An important component of the utility ratemaking process includes the biennial avoided cost proceedings. As a reminder, avoided cost is defined as the incremental cost that a utility avoids by purchasing power from a qualifying facility (QF) rather than generating power itself or purchasing it from another source. These rates are determined by the North Carolina Utilities Commission (NCUC), but utilities may offer proposals based off their own financial projections, and intervenors may offer comments on the utility’s proposals. To that end, Duke Energy Carolinas (DEC), Duke Energy Progress (DEP), and Dominion Energy North Carolina (DENC) submitted their biennial avoided cost rate proposals in November 2018, and NCSEA submitted initial comments on February 12, 2019.
NCSEA believes that the rates proposed by the utilities are the result of inaccurate, incomplete, and misleading information designed to make it impossible for QFs to receive fair compensation for the value they provide the electric grid. Furthermore, we argue that the NCUC should reject the proposed avoided cost rates and instead encourage innovation that will increase the reliability of the electric grid and lower costs to ratepayers by independent power producers in the electric generation market.
In addition to proposing lower than necessary avoided cost rates, the utilities proposed standalone integration charges for solar interconnection to compensate for the alleged increased impact on operating reserves and ancillary service requirements when adding new variable and non-dispatchable solar capacity. NCSEA does not support any version of a solar integration charge, nor the notion that solar adopters should be charged for adopting solar, because solar integration is a net benefit for the grid. Additionally, we argue that the solar integration charge proposed by the utilities is a case of issue based ratemaking and does not comply with PURPA law.
Reply comments are due later in March, and NCSEA will continue working to ensure that North Carolina customers are treated fairly. Stay tuned to NCSEA for the latest information about the biennial avoided cost proceedings, and become a Business Member to be the first to hear about updates from the NCUC.