:

  • Better ensure long-term grid modernization efforts are both affordable and clean. In DEC’s original Power/Forward proposal, less than 50 percent of the investment was for true grid modernization. The settlement requires approximately 90 percent of the now-reduced spend be dedicated to grid modernization.  
  • Reduce short- and long-term customer bill impacts. Under the settlement, DEC will be able to recover some of its investments through a pilot grid rider for a period of three years. The reduced spend will increase rates by an average of no more than 4.5% on average, or about 6% for residential customers over the three-year rider period. While this is an increase in rates, it is significantly lower than the 50% increase that was calculated based on DEC’s original Power/Forward proposal.  
  • Establish administrative review and stakeholder meetings. The Commission will hold annual proceedings to review DEC’s grid rider, and DEC will hold regular stakeholder meetings with the settling parties, including NCSEA. We are optimistic these meetings will foster greater collaboration which will result in more innovative and productive opportunities to sustainably manage energy consumption and reduce customer bills.  

Because this is a partial settlement, it does not address everything that NCSEA advocated for in the rate case. Specifically, the partial settlement does not address the residential base customer charge or the methodology used for its calculation, advanced rate designs, or other issues for which we advocated. 

The decision to negotiate and enter into this settlement was complex and challenging. NCSEA received input from what was a feasible cross-section of experts, partners, and members to arrive within time upon these negotiated terms as approved by our Board. We know not all NCSEA members agree with this decision, and many important issues essential to a sustainable energy future were not on the table in this settlement. 

Just as the potential gravity of this settlement is not lost on NCSEA’s Board and staff team, neither is North Carolina’s serious and chronic lack of an authoritative and unifying vision for our state’s energy system, economy, and policy. 

NCSEA and our partners came together in the early 2000’s with partners and utilities around the Clean Smokestacks law and the formation of NCGreenPower. In 2006 to 2008, we all came together again to make the most significant revision to North Carolina electricity law and regulation in decades, with the passage and rulemaking of Senate Bill 3. Last year, with the passage of House Bill 589, our state-funded a needed energy storage study that is ongoing, added several ways to for customers to access and finance solar, for utilities to also benefit from enabling customer-owned and leased solar, and for creating a competitive procurement process that if run as intended will keep North Carolina a top 3 solar state. 

Now, in NCSEA’s 40th year of service, we intend to lean into our state’s critical need for an energy vision, with a collaborative approach, adhering to our core values with an unwavering focus on our mission and goals. Our team and Board will be inviting you as our members to join us, as we will eventually find a way to align interests to the benefit of all North Carolinians. 

As always, NCSEA’s team is at our best when you share your ideas and concerns with us and bring your questions for discussion — about the settlement and all that we do together. 

Thank you for being an NCSEA member, 

Ivan Urlaub

Read the full Press Release here.

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